Why is it important to review my Term Insurance with time?

We can all agree that our financial objectives and needs change throughout our lives. Given that, it is crucial to have a term life insurance plan in place to ensure financial security during all of these stages. Term insurance acts as a blanket of financial protection that offers coverage for a set number of years. Under this, a death benefit is paid to the nominee if the insured dies during the time period stated in the policy and the policy is active, or in effect. With a term plan, you obtain a large amount of life cover for a relatively lower premium. For instance, a 30-year-old person based in Delhi can get a term plan of 1 Crore for a monthly premium of Rs. 1000-1200/Monthly (Depending from insurer to insurer). 

Further, it is also necessary to review your insurance coverage on a regular basis in order to keep up with changing financial needs. Term insurance is never a one-time purchase, and it is crucial to reassess your policy as you age. This is needed to ensure that the dependents' future requirements are covered sufficiently. Here's a quick overview of when you should examine your term insurance coverage.

When in your 20s and Single

When you are in your mid or late 20s your professional life is most likely just getting started. While you may believe that you have no dependents unless your parents have already retired or you have a sibling who is financially dependent on you, now is the time to start thinking about insurance from a variety of angles. A basic principle that many people are unaware of is that insurance is something that should  be bought in the early stages of life, while the potential health risk is minimal, but most people overlook it at that time. Similarly, as you grow older the risk is higher as you incur the chance of developing health problems and chances of getting involved in external accidents are higher. This is when everyone rushes to buy insurance, but getting coverage at that time becomes more difficult. 

Hence, one should take advantage of their good health to buy an insurance policy that will cover them and any education loans they may have. Furthermore, while your parents may not be financially dependent on you at this point, you would have wanted them to be able to enjoy their retirement without being on a tight budget. 

When You're Married and Have Children

You're probably married and have kids by the time you're 30. Also, you may have a steady flow of income to support your family .  Additionally, you will be surrounded by several liabilities at this stage, and it is crucial that you have sufficient coverage to cover all of them. Given that, it's essential to have a large insurance policy in place at this point in your life to cover all of your family's potential needs. Thus, it makes sense to move to a high-sum assured plan. For instance, a coverage of Rs. 1 Crore can help you stay financially protected in case of an emergency. 

Your Late Forties and Early Fifties

When a person enters his or her late forties or early fifties, it is expected that  the income of an individual increases dramatically. Also,  with the rise in income there are one time expenses  such as marriage and higher education. Moreover, you may be able to obtain a loan to cover such costs or to purchase a home for your family. All of these costs make it necessary to have your term insurance's sum assured increased so that all of your expenses are covered even in your absence. 

Rule of thumb for term insurance

When purchasing term insurance, it is recommended that you purchase a policy with a coverage amount/sum assured of 10 times your yearly salary. Apart from that, there are a few additional considerations that must be taken into account when determining the coverage amount such as a child's schooling and marriage, loans – if any, such as a home, car, retirement preparation for the spouse, medical emergencies, and everyday expenses. All in all. When purchasing a term insurance plan, it is imperative to be aware of all of your liabilities.

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