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Can I Make Changes to My Term Insurance Policy Post Purchase?

Can I Make Changes to My Term Insurance Policy Post Purchase?
  • 13th Nov 2021 |
  • 679

When you decide on buying life insurance, it implies that you have gone over all the possible options available before choosing one. Many people often go for a term insurance policy as it is a popular form of life insurance due to its affordability and other benefits. In addition, the availability of online term plans has made it easier to compare different plans and has also made them more accessible and preferred.

Before we move ahead, let us look at what is term insurance policy. In elementary words, a term insurance policy is a risk cover that provides financial aid to your loved ones in case of your unfortunate and untimely demise. As the name suggests, a term insurance policy is active for a fixed period. The beneficiaries/nominees can receive a death benefit if they pass away within the predetermined term period. A noteworthy fact is that your beneficiaries or you do not receive a payout if you outlive the policy tenure.

Though you do all the math and weigh the pros and cons before buying a policy, you might want to increase your coverage or insurance period in the future, depending on your changing needs. Thankfully, insurers today offer this feature, making it convenient for you to alter specific policy terms and conditions.

Converting Term Insurance Policy to a Different Life Insurance

Such a plan is also known as convertible life insurance. It is self-explanatory - a term plan that can be converted to other life insurance plans that usually have a more extended insurance period than a regular term plan. This may be available as a feature when you buy your term insurance policy or may be offered to you as an add-on to your existing plan. The term insurance policy is converted only when you request that you wish to do so. One of the most prominent questions here would be ‘what happens to the premium?’. The premium for term insurance remains the same because this set value is decided while buying the policy.

A convertible plan comes with several benefits that may seem missing from a regular term plan.

  • A regular term plan offers only a death benefit, whereas when converted to any other type of insurance, you can also claim the maturity benefit along with the death benefit.
  • Usually, before buying a new policy, the insurer conducts a risk assessment. However, no such assessment is conducted if you convert your existing online term plans.
  • You can enjoy the benefits of both term plans and life insurance plans.
  • A convertible term plan also offers tax benefits under the Income Tax Act of 1961.

Renewable Term Plan

Under this term plan, the policy is renewed towards the end of the insurance period. Although usually, to renew the plan at the end of the policy, you must invest in a new plan altogether, becoming highly stressful. Moreover, by the time you complete the first policy and decide to buy a new one, you would have grown older, and therefore, the chances of rejection would be much higher.

The added advantage of buying a renewable policy along with your term plan is that you do not have to go through paperwork multiple times. The premium for term insurance can also be fixed (which is likely to remain the same), and you can pay a yearly renewable plan or one renewed after a fixed period.

Buying a term insurance policy is essential to ensure a financially stable future for your family. Therefore, all the relevant factors must be considered before a decision is taken to invest in one!

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Ref. No. KLI/22-23/E-BB/492

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