Why Renewing Your Policy is as Important as Buying It

Investing in an insurance plan is a huge financial decision. An insurance plan provides coverage against unfortunate events such as death, diseases and disability. In case of any untoward incident, a policy provides a sum of money, which may be used to secure your financial future. You may use the amount to meet the cost of treatment or any other financial obligations such as household expenses or repayment of existing debt.

Importance of renewing insurance plans

There are numerous financial institutions offering insurance policies in India. You may analyze the benefits and features of such plans and select the best policy based on your needs.

Many individuals fail to renew their insurance plan once the policy matures. Renewing an insurance plan is as important as buying it as you will not receive any benefits upon maturity of the policy. After the maturity of your policy, in case you suffer from an unfortunate event, such as a disability, you will not be eligible to claim any benefit. Renewal of your policy, therefore, provides an opportunity to extend the coverage before your existing policy lapses.

Not renewing your insurance policy has numerous disadvantages. The following points highlight the drawbacks of non-renewal of a life insurance policy.

1.Defeats the purpose of insurance

An insurance plan provides coverage and secures your financial position in case of an unfortunate event. Failing to renew your policy indicates that your policy is no longer valid. In an event of your sudden demise, your loved ones will not be entitled to receive the death benefit. They will be left with numerous financial liabilities. Similarly, you will have to bear huge treatment expenses in case you are diagnosed with a disease. Renewing your insurance plan helps you remain protected at all times, thus securing your financial position.

2.It is expensive

Insurance providers take numerous aspects into consideration while determining the premium amount. Some factors include age, gender, present health condition, lifestyle, and family medical record. Those in the younger age group are considered as low-risk individuals and hence, have to pay low premiums. Similarly, those with no medical history of ailments and diseases may enjoy a lower premium.

Failing to renew your policy will mean that you will lose out on low premium benefit. Though you may consider renewing your insurance plan after your policy terminates, you may have to pay a higher amount.

3.You lose out on tax benefits

Besides securing your financial future, you may also avail of tax benefits on premiums paid under Section 80C of the Income Tax Act, 1961.You may claim tax deduction up to INR 1.5 lakh per financial year. Failure to renew your insurance indicates that you may no longer enjoy such tax benefits.

Many have a pre-conceived notion that renewing an insurance plan is a cumbersome process. On the contrary, the process has now become quick and simple, owing to the advent of digitalization. You may renew your policy through the Internet, thereby enjoying a high degree of convenience and flexibility. Besides, you do not have to provide any additional information or go through any medical tests while renewing your policy. This makes the entire process quick and hassle-free. You may, therefore, renew your insurance plan quite easily and secure your financial future.

However, if you have not invested in an insurance plan yet, you may compare the best insurance policies in the market and choose one that suits your needs.