Why you shouldn't surrender your term policy
Sponsored Post 14 June 2021
Personal Finance sponsored post
The realization about the importance of life insurance in financial planning has grown by leaps and bounds over the last one year. [1] Because of the sheer magnitude of the Coronavirus pandemic, this kind of a reaction is quite natural and reasonable. After all, over 163 million across the world have been infected by the deadly COVID-19 virus, out of which, almost 3.5 million have died. [2] In India, the second wave has made the fear of getting infected and not being able to provide for your family even more real. With over two million cases being reported every week in May, the country has now seen around 25 million people already infected by the virus, and the number is rising by around 3-4 lakh every day. [3] It is only a matter of time that our country becomes the worst affected in the world, overtaking the US. 
 
Under these circumstances, one thing that has become abundantly clear is that life insurance must be an essential component in any individual’s financial plan, including yours. Adequate life insurance cover ensures that your family and dependents have the financial resources to live comfortably in case of your untimely demise.
 
Many people remain under the impression that with age on their side, they may not need life insurance. However, official data shows that nearly half the people who have died of COVID-19 in India are younger than 60 years. Moreover, 35 per cent of them were in the age group of 45-60 years. [4] The crisis has forced people to re-evaluate their priorities and pay higher attention to planning for life’s uncertainties. One obvious choice in such situations is getting a comprehensive life insurance policy, or to ensure that the insurance coverage is adequate and intact, if you already have an existing life insurance.
 
Why Term Insurance
Life insurance planning can be done with the help of a term life insurance policy. A term life insurance is a pure-risk cover, which means it pays only when the covered incident occurs. Because it is a pure-risk cover and does not have any savings element or maturity benefit (in most cases), a term life insurance is able to offer a large cover at an affordable cost.
 
The key benefits of term life insurance are its affordability, fixed premium, long-term coverage, and sizable life cover. Young earners should consider term insurance to get lower premium costs and high acceptance rate.
 
Never Surrender Your Term Policy
Once you have bought a term insurance plan, you must ensure that all premiums due are paid on time. A smart and easy way to do that is to set up an automated payment for such important payments. Missing any payment will lapse the policy and its coverage. This is true also when a policyholder knowingly surrenders their life insurance, as they cannot manage to pay the premium.
 
Surrendering a term life policy may not cause any direct financial loss, as there is usually no savings component in it, but it does strip away the financial protection to your dependents in case something unfortunate was to happen to you. In case your policy does have some maturity benefit, then the same is also lost on surrender.
 
Further, buying term insurance again costs more as the premium changes with increase in age and inflation. Moreover, the chances of acceptance into a new policy reduce with age and the onset of lifestyle illnesses like hypertension, diabetes, and so on.
 
Hence, surrendering should never be considered an option. If you feel that one-time payment of annual premium is becoming a strain on your finances, you can opt for quarterly or monthly premium payments. Another proactive step can be taking insurance premiums also into account while building and maintaining your emergency fund.
 
If you decide to buy a term insurance plan and want a policy that fits with your needs and can help you secure your loved ones then you may consider Bajaj Allianz Life Smart Protect Goal - A Non-Linked, Non Participating, Pure Life Term Insurance Plan. It is a term insurance policy that not only comes with a comprehensive cover to protect your loved ones, but also has other benefits to meet your unique needs, some of which are:
Get 3% discount on online purchase*
Rs. 1 Crore Cover @ Rs. 21 per day^
55 critical illnesses covered#
Child education cover#
Return of premium option#
 
Our future plans and financial goals demand protection from the uncertainties of life and especially during these situations arising out of COVID-19 pandemic. A comprehensive term plan with affordable premium can act as a shield against financial stress caused by any life event and can ensure the financial security of your loved ones.
 
References
 
*Discount is available for regular premium and limited premium payment frequency under all variants of this product.
 
^Above illustration is considering Male aged 25 years | Non-Smoker | Life Cover Variant | Policy term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Medical rates | Annual Premium Payment Mode | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only.
 
#Product feature/benefit mentioned above are dependent on variant chosen.
 
BJAZ-WEB-IC-01000/21

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