How Can You Increase the Cover Amount of Term Insurance?

Can Term Insurance Cover be Increased?

Yes, term insurance cover can be increased, but it depends on the type of term insurance policy you choose and your insurer’s terms. Many term insurance plans offer flexible options that allow policyholders to increase their coverage at different life stages or by adding term insurance riders.

Why Should I Increase My Term Insurance Cover Amount?

At the time of purchasing a term insurance plan, your priority would be to leave a sufficient amount of money for your loved ones in case of your unfortunate death during the policy term. Therefore, in order to get the right amount of life cover (sum assured), you should calculate how much amount you would need to complete all your financial goals, such as child’s higher education or weddings, paying off debts and loans, and supporting the current lifestyle of your family in the long term.

Additionally, inflation is an important factor that should be considered. The real sum assured amount that you computed might not be sufficient for your family’s requirements.

How to Increase Term Insurance Cover?

Here are some of the options that should be considered if you want to increase the term life coverage:

Term Plans

₹1
Crore

Life Cover

@ Starting from ₹ 16/day⁺

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₹50
LAKH

Life Cover

@ Starting from ₹ 8/day⁺

VIEW PLAN

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day⁺

VIEW PLAN

1. Buying a New Term Life Insurance Plan

   One of the best ways to increase term life cover is by purchasing a new term insurance plan overall. You are required to go through the entire procedure of documentation and undergo new medical examinations. If you get older and might have a medical condition, there is a good chance that your upgrade could become costly. In some cases, the increase in policy might be declined or rejected because of health or age-related reasons.

2. Choose Increasing Cover Term Insurance

   Rather than going through all the difficulties related to multiple plans, you can buy a term plan with an increasing cover option. As the name suggests, your amount of life cover will increase at a certain rate until it reaches a maximum limit. Under this term plan, you don’t need to undergo any new medical tests, and there is no risk of your sum assured increment being declined.

3. Term Plan with Life Stage Benefits

   Various term insurance plans offer the option of adding life stage benefits, which allows you to increase the sum assured by usually 50% in case of the policyholder’s marriage or 25% in case of childbirth. This feature is added free of cost and provides the option to increase the sum assured at different life stages like marriage, childbirth, and home loan.

4. Voluntary Top-Up Option

   The voluntary top-up option lets you increase your term insurance cover during the policy term, based on your changing financial needs. You can request a higher sum assured at any point, usually in fixed amounts, subject to medical checks and income proof. The premium is revised based on the additional cover. This option helps keep your policy aligned with your growing responsibilities.

What are the Benefits of Increasing the Term Insurance Cover Amount?

Hassle-free: With multiple term insurance plans, the hassle of tracking the premium due dates of all the policies will increase, ultimately increasing the chances of a policy lapse. However, if you buy a single term plan and increase the coverage, the hassle of keeping track of multiple policies and ensuring their premiums are duly paid is reduced.

Fixed Premiums: If you buy multiple term plans, the overall premiums paid to keep all the term plans active increase, but if you increase the cover amount in one policy, the premiums remain the same throughout the policy term. You can use a term insurance premium calculator to get an estimate of the premiums you would need to pay for the desired 

Easy Upgrade: When you buy a new plan to increase the cover amount, you are required to submit documents, sign new documents of declaration, undergo new term insurance medical tests, etc. Additionally, various terms and conditions are also applicable. On the other hand, when you increase the cover amount in an existing term plan, no new applications, documents, medical tests or declarations are required. There are no such additional T&Cs that you have to sign to increase the life cover.

No Rejection Risk: If you think of upgrading your plan at an older age, there is a probability that you will pay a large amount of extra premium amount for a higher age and for any medical disease or illness you get diagnosed during this time. Also, there exists a risk of the proposal being declined because of poor medical conditions or higher age. With the increasing life covers, you don’t have to think about paying additional premium amounts or the plan getting rejected.

Better Claim Experience: Having a single term insurance policy with an increased cover simplifies the claim process for your nominee. In the unfortunate event of your passing, your family won’t have to file multiple claims across different insurers. A single claim with one insurer ensures quicker documentation, faster processing, and a smoother experience during a difficult time.

Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying the plan.

How Many Types of Increasing Covers Exist in Term Insurance?

Depending on the insurance company, there are a number of ways that allow you to increase the cover amount in your term or life insurance policy. You can select the cover that is right for you, based on the maximum coverage you are thinking to opt for or % increase or maturity age.

And, if you are thinking of buying an increasing cover option or increasing term insurance plan just to balance the impact of inflation, in such cases, you can simply choose a plan with an increase in the interest rate that matches the estimated rate of inflation.

Note: Know what is term insurance first and then buy a term plan for your loved ones.

Wrapping It Up!

Altogether, choosing the option of increasing cover while purchasing term insurance might be good for hassle-free management of your term plan and easy managing of the death claim by your loved ones. This process is easy and automatic and does not require you to go through any medical examinations or submit any new documents. It ensures that your family has enough coverage throughout the policy tenure.

You can easily buy a new term insurance plan or choose to opt for the increasing cover option with your existing insurance company.

Note: Check all the best term insurance plan in India.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.