A Term plan is a simple and affordable type of life insurance product that provides financial protection to your family in case of an unforeseen event. When buying a term plan, various factors need to be considered such as expenses incurred, assets, liabilities, annual income, and future financial goals. The financial objective might change as you grow older, and your financial needs may also increase with risking medical expenses and changing your lifestyle.Read more
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So, how you can take care of all these changes with fixed-term term insurance coverage? Here we have discussed different ways to increase term life cover:
At the time of investing in a term insurance plan, your priority would be to leave a sufficient amount of money for your loved ones in case you die before fulfilling all your financial responsibilities. So, in order to get the right amount of life cover (sum assured), you should calculate how much amount you would need for completing all your financial objectives such as higher education for children, 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.
So now what should be the next step to do? Is there any possibility to increase the coverage of your term insurance plan? Let’s discuss:
Here are some of the options that should be considered if you want to increase the term life coverage:
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 get declined or rejected because of health or age-related reasons.
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 signifies, your amount of life cover will keep increasing slowly with time till it reaches a maximum limit.
You are not required to undergo any new medical test and there is no risk of your upgrade getting declined. The term plan will be upgraded systematically without your interference every time.
You can simply ask the insurance company to increase your life cover at certain pre-specified points in life. The policy has this option at the time of buying the policy.
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Single premium with single policy: Using a manual upgrade, you buy a new term plan by paying an additional amount of premium depending on your age and health status. You will continue to pay 2 premiums throughout the policy term. Whereas, in increasing the cover option, you have only a single plan and a single premium for a lifetime.
Automatic increase in life cover: When you upgrade manually, you are required to submit documents, sign new documents of declaration and undergo new term insurance medical tests, etc.
Additionally, some terms and conditions are also applicable. On the other hand, in increasing life cover options, no new applications, documents, medical tests or declarations will be needed. There are no such additional T&Cs that you have to sign to increase the life cover. It will be done automatically.
No such rejection risk: If you think to upgrade 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.
Depending on the insurance company, there are a number of increasing cover options available in the insurance industry. 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.
Different types of modes of increasing coverage are offered by different insurance companies. Following are some examples:
5% increase/8%/10% per year till the life cover becomes 2 times
5% increase/10% every year till the term of your policy ends
5% increase every year till the policyholder reaches 55 years of age
And, if you thinking to buy 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.
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.
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