The cost of living keeps increasing every year, mainly due to inflation. There are various factors that cause the inflation to increase, which in turn impacts how much you spend on your daily requirements. This also impacts how much you get to save and invest to provide a better future for your loved ones in your absence. You can provide a financial safety net your family deserves with the help of a term insurance policy. There are different term insurance plans that you can opt for. However, there are chances that your term insurance cover might be insufficient. Is there anyway you can increase your cover?
Read more to find out.
What is term insurance?
A term insurance policy is a type of life insurance policy. As the name suggests, this policy provides financial protection to your loved from life risks for a specified time period. The policy term is based on the term that you select. If you were to pass away during the policy term due to unfortunate circumstances, your family would be compensated with a death benefit.
What is term insurance cover?
In term insurance, your dependents are provided with something known as a cover. This insurance cover is the amount, i.e., sum assured is based on the policy you purchase. The cover amount that your dependents receive will help them manage essential costs of day-to-day life. It will also help them cope with the costs of any sudden emergencies as well as plan for their future.
Why should you increase the cover?
When you purchase term insurance, chances are you might opt for a policy with a lower sum assured for some reason. However, at a different life stage, you might feel this cover is insufficient and you need to increase. There is no option to increase the cover in your existing, term insurance meaning you might be required to purchase a new policy with a high cover amount. While it might seem feasible, the cost of a new policy will be more than your existing policy.
As you age, there are changes in your body and health. Your insurer will require you to take medical tests before you purchase your new policy. Which means you will be paying more for it. However, instead of waiting till a later stage, you can have an option among term insurance plans that you can opt for. It is known as increasing term insurance plan. In this plan, the amount of sum assured keeps increasing every year, which might help in meeting your requirements.
The main reason you should increase your insurance cover is due to the constantly rising inflation. A lower sum assured means your loved ones might run out of funds trying to cope with the rising cost of living. On the other hand, a higher sum assured means sufficient corpus for them.
Why should you opt for this plan?
You should opt for this plan for the following reasons:
- Premiums are affordable
For a plan where the sum assured keeps increasing every year, the premium remains affordable. While the insurer will charge you a higher premium in the beginning of the policy, as the sum assured keeps increasing, the premiums will decrease. This means you spend less on the policy and save more for immediate emergencies and other vital expenses.
- Helps with life goals
The increasing cover will help your loved ones in accomplishing goals in your absence. Goals such as your child’s education or marriage, your spouse’s financial future, or paying off any debts/loans, can be easily managed with an increased amount in the life cover.
- Riders enhance the policy
A great benefit of this policy is that you enhance the coverage of the policy with the help of different riders. These riders include the accidental death benefit rider, disability rider, and critical illness ride,r to name a few.
Conclusion
To successfully secure the financial future of your loved ones, you can opt for the increasing term insurance plan. Use the term insurance calculator to get an idea about the cost of your policy.
