Adjust Term Insurance Coverage - When & How to Update Your Policy?

Written by : Knowledge Center Team

2025-07-11

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Term insurance is a proven financial asset that safeguards us and our loved ones in times of need by offering coverage benefits and tax exemptions. However, during life transitions, like marriage, having kids, or bigger financial decisions like taking loans, it is essential to update your term insurance policy accordingly.

These milestones often bring new responsibilities and financial obligations, making it crucial to reassess your coverage. For instance, a growing family necessitates increased protection, while a larger loan might require a higher sum assured to ensure your dependents are financially secure. Proactively adjusting your policy ensures it remains aligned with your evolving needs, providing continuous peace of mind and protection. Let’s understand the impact of increasing and decreasing coverage and help you secure one of the best term insurance plans in India.

Key Takeaways

Increasing coverage is crucial during life milestones like marriage, children, or a home loan.
Decreasing coverage makes sense when liabilities reduce or dependents become financially independent.
Flexible options from Canara HSBC Life Insurance allow policy adjustments.
Riders and add-ons can enhance or modify coverage as needed.
Using a term insurance plan calculator helps in making informed decisions.

Can You Increase or Decrease Your Term Insurance Coverage?

Yes, many policyholders reconsider their coverage after purchasing a policy. Whether you need to enhance protection for your growing family or reduce it post-retirement, a term plan can be altered accordingly. At Canara HSBC Life Insurance, we offer term plans that align with your evolving financial journey.

When Should You Increase Term Insurance Coverage?

If your responsibilities grow, increasing your coverage ensures your family remains financially secure. Consider an increase if:

You get married or have children
You take on a significant financial liability, such as a home loan
Your income increases, requiring enhanced lifestyle protection
You start planning for long-term family goals like children’s education
You are the primary breadwinner and need to ensure your family’s financial well-being
You start a new business or take on a major financial commitment

Here’s a quick way to increase your coverage:

Buying a New Term Plan: If your current policy doesn’t allow enhancements, you can purchase an additional plan.
Opting for a Life-stage Benefit: Some plans allow automatic increases at key milestones like marriage or childbirth.
Rider Add-ons: Adding riders such as accidental death or critical illness cover can strengthen your policy’s protection.
Using the Term Insurance Plan Calculator: This helps you assess how much additional coverage you need based on your financial situation.

When Should You Decrease Your Term Plan Coverage?

If your financial obligations reduce over time, you may not need extensive coverage. The best term insurance plan would be the one with a lower sum assured. Here are a couple of situations when you should consider decreasing your

Your children become financially independent
Your liabilities (home/car loans) are significantly reduced or paid off
You accumulate sufficient savings or investments for your family’s future
Your spouse has an independent income, reducing the financial dependency on you
You are approaching retirement and do not need a high sum assured

Following are some of the ways to decrease your insurance coverage:

Convert Policies: Some plans allow downgrading to a lower coverage.
Choose a Decreasing Term Plan: These are designed to reduce the coverage amount over time, aligning with decreasing liabilities.
Discontinue Additional Riders: If you have added riders, removing them can adjust your premium accordingly.
Adjust Policy Tenure: If your financial responsibilities have changed, you may shorten your policy duration.

Did You Know?

The number of Indians with term insurance is low, ranging from 60 to 70 lakhs, and a majority of those policies do not provide sufficient coverage.

Source: The Hindu

Factors to Consider Before Adjusting Your Insurance Coverage

Investing in an insurance plan is all about financial protection and peace of mind. Now, when your requirements change, and you wish to adjust them, there are several things to consider before reassessing your insurance coverage.

Before making changes to your term insurance plan, consider these essential factors:

Current Financial Responsibilities: Ensure your coverage aligns with your ongoing liabilities.
Future Financial Goals: Assess whether you need increased coverage to secure long-term goals like your child’s education.
Health and Age: Adjusting coverage later in life may require medical evaluations.
Policy Terms and Conditions: Check if your existing policy allows coverage modifications.
Affordability: Use the term insurance calculator to determine if a change in coverage fits your budget.

Calculate Term Insurance Premium

A term insurance calculator is a useful online tool that helps you determine how much coverage you need based on your income, lifestyle, and family’s needs.

My Income

My current Cover

Additional Details

Our Recommendation

My Income

My current Cover

Additional Details

Our Recommendation

I am {age} years old,

My Monthly income is {amount}

Additionally, I hold existing Insurance Cover of Rs {insurenceamount}

and loan amounting to Rs{amount}

My name is {name}

my mobile number is {contact}

50 Lakh

12.5 Lakh

75 Lakh

Zero

1 Crore

Where do you stand

Additional Life Cover

Hi {name}

To secure your family’s financial future and protect their dreams, you’ll need an additional cover of

rs 10,000

Note: This is a very brief calculation of HLV

Secure Now

Recalculate

Desclaimer-

The above calculation and illustration of figures are indicative only and not on actual basis.

Why Choose Us for Your Term Insurance Needs?

The Indian insurance market has 28 IRDAI (Insurance Regulation and Development Authority of India) certified companies that offer various policies. We at Canara HSBC Life Insurance are known for:

Tailored Flexibility: Our term insurance plans adapt to your life’s changes.
Easy Online Management: You can explore and even buy your insurance plan from our official website.
Reliable Financial Calculators: Use our term insurance plan calculator to assess your coverage needs.
Comprehensive Rider Options: Enhance your plan for added security with rider benefits like critical illness, waiver of premium, etc.
Claim Settlement Ratio (CSR): At Canara HSBC Life Insurance, we offer long-term financial protection you can rely on. Our CSR is a testament to our commitment to serve you.

Glossary

Term Insurance: A life insurance policy offering coverage for a specific term at an affordable premium.
Rider: An additional benefit added to the base policy for enhanced protection.
Sum Assured: The guaranteed amount paid to the nominee in case of policyholder’s demise.
Life-Stage Benefit: An option to increase coverage at key life events.
Decreasing Term Plan: A policy where coverage reduces over time, aligning with declining financial liabilities.

FAQs

Yes, with Canara HSBC Life Insurance, you can increase your coverage through additional plans, riders, or life-stage benefits.

You can opt for a decreasing term plan or reduce riders to align with your changing financial responsibilities.

Yes, higher coverage results in higher premiums, but you can estimate costs using our term insurance plan calculator.

Yes, by choosing a lower sum assured, removing optional riders, or switching to a decreasing term insurance plan.

In most cases, yes. Canara HSBC Life Insurance may require a medical evaluation to reassess your eligibility for higher coverage.

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.