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A term insurance plan acts as financial security for your family in the unfortunate event that you are no longer able to provide for them. However, if you bought a policy early in life and are now saddled with additional responsibilities, you might be thinking of upgrading your existing cover.
Some of these life events may include becoming a parent, taking care of your aged parents, paying EMIs on a home loan among others. If you are thinking of surrendering your existing plan, it might not be a good idea. Read on to know how to go about getting adequate insurance.
Do the math
Did you know that when you surrender your current policy you lose out on the scheme benefits and also end up getting a lower cash value than the sum of all the premiums paid by you so far? Also, consider that you would have to pay a higher premium for the new term plan with advancing age. So what should you do?
Let us suppose you have an existing term insurance plan of Rs. 50 lakh that you bought 15 years ago. You wish to increase the coverage to Rs.1 crore. Use the term insurance calculator to compare the premium of purchasing a new cover of Rs 1 crore altogether and upgrading your existing plan by Rs. 50 lakhs to get the coverage that you want. Your current age, lifestyle, policy duration, frequency of premium payments and coverage amount are some of the factors that the term insurance calculator uses to decide the final premium payable.
Once the premium computation is done, analyze whether a new term plan of Rs. 1 crore costs you more than purchasing an extra coverage of Rs. 50 lakhs with your current insurance company. If the answer is yes, continue with your existing term insurance plan and purchase an additional cover of Rs. 50 lakhs for your increasing liabilities.
Points to note
Furnish correct information: Remember to specify all the details of you and your family members to minimize chances of claim rejection in the future. Incorrect information submitted by you can rob your family of financial assistance in pressing times.
Choosing policy duration: The tenure of your term insurance plan extends only till the time you plan to retire since income replacement is the main purpose of life insurance. So if you are 40 years of age and are upgrading your term cover to Rs.1 crore, opt for additional coverage of Rs. 50 lakhs for the next 20 to 25 years to compute your premium using the term insurance calculator. This is because 60 to 65 years is the ideal age of retirement for most salaried individuals.
Conclusion
Now that your dilemma is solved, it is time to choose the right insurance provider to buy a policy from. You can choose from term insurance plans available on Finserv MARKETS that offer pocket-friendly premiums with optimum coverage. A high claim settlement ratio ensures that your family won’t have to wait to be financially empowered once a claim is filed.
Not only this, there are several additional coverage options to enhance your cover even further. So, personalize your term policy and give your loved ones the gift of financial independence today!
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