What is policy renewal?

ChatGPT said:

Policy renewal in insurance is the process of extending your insurance coverage beyond its original expiry date by paying the next premium. It ensures that your protection continues without any gaps.

✅ Simple Definition

Policy renewal is the continuation of an insurance policy for another term after the initial policy period ends.

✅ How Policy Renewal Works

Policy Approaching Expiry
- The insurer usually notifies you before the policy expires.
Payment of Renewal Premium
- You pay the premium for the next term to continue coverage.
Renewal Confirmation
- The insurance company issues a renewed policy document or certificate.
Coverage Continues
- Your insurance protection remains active for the new policy period.

✅ Why Policy Renewal is Important

Continuous Protection – Avoids gaps in coverage.
Claim Eligibility – Some claims may be rejected if the policy is lapsed.
Loyalty Benefits / No-Claim Bonus – Many insurers offer bonuses or discounts on renewal for claim-free years.

✅ Types of Renewal

Manual Renewal
- Policyholder actively pays the premium before expiry.
Auto-Renewal
- Insurer automatically deducts premium from bank or card and renews the policy.

✅ Example

Health Insurance: Your policy expires on 31st December. You pay the renewal premium in December → coverage continues from 1st January.
Car Insurance: Expiring on 10th March. Renewal ensures your car remains legally insured on the road.