How to Increase your Life Cover at a Nominal Rate?

Life is the second name of growth. It is normal to expect growth in your age, family, income and wealth while you are alive. With this normal growth, an increasing number of other factors like expenses, financial needs and goals also take shape.

Now term insurance cover is to ensure that your family can maintain their lifestyle as you have left it in the case of your early demise. So, the question, ‘shouldn’t your term life insurance keep up with your life?’

The simple reason would be to ensure that your life cover keeps up with the growing demands of life. But, does it really work like that? Or, is there anything else you should be looking for?

Also Read : What is the meaning of Term Insurance

Your financial needs are defined by the following:

a) Monthly survival expenses
b) Lifestyle habits and spends
c) Medical conditions
d) Number of family members
e) Children
f) Annual Income
g) Long-term liabilities

Changes to the above define the change in your financial status, especially income. A long-term income ultimately defines your lifestyle and financial status.

If you consider your life starting with your first paycheque, you only expect the income to grow. At the same time, other factors like family and lifestyle will also grow with time. Another factor that should prompt you to increase your life cover is a long-term loan such as a home loan or education loan.

Thus, to keep up with your growing family and income your term insurance cover should also grow. Ultimately, you should have a life cover large enough to take care of the following for your family:

  - Pay-off the long-term loans

  - Meet their important financial goals, i.e., child’s higher education and marriage

  - Look after their survival and important lifestyle expenses

Usually, a life cover that is 10 to 15 times your annual income is enough to cover all three financial needs for your family.

Calculate your life Insurance cover need.

How to Increase your Term Life Cover?

Since you need a life cover at least 10 times your annual income the easiest solution is term life insurance. You have more than one option to increase your term life cover:

1. Buying a New Term Plan

Although, the most straightforward, buying a new term plan may not always be a great idea. As you may already know term insurance premiums increase with age, every new term plan will have a higher premium rate.

For example, if you buy a term life cover of Rs 1 crore at the age of 30 with a monthly premium of about Rs 600, at 35 the added cover of Rs 1 crore will cost about Rs 750 and so on.

Additionally, you will need additional underwriting and medical check-up every time you buy a new life cover.

2. Term Plan with Life Stage Increment Option

A term plan with a life stage increment option is an improvement over buying a new term insurance every time you hit a milestone in life. Life stage refers to the big changes in life, for example,

a) Marriage
b) Childbirth
c) First home loan

Term insurance plans like iSelect Smart360 Term Plan from Canara HSBC Life Insurance offer the option to increase your cover for these events. That means you don’t have to go through the whole buying process again.

Additionally, you can receive a discount on the premiums as well. You can avail of this benefit on your existing policy with a simple request to your insurer.

Although better than having to buy a new term plan, the life-stage increment option leaves another scenario altogether. Your term insurance cover is supposed to safeguard your family’s future and lifestyle.

Since both present lifestyle and future goals are dependent on your income, the term cover should keep up with your income.

3. Increasing Term Life Cover

Increasing term life cover is another option if you want your life cover to continue growing without effort. Under the increasing term cover option, your life cover keeps growing at a fixed rate every year.

The growing life cover option of iSelect Smart360 Term Plan increases your life cover by 10% of the base cover every year. The increasing cover option is an automated feature. Thus, your premium for the life cover remains the same throughout the policy term.

The policy cover continues to grow until it doubles. For example, if you buy a term life cover of Rs 1 crore with increasing cover benefit, the cover will grow by Rs 10 lakhs every year until it reaches Rs 2 crores.

Click to use : Term Insurance Calculator

Buy iSelect Smart360 Term Plan for Increasing Cover

iSelect Smart360 Term Plan is one of the most versatile life insurance plans with increasing cover benefits. The plan offers two types of incremental life cover options:

• Life stage increment
• Increasing cover at a fixed rate

You would want to choose the second option if you want to continue increasing your life cover without increasing your premiums. Apart from the increasing cover iSelect Smart360 Term Plan offers multiple additional benefits such as regular income pay out and terminal illness cover.

Regular income pay-out is especially useful in keeping the headache of income-generating investments after the claim.

Term life cover is an important part of your financial safety needs, especially when you have dependents. Selecting features such as growing life cover and regular income features help increase the benefits of your term insurance plan.

Increasing covers are a great way to ensure your single term insurance plan remains relevant for your family for a long time.