Can You Extend The Tenure of Your Term Plan?
Purchasing a term life insurance plan is one of the preferred ways to secure the financial future of your family. It allows you to take care of your family’s needs and life goals even when you’re not around. That said, a term insurance policy is only valid for a certain period of time, known as the policy term . You have the freedom to choose the tenure of the plan at the time of purchase itself.
But then, what would happen if you reach the end of plan’s policy term ? Can you extend it further? Here’s where many individuals get confused. If you’re wondering the same thing, then continue reading to find out if you can extend the tenure of your term plan. But before that, let’s quickly revisit the concept of a term plan.
What is a term plan?
A term life insurance plans is a contract between two parties - an individual and an insurer, where the insurer agrees to provide a life cover to the individual for a certain period of time.
If the individual, known as the policyholder, dies within the policy term, the insurer would be obligated to pay out a predetermined sum of money to the nominees of the deceased. This payout that’s made to the nominees of the policyholder is known as the death benefit.
And in exchange for receiving this life cover amount, the policyholder has to make payments periodically to the insurer in the form of premiums. As long as the policyholder makes the premium payments on time, the term insurance plan stays active.
That said, what if the policyholder survives till the end of the policy term ? In that case, he/she would not be eligible for any maturity payout whatsoever except in case of term insurance plans with return of premium option. Since pure term life insurance plan lack maturity benefits, the premium that you’re required to pay towards the policy is more affordable than other types of life insurance plans.
Can you extend the policy term of your term insurance policy?
Now that we’ve answered the question ‘what is a term plan?’ Let's take a look at whether you can extend the policy term of your term insurance policy.
To put it simply, once you reach the end of the selected policy term , you cannot extend it further by any means. Currently there are no products that give you the option of extending the term of your policy.
Why, you ask? Here’s why. The policy term of a term insurance policy is something that’s fixed right at the time of policy purchase. Once you’ve selected the policy term and purchased the policy, you can neither change it nor extend it further. Here’s an example to help you understand it better.
Say you purchase a regular term life insurance plan with a death benefit sum assured amount of Rs. 50 lakhs. You decide to go with a policy term of 20 years. Now, once you’ve purchased the policy, the policy term of 20 years stays put and cannot be changed or extended further. At the end of the 20-year tenure, your term plan would automatically expire and cease to exist. And you and your family would not be able to enjoy any of the benefits under the plan after expiry.
Okay so, if you cannot extend the tenure of a term plan, then what do you do when it expires? Simple. You would have to purchase a new term life insurance policy to replace your expired one to continue enjoying the financial protection.
However, here’s something that you need to know. Before you go ahead and purchase a new plan, check the term insurance age limit first. Many insurers have a maximum term insurance age limit beyond which individuals are not allowed to purchase any new term plans. Also, when you purchase a new plan to replace your expired one, the premiums that you may have to pay are also likely to witness an increase as well. So, that’s another thing that you would have to account for as well.
If you’re worried about the term insurance age limit preventing you from purchasing a new policy, there’s another option that you may consider - whole life term insurance. It is basically a term life insurance plan that provides coverage till you attain 99 years of age. With this plan by your side, you don’t have to worry about extending the policy term or the term insurance age limit coming into play.
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