Should I Surrender My Term Policy?
Table of Content
The short answer is no. It is never a good idea to surrender your term life insurance plan. Think back to everything that has happened since March 2020. The coronavirus pandemic turned our world upside down overnight. It has been more than a year since several countries imposed lockdowns, but the virus continues to wreak havoc in our lives. In 2021, the second wave of the pandemic forced us to reconsider all our decisions, especially ones we’ve made about life insurance. The pandemic forced us to think about mortality. We realised just how quickly life changes. In an instant, we could leave our loved ones without any financial support. With all this in mind, it has become more vital than ever to have a good life insurance policy in place.
Why Term Insurance?
There are several life insurance plans available on the market. However, the most affordable option is a term insurance plan. Term plans offer high sum insured sums at affordable premiums. These plans do not offer maturity benefits or investment opportunities. So, insurance providers can offer them at lower rates. Individuals who are young and healthy can get sum insured amounts of 2 or 3 crores for as little as INR 1,000 per month!
Why Shouldn’t I Surrender My Term Insurance Plan?
Once you purchase a term insurance policy, you must do your best to pay your premiums on time. If you miss a payment, your policy will automatically get cancelled or surrendered. You will not face any immediate financial repercussions, but you will lose the life cover that your policy provides. Without this crucial cover, you could leave your family without any financial support in the future.
If you do happen to surrender your term insurance plan, purchasing a new policy at a later date will likely be far more expensive. Remember, your age and health will impact your premiums. Additionally, most term plans today offer a maturity benefit such as the return of premiums. Should you surrender your policy, you will lose out on the maturity benefit.
Surrendering your insurance may appear to be a smart option in the moment, but it might affect your long-term finances. Some individuals are worried about outliving their term policy. But, you shouldn’t worry. You can always convert your term insurance plan into a regular life policy before the maturity date. By doing this, you will continue to enjoy life protection without having to shell out for a new life insurance policy.
Benefits of Term Insurance
For several years now, term plans have been looked down upon since they do not offer maturity or investments benefits. But, these insurance policies come with a host of benefits, including:
Peace of Mind
Every insurance policy provides you with peace of mind. It’s a safety blanket that you and your family can rely on when you need it the most. The best term insurance policy will provide more than just life cover. Most policies today also offer critical illness and disability payouts. With such a plan, you can rest easy knowing that you and your family will always have a financial safety net to fall back on, no matter what life throws your way.
Value for Your Money
Most other life insurance plans offer a combination of investment and savings. So, these plans often come with higher premiums. A term insurance policy, on the other hand, provides life cover and nothing else. Term plans offer you the best value for your money, making them the prudent choice.
Tax Planning
Since term plans fall under the life insurance category, the money you pay as premiums can get deducted from your taxable income. Every year, you can claim a deduction of up to INR 1,50,000 for premiums you pay under Section 80C of the Income Tax Act, 1961. If you’ve opted for a return of premium policy, the amount you receive at maturity is considered tax-free. Additionally, if anything happens to you during the policy term, the payout your nominee receives will not get taxed either.
Additional Benefits
Term policies have evolved in the recent past. Today, you can opt for a term insurance plan that offers more than just life cover. You can pick riders that will boost your insurance payout. Depending on your needs, you can opt for a plan that also offers disability and critical illness cover.
Complete Flexibility
Term policies have become popular since they provide you with flexible payment options. Depending on your finances, you can opt to pay premiums annually, half-yearly, quarterly or monthly. More importantly, you can also choose whether your nominee should receive a single lump-sum payout or a staggered payment plan.
As you can see, every individual must have a term insurance policy. These plans provide financial stability when you and your family need it the most. So, never consider surrendering your term insurance plan.
Term Plan Articles
Investment Articles
Savings Articles
Life Insurance Articles
Tax Articles
Retirement Articles
ULIP Articles
Subscribe to get the latest articles directly in your inbox
Health Plans Articles
Child Plans Articles
Popular Calculators
Here's all you should know about life insurance.
We help you to make informed insurance decisions for a lifetime.
HDFC Life
Reviewed by Life Insurance Experts
HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER
We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.
Popular Searches
- Term Insurance Calculator
- Investment Plans
- Investment Calculator
- Investment for Beginners
- Best Short Term Investments
- Best Long Term Investments
- 5 year Investment Plan
- savings plan
- ulip plan
- retirement plans
- health plans
- child insurance plans
- group insurance plans
- income tax calculator
- bmi calculator
- compound interest calculator
- income tax slab
- Income Tax Return
- what is term insurance
- Ulip vs SIP
- tax planning for salaried employees
- HRA Calculator
- Annuity From NPS
- Retirement Calculator
- Pension Calculator
- nps vs ppf
- short term investment plans
- safest investment options
- one time investment plans
- types of investments
- best investment options
- best investment options in India
- Term Insurance for Housewife
- Money Back Policy
- 1 Crore Term Insurance
- life Insurance policy
- NPS Calculator
- Savings Calculator
- life Insurance
- Gratuity Calculator
- Zero Cost Term Insurance
- critical illness insurance
- itc claim
- deductions under 80C
- section 80d
- Whole Life Insurance
- benefits of term insurance
- types of life insurance
- types of term insurance
- Benefits of Life Insurance
- Endowment Policy
- Term Insurance for NRI
- Term Insurance for Women
- Term Insurance for Self Employed
- Benefits of Health Insurance
- Health Insurance for Senior Citizens
- Health Insurance for NRI
- Best Term Insurance Plan for 1 Crore