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What Happens If You Outlive Your Term Life Insurance Policy?

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What Happens If You Outlive Your Term Life Insurance Policy?
September 16, 2023

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A term insurance plan provides coverage for a limited time. Once the tenure expires, you lose the coverage. Since term plans are pure insurance products, they do not offer any maturity or other benefits. So, if you outlive the term life insurance plan, you will not receive any returns or benefits.

Let’s look at how you can make your term insurance policy work for you:

1. Opting for Return of Premiums

When you purchase a term plan, you can choose a policy that offers a return of premiums in case of survival. For example, a person may purchase a 20-year term plan with INR 20,00,000 as the sum insured. Every year, they pay INR 2,000 as the policy premium. If something happens to them during the policy tenure, their family receives the sum insured amount. If they survive the policy, they receive a payout equal to the premiums paid. In this case, they will receive INR 40,000 when the policy expires.

2. Extending Your Coverage

You can opt to purchase a term plan that offers guaranteed renewability. You can renew your term insurance plan at the end of the policy term. In such situations, the insurance company guarantees to extend your coverage, but they will likely revise your premium. Since you will be older and might have health concerns, you might have to pay a significantly higher premium than before.

3. Converting to a Permanent Policy

Many companies offer term plans that you can convert into permanent life insurance policies. Each insurance provider lays down its rules and conditions regarding the switch from a term policy to a permanent one. If you can afford the required premiums in the future, a permanent policy could be ideal for you.

4. Purchase a New Plan

You can opt to purchase a new insurance policy once your existing term plan expires. Healthy and active individuals can get a new policy since they might still enjoy affordable premiums. Additionally, a new plan means the policyholder can customise the terms and conditions based on their family’s requirements and financial needs.

5. Move Ahead Without Insurance

Although not wise, you can choose to move ahead without life coverage. Of course, we do not recommend this as it could impact your family’s finances in the future.

Why Should I Get a Term Policy?

A term insurance plan provides your family with financial support when they need it most. Here’s a look at some of the benefits these insurance policies offer:

  • Easy to Understand

    Term policies are straightforward life insurance plans, making them easy to understand. You pick a sum insured and pay regular premiums to enjoy the coverage.

  • Customised Cover

    You can customise your term insurance coverage based on your specific needs and requirements. Apart from the sum insured amount, you can select add-ons or riders to enhance your coverage.

  • Financial Stability

    Life is unpredictable, and a term policy helps you deal with uncertainties. If anything happens to you, the plan provides your family with the payout benefit, providing them with financial stability at a difficult time.

  • Affordable Premiums

    Term plans offer high coverage at pocket-friendly premiums. Since they do not have any additional benefits, the entire premium goes towards your life coverage.

  • Pick Your Payout

    When you buy a term plan, you can choose how your loved ones will receive the payout. You can opt to have the money provided as a single, lump-sum payout. Or, you can ask your insurer to provide your family with monthly or annual payouts. Make your decision based on your family’s financial needs.

Many people do not purchase a term plan since these policies have expiry dates. However, if you select your insurance coverage, riders and tenure wisely, they can offer significant benefits to your nominees and loved ones.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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