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Term insurance is touted as one of the most cost-effective insurance schemes in the present times. Couple that with a renewable term insurance plan, and you have yourself a comprehensive long-term protection plan in place. A lot of the term insurance policies come with the renew-ability clause that allows one to rebuild the original coverage for an extended period.
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Note: Know more about what is term insurance first before reading this article.
To understand which types of term insurance are renewable, it is important to first identify all the variants available.
Level Term Insurance – This is the most commonly bought term cover wherein the coverage amount remains fixed for the entire duration of the policy.
Increasing Term Insurance – The sum assured increases by a specific percentage on an annual basis against a constant premium amount. The premiums are usually found to be higher for such plans.
Decreasing Term Insurance – The sum assured on death decreases each year as the financial obligations of the life assured decrease. The sum assured decreases in line with EMI/mortgage payments.
TROP (Return of Premiums) Plan – It is the only kind of term insurance that comes with maturity benefits in the form of the return of total premiums paid if the life assured survives the policy term.
Now, let’s look at the types of term insurance that are renewable.
Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying.
Term Plans
A standard term insurance policy offers financial protection against the death of the life assured. On the death of the policyholder before the end of the policy tenure, assigned nominees receive the sum assured on death that they can use to fund future needs.
Renewable term insurance is exactly like a standard term insurance cover, except with the provision of extending the cover at the end of the policy term. Such policies are a popular choice because the purchase of a new policy ends up costing more owing to age and health-related factors. However, renewing your existing cover does not require you to re-qualify for new coverage and therefore costs less.
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If you want to know which types of term insurance are renewable, the answer is nearly all of them, including level term insurance, decreasing term insurance, increasing term insurance. It is important to note that renewability is a defined benefit and is not an in-built feature. For instance, one insurer's level term insurance policy may feature this term insurance benefits while similar plans by other insurers may not.
It is important that you carefully review the policy brochure and check if the policy comes with this particular provision.
It is also important not to confuse term insurance renewability with a convertible term plan. While the former extends the existing term life cover, the latter allows one to switch between different types of plans. Renewability does not allow you to change your existing term cover to, say, a whole-life insurance cover or an endowment policy, or a ULIP.
Important Points to Note Before Renewing any Type of Term Insurance Policy
Not all term insurance plans come with the provision for renewability. Every insurer has set different criteria, and, therefore, the specificities need to be clarified with the insurer itself.
Renewability does not allow you to convert your term insurance cover to a different kind of covers such as whole-life or ULIP or any other.
Renewal is only allowed till the policyholder reaches a specific age. Mostly, the maximum age limit has been set at 80, following the completion of which one cannot renew their policy.
A term insurance cover can only be extended if the policy brochure mentions the provision for renewability.
While the renewal of a term policy does not require one to undergo a medical evaluation, the premium amount might increase based on the age of the policyholder or newly acquired medical condition.
If you are in your 20s, 30s, or 40s, it will make a lot of sense for you to invest in term insurance policies that come with the renewability feature. Suppose you are a 40-years-old male with a term insurance cover for 20 years. Should you survive this policy term, it is likely to be difficult for you to get a new term insurance cover at the age of 60, given the rise in health complications with age.
At this stage, a renewable term insurance policy is your safest bet and the most economical option. You will not be asked to offer any medical undertakings, which eliminates the risk of high premiums to an extent.
Choosing a type of term insurance that is renewable is also a smart choice as it is a short-term investment and, therefore, allows you time to plan your long-term requirements.
If you have budget constraints, renewable term life insurance is a good option because the premiums are generally lower than a standard term cover. It is also a temporary solution for someone who is not ready to commit to a long-term protection plan. Specifically, one-year renewable term plans are the most convenient as it allows you to revisit your life insurance needs every year and change your preferences accordingly.
Note: Check out the best term insurance plan in India and choose one that suits your requirements.
˜Top 5 plans based on annualized premium for bookings made on https://www.policybazaar.com in the first 6 months of FY 24-25.
Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
+Rs. 487/month (Rs.16/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited
We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale
Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.
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+Rs. 820/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
+Rs. 1,443/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
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