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Ref. No. KLI/22-23/E-BB/492
You can't make changes to term insurance policy post purchase, but Thankfully insurers today offer to alter specific policy terms and conditions. Here’s how
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.
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.
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!
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
