Topic 4: Seven Important Benefits of Life Insurance Renewal

Your family looks up to you for emotional and financial support. You should do everything in your power to take care of their needs when you are present in their lives and even when you are not around. Life insurance plans give you an option to create a financial safety net for your family. 

It is critical that you continue paying the premiums for your life insurance plans so that your family gets financial support during tough times. Whichever life insurance plan you opt, it is important for a policy to remain active if your beneficiaries need the benefits.

Seven important benefits of life insurance renewal:
Continued Financial Security:  Not paying your life insurance plan premium on time and letting your policy lapse goes against the purpose of buying insurance. No active policy means no financial coverage. So, in the case of your untimely demise, your family will not get any benefits, which could leave them struggling financially even to make their ends meet. Renewing your life insurance plans within the due date keeps your family financially secure.

Evade High Premiums:  When you buy a life insurance plan at a young age, you get lower premiums since your insurer associates your young age with low risk and good health. If you do not renew your policy, you lose the low-risk tag and later, when you consider buying a new life insurance plan, you might need to pay much higher premiums than before because of your age, medical condition, etc.

Get Full Policy Benefits: If you do not renew your life insurance plan, your family will not get any death benefits or any other additional rider benefit. This means that all the premiums you have paid are for nothing. You might also need to pay interest for reinstating your life insurance plan online. If you renew your policy in time, your family gets the full benefits of the policy.

Avoid the Waiting Period: Life insurance plans have a waiting period before the inclusion of some benefits. When your existing policy lapses, you lose the waiting period covered. So, when you purchase a new life insurance plan, the waiting period is renewed, and you have to begin afresh.

No Medical Tests: Life insurance plans require you to undergo medical tests to determine your health risk and premiums. If you buy a life insurance plan at a young age, you have a lower risk because of your good medical history. This means you can get lower premiums. However, when the policy lapses, you have to undergo medical tests again when purchasing a new life insurance plan. This could result in higher premiums and more hassle.

Get Full Tax Benefits: The premiums of life insurance plans are eligible for taxes deduction under Section 80C of the Income Tax Act, 1961. But when your policy lapses, you cannot claim tax benefits for that year. This causes your taxable income to shoot up. Renewing your life insurance plan ensures you get full tax benefits as applicable.  

Avail Full Tenure Advantage: Life insurance plans have a minimum and maximum entry age, usually between 18 and 65 years, and tenure up to 40 years. For instance, if you buy a life insurance plan at 58 years and continue it for eight years but fail to renew it later, you may lose out on the benefits of the past premiums and become ineligible to buy another life insurance because of the maximum age limit.

Renewing a life insurance plan is hassle-free if you opt for timely renewal. Staying covered under a life insurance plan at all times ensures that you do not have to worry about your family in case of an unforeseen situation.
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