Choosing a term Insurance can be one of the most significant financial decisions you might make in your early adulthood. Various factors influence your decision to buy term insurance.
It might be the premium, your health, your financial status, other investments, other expenses, etc. What’s more important is that you choose the best option for yourself that aligns with your needs and requirements.
Choosing the best option with features like additional riders and renewable and non-renewable insurance has become even easier with online tools like a term insurance calculator.
It is important that you make use of such tools to make the best decision that aligns with your goals for your family’s financial future.
In this blog, we are going to talk about the advantages and disadvantages of both renewable and non-renewable term insurance so that you can make better decisions for yourself and your family.
Renewable Term Insurance
Unlike the traditional form of term insurance, a policy that comes with a renewable option is called renewable term insurance. You can renew this policy for another term if you see the need to do so.
Typically, a “term” of a term plan can range from a year to 30 years. So, you can extend your policy through renewal for up to 30 years if you want to.
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Pros
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Cons
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With a renewable term plan, you can renew the policy, and you won’t have to go through all the medical procedures.
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With renewable insurance, you do not get to skip the increasing age. As you get older, the premium increases. This also means the insurance renewal increases the policy cost.
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Renewable term policies can be renewed even if you have a deteriorating health condition. The premium does not increase because you get ill.
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It is more expensive than a non-renewable term insurance plan.
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This is a good way of making the best out of the money that has been spent on this term plan. This is a great for individuals who see the need for financial support in a short-term period.
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If you consider the cumulative expenses spent on the term plan, the cost outweighs the benefits of the policy.
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Non-Renewable Term Insurance
Non-renewable term insurance is your usual and traditional policy that expires once the policy term is finished. Either that or if the policy matures.
Even a non-renewable policy ranges from 1 year to as long as 30 years. This policy, however, cannot be renewed, and you will have to buy a new plan if the first one expires.
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Pros
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Cons
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The traditional form of term plan, i.e., the non-renewable term policy, is more consistent than a renewable insurance policy.
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Once the term is over, it is over! You cannot get the money back because there is no provision for getting the accumulated cash back for yourself.
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Non-renewable term insurance policies begin with comparatively lesser premium amounts. Along with that, these premiums are constant.
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If your policy term ends without maturity, the policy expires. This means you will have to buy a new policy and go through all the procedures once again. This also means medical tests and lifestyle updates. Your premium goes up due to the increased age as well.
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Conclusion
The decision to choose between renewable and non-renewable term insurance is an important one. You will have to compare different policies and policy providers for this decision.
While you cannot assure yourself that you will outlive the term plan or won’t, you can stay safe by choosing the renewable policy. With its advantages and disadvantages, you can tell that the benefits of the renewable policy outweigh the limitations. But it completely depends on the policy seeker and their needs. Make educated decisions for yourself and be in safer hands.