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Features
Ref. No. KLI/22-23/E-BB/492
After maturity, term insurance typically expires, leaving the policyholder without coverage. However, some policies may offer options for renewal or conversion to permanent insurance.
Term insurance is a pillar of financial security, providing invaluable protection to individuals and their families during uncertain times. It helps them with daily expenses in the absence of a breadwinner.
Yet, as the term of a term insurance policy draws to a close, policyholders may wonder about the fate of their coverage. What happens to term insurance after maturity?
Term life insurance is a type of life insurance that provides coverage for a specified period, known as the term of the policy. Unlike permanent life insurance policies such as whole life or universal life insurance, which provide coverage for the insured’s entire lifetime, term life insurance offers coverage for a predetermined period. Now that you know what term insurance is, it is time to answer the biggest question in your mind - what happens to term insurance after maturity?
As a policyholder, you should know what happens when a term insurance matures. You should also know what to do if your term plan is about to mature. Whether you choose to renew the policy, explore additional coverage options, or shop around for a new policy, proactive decision-making is key. Here are some important steps to take if your term insurance policy is about to mature:
Consider renewing your existing term insurance policy if your insurer offers a renewal option. This allows you to extend your coverage for another term, providing continued financial protection for your loved ones.
Some term insurance policies offer a return of premiums option, where you can receive a refund of the premiums paid if you outlive the policy term. Evaluate this option if available, as it allows you to recoup some or all of the premiums paid over the policy term.
Explore the possibility of converting your term insurance policy into a permanent life insurance policy, such as whole life or universal life insurance. This provides lifetime coverage and may offer additional benefits such as cash value accumulation.
If you still require life insurance coverage but your existing policy is about to mature, consider extending your coverage by purchasing a new term insurance policy with a longer term or higher coverage amount.
Convert your term insurance policy into a permanent life insurance policy if your financial circumstances and long-term goals warrant it. Permanent policies offer lifetime coverage and can provide a source of cash value accumulation over time.
Take the opportunity to shop around and compare quotes from different insurance providers to find the best coverage options and premiums for your needs. Consider factors such as coverage amount, policy term, and premium affordability.
If you have multiple term insurance policies with different insurers, consider consolidating them into a single policy with one insurer. This can simplify administration and may result in cost savings.
If your primary goal is to cover funeral expenses and final expenses, consider purchasing a burial policy or final expense insurance. These policies provide a small death benefit specifically designated to cover funeral costs.
In most traditional term insurance policies, policyholders do not receive their money back at the end of the policy term. Unlike investment-linked insurance policies or endowment plans, which may offer maturity benefits or cash value accumulation, term insurance is designed primarily to provide financial protection in the event of the insured’s demise during the term of the policy.
The simple answer is that it depends on the insurance company and the terms of the policy. While term life insurance is designed to provide coverage for a set period, there are options available to extend or renew the policy in some cases. Here’s what you need to know about extending term life insurance:
Some term life insurance policies offer a renewal option, allowing policyholders to extend their coverage for an additional term without the need for a new medical exam or underwriting. Policyholders may have the option to renew their coverage annually or for another fixed term, depending on the terms of the policy and the insurer’s guidelines.
Many term life insurance policies include a convertibility feature, which allows policyholders to convert their term insurance policy into a permanent life insurance policy, such as whole life or universal life insurance, without the need for a medical exam.
If your existing term insurance policy is about to expire and you still need coverage, you can purchase a new term insurance policy with a longer term or higher coverage amount. While premiums may be higher due to factors such as age and health status, purchasing a new term policy allows you to maintain coverage for your loved ones’ financial protection.
Some term life insurance policies offer optional riders, such as term conversion riders or term extension riders, that allow policyholders to extend their coverage beyond the original term of the policy. Policyholders can add these riders to their existing policy for an additional premium, providing flexibility and peace of mind.
A term insurance plan offers protection for a set duration, and once this period ends, coverage ceases. As term plans solely focus on insurance, they do not provide any maturity or additional benefits. Therefore, if you surpass the policy term, you will not receive any returns or benefits.
Once a term insurance policy reaches maturity, coverage ends, and there is no payout to the policyholder. Policyholders have several options to consider after maturity, including renewal, convertibility, or purchasing a new policy. It is essential for individuals with maturing term insurance policies to evaluate their options carefully and choose the best course of action based on their individual circumstances and financial goals. Consulting with an insurance provider or financial advisor can provide valuable guidance in navigating the decision-making process after term insurance maturity.
1
No, in most cases, you do not get your money back at the end of a term life insurance policy if you outlive the term. Term life insurance is designed primarily to provide financial protection for your beneficiaries in the event of your death during the policy term.
2
After maturity, term life insurance coverage ends, and there is no payout to the policyholder. Policyholders have the option to renew the policy, convert it to a permanent policy, purchase a new policy, or let the coverage expire.
3
No, term insurance typically does not offer a maturity amount or payout if the policyholder outlives the term of the policy. Term insurance is focused on providing a death benefit to beneficiaries in the event of the insured’s demise during the policy term, with no financial returns if the policyholder survives.
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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.
