How to Increase Term Insurance Coverage

How to Increase Term Insurance Cover?

There are a few simple ways to increase your term insurance cover after buying a policy.

1. Increasing Term Plan: Some term plans offer a built-in feature that increases your cover every year by some percentage. This plan lets you increase your sum assured without buying a new policy.
2. Buying a New Policy: If your existing plan doesn’t allow any increase, you can always purchase an additional term insurance plan to supplement the existing one. This can help you layer your coverage without affecting the old one.
    

How does Life Stage Protection Work?

Life stage protection is a beneficial feature that some term insurance plans offer. As per this feature, you can increase the sum assured under the plan by a predetermined percentage at certain specified milestones in your life.

Typically, life stage protection comes into effect at the following key milestones in your life.

• When you get married
• When you have your child (this is generally valid up to two children)
• On taking a home loan

So, for example, say you have purchased an online term insurance at the age of 25, with a sum assured of Rs. 1 crore. Now, say the plan offers life stage protection with a 50% hike when you get married and a 25% hike upon the birth of your child (up to two children). So, in this case, here is what your term insurance coverage may look like at the concerned milestones. Typically, there is a cap on the maximum amount up to which the coverage can increase.

How much Additional Coverage do you need?

The exact amount of additional term insurance coverage you need depends on several factors. Broadly speaking, here is what you need to take into account to determine how much to hike your insurance coverage.

• Your family’s expenses

  The additional coverage should be enough to help your family meet their everyday expenses without any trouble. Here, you also need to factor in inflation. This can ensure that your loved ones can continue to enjoy the same lifestyle they do now, without any adjustments to their standard of living.

  
  

• Your children’s education

  Your children’s education is one of the major milestones that your term insurance plan may account for. It is also vital to ensure that your children have access to the best education available. So, the sum assured you choose should be enough to cover this need.

  
  

• Your family’s important life goals

  There may also be other important life goals that your family is chasing, like owning their dream home and paying for your children’s wedding. These are major milestones that can be quite expensive. So, the additional coverage should be enough to provide for these life goals too.

Once you have factored these aspects into your financial plan, you may get a better idea of the additional coverage you need. This increase in coverage is capped by insurance companies and the capping will vary from insurer to insurer and from product to product. If the additional coverage is not enough, you may always purchase another insurance policy to meet your needs for additional coverage.

Key Benefits of Increasing the Term Insurance Coverage

Whether you’re starting a family or buying a house, your term insurance coverage makes sure that your loved ones stay protected, even in your absence.

• It keeps pace with life goals: As your lifestyle and expenses grow, the sum assured should be enough to meet your family’s growing financial needs at different stages of lives.
• Better family protection: From your child’s education to repaying a home loan, higher coverage ensures your family’s needs are met in your absence.

So if you’re wondering how to increase term insurance cover without making things complicated, it’s worth checking an increasing term plan.

Key Things to Know About Increasing Coverage in Term Insurance

• Your insurer’s terms of contract are very important: Not all life insurance plans allow you to increase coverage. So, before signing on, read the terms carefully.
• Medical checks may apply: Renewal of your policy to increase the sum assured could mean undergoing a new medical test or evaluation.
• Premiums will change: Higher coverage means a higher premium. It’s important to budget for the increase.
   

Conclusion

Before you buy a term insurance plan, you need to carefully evaluate if your insurance coverage needs will increase in the future. Only then can you choose the appropriate life stage protection at the time of purchase itself. This may also help your family remain adequately financially protected even as you move from one milestone to the next.

FAQs

1. Can term insurance coverage be increased?

   Term insurance coverage can be increased if your plan allows it. For eg – in increasing term plan, increase your cover every year by some percentage.

   
   

2. What steps should you take to increase your term insurance cover?

   To increase your term insurance cover, first check if your policy includes features like life-stage benefits (additional cover during milestones like marriage or childbirth) or increasing cover options. If available, contact your insurer and complete the required formalities, which may include submitting documents and undergoing medical tests.

   If your existing policy does not allow an increase in cover, you can always buy an additional term plan to enhance your protection.

   
   

3. What is the maximum cover for term insurance?

   There’s no fixed maximum. It usually depends on your age, gender, income, lifestyle habits, health condition, etc. The insurer decides the cover based on your personal details.