7-reasons-why-you-might-need-another-life-insurance-cover

Reasons You Might Need Another Life Insurance Cover

Life insurance isn’t a one-time decision. This guide walks you through six major life events when upgrading your life cover becomes essential.

Written by : Knowledge Center Team

2025-11-08

987 Views

7 minutes read

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One of the most common reasons people invest in term insurance policies is to save tax. But that’s not why you should buy another life insurance every few years. Life insurance is an essential investment that means you need to have adequate life insurance at the minimum possible cost.

Key Takeaways

  • Life insurance must evolve with major life changes, like income hikes, loans, or family expansion.

  • Calculate your life cover using a simple formula: 10–15× your annual income minus your existing cover.

  • Modern term plans offer income payouts, legacy creation, and child-specific benefits.

  • Don’t cancel your old policy unless it’s expiring; combine old and new plans for smarter coverage.

  • Consider adding disability and critical illness riders for better protection.

Your Income Has Grown Significantly

Income growth is one of the most frequent phenomena that directly impacts your life cover need. However, this does not necessarily mean you need to buy a new life insurance plan at every appraisal.

But when your income has grown enough to change your lifestyle and household budget, it’s time to look for additional life insurance. Here’s how you can estimate your additional life cover need in simple steps:

Step 1: Calculate your total life cover requirement as 10 to 15 times your current annual take-home income.

Step 2: Subtract your existing life cover from this amount.

The difference is the additional sum assured you should consider for your new term insurance plan.

A sample estimate: Assuming your annual take-home income is ₹15 lakhs now, and your existing term cover is ₹1 crore. Your total life cover need is at least ₹ 1.5 crores (10 x 15 lakhs). Since you already have a life cover of ₹1 crore, you can get an additional ₹50 lakh term cover to match your need.

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You Want to Leave a Legacy 

Nowadays, you can invest in term plans not just to safeguard your family, but also to pass on an estate to your children. All you need to do is get a term cover till the age of 99. Despite growing life expectancy in the country, average life expectancy is likely to remain below 99 in the next 50 years.

Meaning, your 99-year term plan is most likely to receive a death claim, even when your death is completely natural, thereby providing your nominee children or grandchildren with a ready-to-use estate.

Coming from a life insurance company as a death claim, this money will be tax-free in the hands of your nominees. That’s not all; you can even set up a trust to invest the proceeds safely and then distribute the income to your beneficiaries.

This is one of the best ways to leave a positive mark on the world and fund charitable work even after you are no longer in this world.

Ensure a Secure Income for Your Family

Regular income is an important feature to simplify the life of your dependents after your untimely demise. Most traditional life insurance plans and older term insurance plans offer only a lump-sum payout. Whereas, your family will need a monthly income to run the household smoothly.

In the absence of a monthly income, the family will have to buy an annuity from the life insurer using the lump-sum money received from the insurer. The effort is completely unnecessary and poses risks of incorrect allocation or even investment.

However, they don’t have to worry about this step if they can receive a safe and regular monthly income as part of a life insurance claim settlement. The only challenge is that your older life and term insurance policies are unlikely to have this option.

Since you cannot switch to this option after purchase, you need to add a new policy with a regular income payout benefit. The iSelect Smart360 Term Plan by Canara HSBC Life Insurance offers the option to pay 100% of the death benefit as regular income. Additionally, the family can receive income for up to 40 years after the claim is made.

who needs life insurance

You are Taking a Loan

If you are taking a significant loan for building an asset or business, you must add more life cover to your contingency plan. You don’t want liability to pass on to your dependents due to a mishap.

Additionally, increasing only life cover is not a sufficient proposition. Life cover will only come into the frame once you have met your ultimate fate. But you will need to take care of the liability even if you cannot earn due to a life-threatening illness or disability.

So, consider adding some accidental disability and the critical cover as well. You can get both as added benefits to your new term life cover.

You Want to Secure Your Child’s Financial Goals

As parents, you are already investing in your child’s future goals financially and otherwise. But unless you are investing in a child plan from a life insurer, you should add a separate life cover to secure this goal.

Child plans have an inbuilt feature that, once you set the goal to a specific amount, the plan will pay that much money to your child. If you could complete your investment tenure and accumulate sufficient money, great!

However, just in case investments in the child’s goal are halted due to an unfortunate development, the goal remains unaffected.

Your Family Has Grown

If you have bought life insurance at the start of married life, or earlier, you should consider increasing the life cover once you welcome a child into theworld. Few modern online term insurance plans allow you to increase your term cover without buying a new plan.

But unless you have such a term plan in place, you should consider buying a new one.

Should You Replace the Old Term Insurance Plan?

You should note that it’s never a good idea to replace your old term cover with a new one. The reason behind this thumb rule is that even if your old plan had fewer features, it is going to have a lower premium and higher chances of quick claim settlement.

Thus, unless your old term plan is expiring soon, you should continue the plan instead of getting a replacement term cover. But yes, do keep your life cover up to date. There is nothing more important than ensuring a safe financial future for your family.

Conclusion

Life insurance is a long-term commitment that must grow with you. As your income rises, your lifestyle improves, your family grows, and responsibilities multiply, your existing life cover may no longer be enough. That’s why reviewing and upgrading your life insurance at every key milestone is crucial to protect your loved ones from future uncertainties.

Instead of replacing older policies, consider supplementing them with flexible, feature-rich plans that reflect your current financial goals. Modern term plans, like the iSelect Smart360 Term Plan from Canara HSBC Life Insurance, are designed to adapt to your evolving needs. Whether you want to secure your child’s education, ensure a steady monthly income for your family, or leave behind a lasting legacy, these plans offer the right blend of customisation, protection, and peace of mind.

Remember, the best time to reassess your coverage is now, before life surprises you. By staying financially prepared and insured at every stage of life, you're empowering the future of your family.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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Life Insurance - Top Selling Plans

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