Increasing Term Insurance : Is Increasing Term Insurance Cover a Wise Decision?

We all know that buying a term insurance plan is one of the wisest decisions to make in a lifetime. It helps prepare you for life’s eventualities – today when you are alive and tomorrow in your absence too. However, can term insurance really cover all of life’s uncertainties such that you would never have anything else to worry about for the rest of your life and thereafter?

Perhaps not. This is because life itself is changing every single minute and so does everything else associated with it. Our needs grow with time and so do our uncertainties. With changing times and situations, your term insurance policy purchased in the past may also become obsolete in a way. In some cases, it may not be able to provide sufficient coverage for increasing cost needs and in some others, the insurance plan may not be equipped to handle an unfortunate mishap.

Does that mean that your term insurance plan is not useful anymore? No, it simply means that it’s time to increase the cover option of your policy. Let’s read more about what it means and how it works.

How to Increase Cover Option In Term Life Insurance Policy After Purchase?

As discussed earlier, your term life insurance policy is not going to be adequate to cover all your financial needs and life’s eventualities until the end of your lifetime. This is why it’s important to consider increasing the scope of coverage of your plan. Here are a few options that you can consider in this regard:

1. Select a plan that provides life-stage increment option: A term insurance plan with life-stage increment option makes it more adaptable to the changing needs with age and situations. Moreover, you don’t need to pay a higher premium rate or incur any additional expenses to include this option in your term insurance policy. It is ideally suited for those who purchase term insurance early on in life or immediately after marriage.
2. Switch to a new plan: To increase coverage of your life insurance term plan, you may also choose to buy a new policy altogether. Of course, it’d require you to repeat the entire process all over again – from taking medical tests to duly filling out and signing the complete documentation procedure. Also note that the choice to switch to a new policy as you get older may also sometimes be rejected by the insurance company. This is because with age, illnesses and other health risk factors also increase.
3. Buy an increasing term life insurance coverage: This is by far one of the best and also the most sought-after option for a number of policyholders. This is because under this option, there is no requirement to repeat the documentation process nor a risk of rejection while applying for a new plan.

All you need to do is simply buy term insurance with an increasing term coverage option. In this case, the sum assured continues to gradually increase by a predetermined sum every year until the end of the term. This would mean that all your costs can be well taken care of. Besides, the policyholder’s age and health status do not pose restrictions under this cover, unlike in the case of other insurance plans.

Every term insurance policy offers a choice to the policyholder to renew the plan or extend its coverage upon completion of the policy term. However, both these scenarios largely depend on the age of the policyholder and also their state of health at the time of renewal. If either of the two situations aren’t favorable to the insurer, the renewal application may be rejected.

However, with the increasing term insurance coverage option, this does not seem to be the issue. To help you make an informed decision, let’s look at some more benefits of this cover below:

Why Opt to Increase Cover Option In Term Life Insurance Policy?

There are several advantages of this benefit which explains why it is preferred by most policy buyers over other term insurance plans. Here are just some of the benefits of this cover:

• It is one of the best insurance plans in the market to beat the inflation effects. As rising prices hit the common man, this plan would be able to better accommodate the increasing costs for the policyholder and even their family in the former’s absence.
• The premium rate for this cover remains steady throughout the term of the plan. Only if the policyholder wishes to increase the protection coverage of the plan would they need to pay a higher premium in accordance with the changing needs of the buyer.
• It also helps save taxes. People opting for this plan are exempted from tax payment up to a limit of Rs. 1.5 lakhs in a financial year. Moreover, the death benefit provided as part of the plan is also exempt from tax payment as per the Income Tax Act, 1961.