With increasing age, come more responsibilities. Before you realize, new responsibilities knock at your door. But, are you ready for them? When was the last time something big happened in your life? Maybe you got your first job or a promotion or maybe you got married. Each time you advance in life, you are expected to prepare for a bigger role.
To assume bigger roles and responsibilities, you must be financially fit. Yes, we are speaking house, children’s education, marriage, and retirement. All these are important life events. You might not be able to afford certain assets and will be forced to avail loans. But, do you have sufficient insurance as responsibility increases?
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Yes, we are speaking on increasing your insurance coverage. You might have availed a term insurance plan long back, maybe in your initial working days. Then you got married and now you have bought a home. After so many developments, your term insurance coverage is surely inadequate.
Term insurance plans ensure your family’s financial protection in your absence. These plans give you confidence and peace of mind. But, would you like to be under-insured and partially protect your family? It’s important to revisit your term life insurance coverage level each time you enter a new phase in life. Following are the common life phases at which it is important to increase the term life insurance plan coverage:
Yes, your first job brings great responsibilities. You start earning and looking after your own expenses. Even though you don’t have a family dependent on your income, you will have it in the near future. Therefore, it is necessary to buy a term insurance plan. As it is your first job, you might not be earning a fat-salary. But make sure you don’t buy a term insurance plan with a low sum assured.
Term insurance is a way by which you can transfer wealth to your family members at a young age, on an unexpected demise. Therefore, consider inflation, the purchasing power of money and how much you’d like to leave behind for your family while deciding on the sum assured of a term insurance plan.
Yes, this should call for the first revision in the sum assured of your term life insurance plan. Wedding means you are no longer alone. Your spouse is your responsibility too. Marriage calls for lifestyle changes which demand more financial obligations. Hence, term insurance is more important now than ever before. Whether or not your spouse is financially dependent, a term insurance plan with an adequate sum assured is necessary.
Yesterday, you were a kid. Today you are a parent. This is an even greater responsibility. Now, your family is entirely dependent on your income if you are the sole breadwinner. Raising a kid is very costly. You’ll have to consider child education planning as well. You’ll also have to save for their wedding expenses. But what happens if you haven’t revised the insurance coverage and something were to happen to you? Death benefits would be inadequate and your spouse and children would have to compromise on the standard of living. Therefore, it is time you boosted your term insurance cover.
If you change to a risky job or get a salary hike, it is again time to increase your term coverage. With increased income, the standard of living increases. Your family will get used to a higher quality of living. Therefore, it is time to revise the term insurance plan.
If you avail a home loan, it is a must to revise your term plan. Why? God forbid if something were to happen to you, who will repay the home loan? The burden of repayment will fall on your family. In such cases, a term insurance should be able to cover the home loan amount and also provide for living expenses.
It is well known that money has future value. Simply put, today’s Rs 100 will not serve any purpose after 15 years. So, there is no way that your term insurance is adequate. Inflation is soaring. Even if you assume a minimum 5% inflation, costs will be high. Therefore, to cover increasing expenses due to inflation, it is important to revise the sum assured or cover on your term insurance plan. Ideally, you should be increasing your term insurance coverage every 5 years.
Responsibilities increase with age. Take measured steps and make wise decisions. Do not neglect to increase the coverage of your term insurance plan.
Be Wise, Get Rich.
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