Term insurance policies are only active for a predetermined period of time, based on the tenure that you choose when purchasing one. It's like a chance to create a financially secure future for your family members. Term insurance plans are designed to compensate for the breadwinner's death for a variety of causes.
Let's start by learning how a term insurance policy works, and then we'll look at the options accessible if you expire your term insurance in the UAE.
What Is Term Insurance and How Does It Work?
A Term Insurance policy is a form of life insurance policy that provides financial protection to beneficiaries in the event of the policyholder's untimely death. The majority of insurance companies in the UAE provide term insurance plans with more coverage at reduced insurance prices. Some of these insurers include permanent or total disability, critical sickness, and other benefits in their insurance policies.
A term insurance policy can be purchased for a fixed duration ranging from 10 to 30 years. You must pay an insurance premium during the period in exchange for the death benefit, which provides the nominee with the sum assured.
What to do when Term Insurance Policy Expires?
Your ability to support your dependents determines whether you require ongoing term insurance coverage. People get a term insurance policy for a specific period of time in the hopes that their dependents will settle down and become financially stable.
If you live out the whole term of your term insurance policy, you may no longer require insurance coverage. However, if things go differently for you, make sure you review your insurance needs before your coverage expires in 6 months. This will provide you with sufficient time to make an informed decision.
You can begin a short evaluation to determine whether:
- Your loved ones require your financial assistance.
- You have enough savings to cover end-of-life expenses.
- You still owe a lot of money.
The study will assist you in determining whether you need to renew your term insurance policy in order to protect your family. If you survive the entire term insurance policy and wish to continue coverage, make sure you complete one of the following procedures before your policy expires or you may not receive anything at all.
Extend Your Coverage
The majority of term insurance companies provide term insurance plans that are guaranteed to renew. You can try contacting your insurance company to see if you can continue to be covered. For the additional coverage, you may have to pay a higher insurance premium. If you outlive your insurance policy, you will receive no payment from the insurer. However, if you have extended coverage, you can add a Return of Premium benefit to your insurance policy to receive a refund of your paid premiums. So, even if you have to pay a small fee to extend your coverage, it can be beneficial to you.
Convert your Term Plan to a Permanent Life Insurance Plan
Inquire your insurer whether you may convert your term insurance plan to a more permanent one. If so, you can convert your term insurance policy into a permanent life insurance policy to improve your coverage and benefits. This option also necessitates a larger insurance premium. This advantage is not provided by all insurance firms in the UAE with term insurance plans. For various insurance policies, each of these firms has different terms and conditions. You must choose this option if you can afford to pay a higher insurance premium. This manner, you can receive better insurance coverage while saving money on your term insurance rates that are about to expire.
Purchase a New Term Insurance Policy
If you do not have any health difficulties, it is preferable to purchase a new insurance policy rather than convert an old one. This may save you money, and you will be able to choose the insurance plan of your choosing based on your family's financial circumstances. To purchase a new insurance policy, you may be required to undergo a series of medical tests and have your medical history reviewed.
Drop Your Life Insurance
While this is not a wise move, if you have saved enough to sustain your family and meet their financial demands, you can consider cancelling your term insurance plan.
How Can Term Life Insurance Convert to Permanent Life Insurance?
Term insurance plans with created term conversion riders are available from the majority of insurance firms. When your term insurance policy expires, the rider allows you to convert it into a permanent life insurance policy. Check with your insurance company to see if your term insurance policy contains this rider.
The best aspect about this rider is that you don't have to go through the hassle of purchasing a new insurance policy. The rider allows you to avoid medical exams and maintain your original insurance classification even if you are not in excellent health.
Another advantage is that you will not have to pay a higher insurance premium if you purchase a new insurance policy at this age. The rider assists you in converting your term insurance policy to a new life insurance policy at a fair insurance premium. In addition, your insurer may offer you term conversion credits for the first year. To avoid missing out on such benefits, make sure you act in the final year of the term of your term insurance plan.
Conclusion
You can simply opt out of your term insurance policy if you outlive it and do not require additional coverage. However, if you require insurance coverage, you can select any of the choices listed above.
If you're still unsure about which package to choose, contact Dhanguard team of professionals, who are pleased to walk you through the entire purchasing process. We will assist you in exploring the greatest possibilities so that you can make the best selection.