Most people have probably heard that term insurance is very important to purchase. However, have you really thought about what kind of coverage you should buy and why? If you have, you belong to the group of individuals who like to know exactly what they are buying. Having a term plan is a vital step in ensuring that your family is financially secure in the event of your death. It provides a sum of money that’s enough to cover their future expenses. However, this sum is decided by you at the time of buying the policy. This is something you would definitely know if you have bought a term policy already. Ultimately, you have to pick the right amount as sum assured so that it might not fall short for your family’s financial requirements for now and the future.
Why do you need to raise term insurance coverage?
Imagine that you would like to send your child to study in another country in 10 years. However, in the event that you die, would the current sum assured you chose still be enough to fund his or her education? There is a real chance that it might not be. The reason for that is inflation. Essentially, affording the same thing can be more difficult than it is today due to higher demand for it. Similarly, there is also your current lifestyle to consider. The question you might have is what is term insurance going to do about it.
The sum assured of your policy is supposed to pay for everything after your death. Your sum assured should be able to help your family in supporting your current lifestyle in your absence. Even if inflation continues to rise, it will leave your family with enough money to live comfortably. This is the reason why it is important to have enough insurance coverage to safeguard yourself and your family. But if you have already bought the policy, how can you raise your coverage for it to be enough?
- Buy an extra policy
It is completely possible that the coverage offered by the first policy you bought is not enough for your family’s future requirements. In this situation, you can just look through various term insurance plans and buy one to add to the coverage you already have. This means you can choose two term insurance policies with a high amount set as the sum assured in the event of your death. Your family can make a claim on both of these policies in the event of your demise. And if you choose the same or better sum assured for the second policy, you will have double or more coverage for your family.
- Get increasing cover term insurance
If you already have a limited understanding of what is term insurance, getting a new life insurance policy may not be as easy as you think. There are always parts of the process that need special attention. Even if you make a slight mistake, you might end up in a worse situation than before. The process can be very time-consuming and complex. Aside from having to go through all of the usual steps, you also have to meet with your insurance provider to discuss the coverage terms of the additional policy. Moreover, you would have to go through the hassle of documentation again. At that time, the coverage and premium requested would be different depending on your health and age. In such a scenario, you would either be rejected or not get a suitable policy.
Instead of going through all the trouble of getting a policy, you can get an increasing term insurance cover. This is a great way to save money instead of just buying an extra policy that might cause more problems than benefits. Term insurance is a type of policy that provides a sum of money that’s enough for your family at the time of your death. However, the amount that’s required then will vary from both your current financial status and the amount of money that you have set as the sum assured in a regular term policy. An increasing cover term insurance policy allows you to raise the sum insured by a certain percentage each year. This percentage is decided by the insurance provider. This feature is very simple to implement and does not require any new documents. What this means is that you can increase your coverage each financial year. However, unlike buying more coverage, this hike in coverage does not mean your premium increases every year as well.
Term insurance is specifically designed to make sure that your family has enough to work with after you are gone. Hence, you should ensure that they do not fall short on term insurance coverage in your absence. Use any of the two options above depending on your affordability. You can use a term insurance premium calculator to help make the right choice. You can then make sure that all your family’s dreams in the present and the future remain alive.