It is good if you have already secured the uncertainty of life with a term insurance plan. You have ensured that your family will not be left in financial distress in your sudden absence. However, have you reviewed your life cover recently?
Over the years, your lifestyle and requirements change. So, you need to analyze the term plan’s cover to ensure its adequacy. When you are young and single, you have limited responsibilities. When you marry and then later start a family, your obligations increase. Therefore, you need to raise your life cover, keeping this factor in mind.
A term plan is an affordable way to procure a higher sum assured to ensure the financial stability of your family in your absence. In case of an unfortunate incident during the policy’s duration, the insurer pays the death benefit to your nominees. As your life situation changes, here are five events when you should review your term insurance policy coverage:
- When you get married
Post your wedding, your responsibilities and expenses will rise. You will spend more on household-related costs, like groceries, accessories and clothing, medical bills, and telephone expenses. These costs will spike over the years due to inflation. Therefore, revisit your insurance policy and enhance the cover to secure your family’s financial stability, considering the surge in your expenses.
- When you start a family
Apart from bringing happiness to your life, a new-born baby increases your monetary obligations. In addition to the rise in current expenses, you will need to plan for the baby’s future education and wedding. With time, education costs are bound to increase. So, consider enhancing your term life insurance cover to ensure your child can have a bright future without facing financial difficulties when you are not there to take care of him or her.
- When you buy a home with a loan
Almost everyone avails of finance to purchase a home. A housing loan is a huge financial responsibility spread over 15 to 20 years. If you are the sole earning member of your family, the burden of any outstanding home loan will fall on your loved ones if anything untoward happens with you. Their incapability to repay the balance loan may result in them being homeless. Thus, when you purchase a house with a loan, increase the cover to make sure that your family members can pay the outstanding sum without any problem.
- When your income increases
As your income grows, your lifestyle improves, and there is an increase in your household expenses. Your family would be used to higher spending habits and a comfortable lifestyle. Therefore, you need to raise the cover of your term plan so that they can sustain their lifestyle in your absence without facing any trouble.
- When there is an unexpected change in your family situation
An unforeseen change in your family’s circumstance, such as an accident or disability, requires you to revisit your coverage. For example, if one of your family members gets permanently disabled due to an accident, you will have more financial obligations. So, you need to increase your life insurance coverage to ensure that your loved ones can meet this additional responsibility even in your absence.
Most term insurance plans in India providers allow you to enhance the coverage by a certain percentage without a medical checkup to cover your loved ones when you are absent. You can check the terms and conditions for enhancement with your insurer.
Simply knowing what is term insurance, buying a policy, and paying the premium on time is not adequate. It is advisable to regularly review the insurance plan to ensure that the policy’s benefits are sufficient to cover the rising financial responsibilities over the long-term.