Term Insurance Expired - 3 Options To Choose From When Your Term Policy Is Getting Expired

Meet Rahul, a software engineer who made proactive provisions for the financial security of his family as early as when he first started his career by buying a term insurance policy. All these years, he was serene in the backdrop of his mind that his loved ones were all financially safe in case something unexpected happened to him. However, as the expiration date of Rahul's term insurance policy started getting closer, it was time for a very important decision at the crossroads. Like many people facing similar situations, he had to make very careful assessments to ensure continuous security for his family.

This article will help should you find yourself in a similar position sometime in the future. We will delve deep into what really happens when your term insurance policy actually expires, explore available choices, and underline why proactive financial planning is important.

What Happens When Your Term Policy Expires?

When your term insurance policy reaches its expiration date, the coverage you've relied on comes to an end. If something happens to you after the policy has expired, then your beneficiaries will not have any death benefit. In essence, the safety net you had during the term no longer exists.

The term insurance policies do not have any cash value. Hence, when your term policy expires, there are no payouts or refunds on the premiums you pay unless you have opted for the TROP plan ie. a term plan with return of premium option. With a TROP plan, if you outlive the policy term, you get a nice maturity benefit – the total premium that you have paid comes back to you, subject to certain terms and conditions.

3 Options To Choose From When Your Term Policy Is Getting Expired

If You Have A Term Insurance With Return Of Premium Plan

If you have a TROP plan, you'll receive one nice perk - maturity benefit- in case you outlive the policy term. Now, this maturity benefit is nothing but the total of all premiums you would ever have paid during the policy term minus taxes. When you realise that the date of maturity for the policy is nearing, make these documents available in their originality, like the original copy of the policy, premium paid receipts, etc., so claiming the maturity benefit might be easier than ever.

If You Have A Regular Term Life Insurance Plan

Now, suppose you are holding an ordinary term insurance policy, and you are at a position close to the end of the policy term; in such a case, here's what will happen under the policy:

• Death Benefit: In case of death of the life assured during the policy term, a pre-declared payout can be claimed by a nominee; subsequent to the claim, the policy gets terminated.
• Maturity Benefit: On the other hand, if you outlive the policy term, no payout will be made. This product, being a regular term policy, simply expires without any maturity benefit.

Start Fresh

If your term plan expires and you still have financial obligations or dependent family members, you might consider purchasing a new term insurance plan. However, you may not be eligible to get one, or the premium may work out to be very high because of your age, health conditions, etc. To save yourself these possible headaches in the future, be sure to project what your long-term financial commitments will look like and select an appropriate policy term up front. This way, you won't have to worry about scrambling for coverage later on.

Wrapping Up!

Planning for the expiration of your term insurance policy is crucial to maintaining financial security for your loved ones. Don’t put yourself in a position that dig a deep hole in your pocket at the last moment. Understanding your options - whether it's securing a maturity benefit with a TROP plan, preparing for a straightforward policy expiration, or considering a new insurance plan is key. By making informed decisions and anticipating future financial responsibilities, you can ensure continued protection against life's uncertainties.