Growth is the essence of life, so you cannot expect that all the variables in your financial life, especially, will remain at a standstill. Right from the time you start earning your first income, your financial growth is imminent as you complete different milestones in your journey. Your income will start increasing, and with it, so will your standard of living. Once you have a family, you may also buy a house, and again your financial life would be changed in a major way.
So, if you buy a term insurance plan at an early age with a set assured sum that you thought was enough at the time, then at a later stage, that amount will surely seem a lot less. With education fees to pay, loans to clear, and most importantly, to maintain the same standard of living, you must ensure that your family has adequate funds in case you pass away, and your term plan is claimed.
How can you, then, increase your life cover with the least possible cost? Let’s find out.
What is Term Insurance?
Term insurance is a tool for financial protection wherein the policyholder purchases a policy by paying premiums for an assured life cover sum. In case the policyholder passes away during the policy tenure, the policy can be claimed by the nominee, and the insurer pays the death benefit as a lump sum amount. Hence, term insurance is a way for you to protect your family from financial problems after your untimely demise.
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How to Increase Term Insurance Cover?
You have two options to increase your life cover.
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Purchase A New Term Policy
The first and lesser advised option is to buy another term policy with a higher life cover. You can buy as many term plans as you like as there is no restriction on this. However, buying a whole new policy may be expensive and inconvenient since you must go through the insurance buying process, like undergoing health check-ups, documentation, etc., again.
Because you will be older, your premium will also be higher. You will end up paying two premiums for your two different term plans. If you have a family floater plan, then your family will also be subjected to repeated health check-ups and documentation and face inconveniences.
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Buy an Increasing Cover Term Plan
The more favourable option is to purchase an increasing cover term plan. Right when you’re buying your first term plan, ensure that you choose one that has an increasing cover benefit.
In such a term plan, your life cover keeps increasing by a certain percentage every month until it reaches a maximum limit, while the premium remains the same. Your cover may increase by 5%, 8%, or 10%, depending on your specific plan.
You won’t have to undergo health tests again, and you will still be paying a single premium. Thus, you can take the benefit of an increasing life cover in your existing term insurance plan to keep up with your financial obligations at a much lower cost.
So, if you’re wondering how to increase your term insurance cover with minimal hassles and costs, then an increasing cover term plan may be your best bet.
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