A life insurance cover seeks to keep your family financially safe. The money procured from a term insurance plan can be used for children’s education or their wedding or paying off any loan.
There is no guarantee that the sum insured could cover all the costs at the time of its dispersal, owing to the circumstances as well as inflation at that point in time. Hence, it is better to calculate the optimum level of sum insured on the basis of planned expenses, assets owned, liabilities and financial goals set for the future.
But, is it still going to be enough?
Financial situations can change over time, thanks to unforeseen reasons. Additionally, inflation needs to be considered as well. Given these factors, assessing the right amount of the sum required for a term insurance coverage plan may not be easy.
So, what are your options?
1. Upgrade to a newer policy
Purchasing another policy can be an option. To do so, you must go through the entire documentation measure again and take fresh medical tests as well. Given that you'll be older by the time (and may even have a new ailment) you opt for a new policy, your upgrade could be expensive. In the best-case scenario, the upgrade may even get rejected because of these issues.
Even if you get one, overseeing two separate policies can prove to be an uphill task for both you and your family. There will be two levels of documentation for your family to deal with in your absence. Keep this point in mind when you plan to opt for a brand new policy.
2. Choose a plan with life-stage increment
The life-stage increment choice adds adaptability to your insurance plan that will take care of your old age issues. This special component empowers your protection inclusion in the critical phases of your life. Additionally, this advantage doesn't expect you to bear additional expenses or a higher term plan premium.
In any case, this is an option exclusively for those who buy term plan online early or at least right after marriage. As the biggest increment happens at the time of marriage (50%), it is better to have this alternative in the arrangement if you are buying it before marriage.
3. Purchase an increasing term insurance coverage
Rather than going through all the intricacies of arrangements mentioned above, you can buy term protection with an increasing life insurance term coverage. According to the process involved, this cover is the most agreeable one. The total guaranteed1 can continue to grow gradually as your life goes on.
Neither will you need to go through any new medical tests nor is there a danger of your upgrade getting rejected.
Which option is better?
In an increasing term insurance plan coverage, the sum insured increases by a predefined sum each year until reaching the end term. By and large, all insurance policies have an alternative to broaden or renew the plan after the completion of its term. In any case, the new expenses will rely upon an individual's age and well-being at the time of the renewal. These restrictions are not applicable to the increasing term policy plan.
There are benefits of picking an increasing protection plan such as:
· The term plan premium for the most part stays steady. If there is a need for an increased term protection plan, the premium may increase as indicated by the increased death advantage. This gives the policyholder the benefit of paying a lower premium in the beginning to conform to their financial conditions.
· The advantage of the increasing term protection plan is that it can keep pace with inflation in the market. Subsequently, a policyholder can be confident about the fact that his or her family can cover the increasing expenses in his or her absence.
· There is a risk of the proposition being dismissed because of old age or chronic illness in case of other policies. With increasing life insurance term coverage, you won’t need to stress about paying extra charges or getting rejected.
· The best part about increasing term protection plans is that the expenses are low and reasonable. Additionally, expenses stay steady and don't put a strain on your pocket.
· An increasing term protection plan also saves your taxes. The expenses you pay for the arrangement are *tax-exempt up to a limit of ₹1.5 Lakh in one financial year. The death advantage you get under the arrangement is also tax-exempt.
Final words
Generally, choosing the right kind of term policy can be overwhelming for you. With the increasing term plan, it all becomes better. In fact, you should ask for increasing coverage at the time of purchasing a term protection plan for the benefit of your family. It doesn't expect you to go through any medical tests or present any new documentation, all this while guaranteeing that your family has adequate cover till the end of the term.
When you choose to go for an increased coverage, the options could be irresistible. Tata AIA term insurance offers a range of term policies that can take care of your life’s responsibilities, even in your absence.
L&C/Advt/2021/Jun/0887