When it comes to protecting your family financially, term insurance continues to be one of the most preferred options available to an individual. It helps keep your family financially secure even after your demise, thereby allowing them to fulfil their goals. However, most people buy term insurance plan for a specified time and post that the cover ceases. Therefore, the question of "Can term insurance be extended?" inevitably arises. If this is something that you have also been wondering, read on to find out.
How term insurance works
Also known as life insurance term plan, term insurance is a type of life insurance that provides you a life cover for a certain specified period. In exchange for this coverage, you would have to make periodic payments known as "premiums" to the life insurance company.
In the event of your death during the policy term, the life insurance company would provide your nominees or your beneficiaries with a predetermined sum of money, known as the death benefit. Since there are no maturity benefits involved with a term insurance plan, the premiums that you are required to pay are typically much lower than the other types of life insurance plans. That said, there are certain specific life insurance term plans that do come with the option where the insurer returns the premiums that you paid during the entire tenure back to you. This feature is termed as return of premium.
Can term insurance be extended or not?
Now that you have understood how term insurance works, you may be wondering if you can extend your term insurance plan. After all, that would mean that you could enjoy the benefits offered by life insurance term plan for longer, isn’t it?
So, can term insurance be extended?
No, unfortunately the tenure of a term insurance plan cannot be extended. This is because the policy term is something that is predetermined and fixed. Therefore, for instance, if you purchase a term plan with a tenure of 25 years, the cover offered by that plan will continue to be in place for that period only. You cannot extend it beyond that period.
Therefore, you now know that a term plan cannot be extended under any circumstances. That is why it is important to purchase a plan that gives you sufficient cover early on, so you can enjoy lower term insurance premiums for higher life covers. It is also essential to choose a plan that gives you coverage for a longer period depending upon your life goals.
To enjoy uninterrupted benefits over the period of the term plan you purchased, it is best to pay your term insurance premium on time. That way, your policy does not lapse. Also, when opting for a life insurance term plan, always ensure to thoroughly read the features, terms, and conditions of the policy before purchasing it. Also, remember to use a term insurance calculator to find out just how much of a premium you would have to pay to cover any unexpected surprises.