You hear from many people that it is important to buy term insurance or any other form of life insurance. And as a wise person, you may have already bought it. However, when it comes to term insurance, have you considered what is your exact reason for purchasing it? The main reason to buy a term insurance plan is that your family will be financially secure in the event of your untimely death. This means having enough money to cover all expenses and responsibilities in the future. For this, the amount of your insurance will be sufficient by the time your family has to make the claim.
Imagine that you want to send your child to study abroad in 10 years. If you unfortunately die today, will your current sum assured be sufficient for his education after 10 years? This may not be the case due to inflation. This applies to your spouse’s future medical expenses, the purchase of a new home, and many other expenses. Now, if inflation destroys your plan to leave your family with enough money, there is no way out. Unless you find a way to increase your cover amount later. But how can you do that after you buy the policy? Here are two ways:
- Buy another policy
The coverage provided by the policy may not be sufficient to meet your family’s needs after a few years. In this case, you can purchase another term insurance policy to improve your existing plan. That means you have two policies, and in turn, a higher amount of death benefit. Your family can make a claim on both of these policies in the event of your death. And depending on the coverage you choose for the other policy, you may have twice as much coverage for your family.
- Get increasing cover term insurance
You can always choose to buy another policy, but getting the additional policy may not be as easy as you think. First, you must complete the process of buying a policy all over again. Depending on your insurance provider, this can mean tedious documentation and countless other hassles. Also, as with the previous policy, you will have to undergo some medical examination for the new policy. Depending on your age and health at that time, the coverage offered, and the requested premium will be very different. In such a situation, you will not be able to get the right coverage, or you will be rejected outright.
Instead of complicating things for yourself by getting another policy, you can always go for an increasing term insurance policy. This type of term coverage is the perfect example to show anyone that asks you ‘what is term plan?’ or ‘why is term insurance better?’. Ultimately, term insurance is designed to provide a substantial sum for your family at the time of your death. The money required for financial security now is very different from the money that will be required after years from now. Therefore, an increasing cover term insurance plan will allow you to increase the guaranteed amount each year. You do not need to show any new documents or follow any process for this update. There is an upper limit to how much sum assured can be increased. Meanwhile, the premium that you start with upon purchasing the plan will be the premium you pay until the policy expires.
Although the premium for an increasing cover term policy is slightly higher than the normal term plan, it remains the same throughout the policy term. Since term insurance is considered to be the cheapest option for life coverage, a slight increase in the premium should not give you much trouble. Know the premium using a term insurance plan calculator.