Outliving a Term Insurance Policy in the UAE – What Happens After That?

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Term insurance plans are valid for a pre-specified duration only, depending upon the tenure that you opt for while buying one. It is like an opportunity that lets you buy a financially secure future for your family members. Term insurance plans are to make up for the breadwinner’s death due to a variety of reasons. However, what if you survive the entire tenure of your term insurance policy? Well, things will work differently in that case. Multiple questions will arise in such a case. For example-

  • Will you get your premium back?
  • Will your money lapse?
  • Can you renew the policy and extend the coverage?

If you’ve been looking for answers to these questions, then just keep reading. Let us begin with learning how a term insurance plan works, followed by evaluating the options that are available if you outlive your term insurance in the UAE

What is Term Insurance and How It Works?

Term insurance policy is a type of life insurance policy that offers financial coverage to the beneficiaries after the policyholder’s untimely demise. Most insurance companies in the UAE offer term insurance plans with higher coverage at lower insurance rates. Some of these insurers also cover permanent or total disability, critical illness, and more in the insurance policy. 

You can purchase a term insurance plan for a fixed term ranging between 10 to 30 years. You need to pay an insurance premium throughout the term in exchange for the death benefit, where the sum assured will be provided to the nominee. 

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What to Do When a Term Insurance Policy Expires

Your ability to support your dependants decides whether you need continued term insurance coverage or not. People buy a term insurance plan for a certain period keeping in mind that their dependants will get settled and become financially stable. 

You may no longer need insurance coverage if you survive the whole term of your term insurance plan. However, if things work out differently for you, make sure you analyse your insurance needs prior to six months of your policy lapse date. This will give you enough time on hand to make an informed decision. You can start a simple evaluation to see if:

  • Your loved ones need your financial support
  • You have sufficient savings to meet with end-of-life expenses
  • You still have huge debts to repay

The analysis will help you find an answer to see if you need to renew your term insurance policy in order to protect your family. If you survive the entire term insurance policy term and want to continue the coverage, make sure you take one of the following steps before your policy reaches its end or might not get anything in the end. 

  • Extend Your Coverage - Most term insurance providers offer term insurance plans with guaranteed renewability. You can try contacting your insurance provider and check if you can get continued coverage. You may need to pay higher insurance rates for the extended coverage. If you outlive the insurance plan, you will get nothing paid from the insurer. However, with extended coverage, you can add a Return of Premium benefit to your insurance policy in order to get your paid premiums back. So even extending your coverage by paying a little extra premium can also work out well for you. 
  • Convert your Term Plan into a Permanent Life Insurance Plan - Check with your insurer if you have an option to convert your term insurance plan into a more permanent one. If yes, you can convert your term insurance plan into a permanent life insurance policy for better coverage and benefits. This option also comes with higher insurance rates requirement. Not all the insurance companies in the UAE offer this benefit with term insurance plans. All these companies have different terms and conditions for different insurance plans. If you can afford to pay the higher insurance premium, you must go for this option. This way, you can get better insurance coverage while saving your expiring term insurance plan premiums.
  • Buy a New Term Insurance Policy - If you are not facing any health issues, it is better to buy a new insurance policy than to convert an existing one. Doing this may cost you less, and moreover, you can buy the insurance plan of your choice depending upon your family’s financial needs. To buy a new insurance policy, you may need to go through various medical tests and have your medical history checked. 
  • Drop Your Life Insurance - This is not a very good decision to make, but in case you have managed to save enough to support your family and fulfil their financial needs, you can consider dropping your term insurance plan. 

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How to Convert Term Life Insurance into Permanent Life Insurance?

Most insurance companies offer term insurance plans with built-in term conversion riders. The rider allows you to convert your term insurance plan into a permanent life insurance policy whenever it expires. You can check with your insurance provider if your term insurance policy includes this rider. 

The best part about this rider is that you need not go through the entire process of buying a new insurance policy. The rider enables you to skip the medical tests and keep your original insurance classification even if you are not in good health. 

Another good thing is that you need not pay a higher insurance premium for buying a new insurance policy at this age. The rider helps you convert the term insurance plan to a new life insurance plan at reasonable insurance prices. Your insurer may also give you term conversion credits for the first year. Make sure you act in the final year of the term of your term insurance plan to avoid missing out on such benefits.

You may also like this - Term Insurance Vs Permanent Insurance

The Bottom Line

If you outlive your term insurance policy and do not need extended coverage, you can simply opt out of it. However, if you need insurance coverage, you can choose any one of the options mentioned above. 

If you still feel confused about choosing a plan, then speak to our brilliant team of experts who are happy and will to handhold you through the whole buying process. Give us a call and find answers to your queries in just a few minutes. We will help you explore the best options that’ll enable you to make that right decision.

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