Life is brimming with unexpected twists, both delightful and less so. The future remains uncertain, but you can always take steps to get ready for it. Investing in a term insurance plan is a means to safeguard your family’s financial prospects.
Term insurance is a perfect example of a pure life insurance plan. It offers coverage for a fixed number of years – the “term” of the policy. If you die during the policy term, your nominee will receive the sum assured as regular income or lump sum, depending on your payout option. Term insurance is one of the most affordable and effective ways to shield your loved ones from unforeseen events.
But buying a term insurance plan is not enough. You also need to review and update it from time to time, especially when you go through some major changes in your life. Here are five crucial life events when you should revisit your term insurance cover and make necessary adjustments.
1. Getting Married
Marriage is a beautiful and significant milestone in your life. It also entails more responsibilities and financial commitments. You need to consider the needs and goals of your spouse and plan for them accordingly. If you already have a term insurance plan, you may need to increase your cover amount to remain assured that your spouse can maintain the same standard of living, in case of your untimely demise. You may also need to change your nominee from your parents to your spouse or add your spouse as a co-nominee.
What to Consider:
- Consider the needs and goals of your spouse.
- Consider shared financial obligations, such as mortgages and joint loans.
2. Having Children
The arrival of a child is another joyous and life-changing event in your life. It also adds to your expenses and responsibilities. You need to provide for your child’s education, health, marriage, and other aspirations. If you have a term insurance plan, you may need to increase your cover amount to secure your child’s future in case something happens to you. You may also need to add your child as a co-nominee along with your spouse.
What to Consider:
- Estimate the cost of raising your child, including education expenses.
- Factor in their wedding expenses well in advance.
3. Buying a Home
Buying a home is one of the biggest and most important investments in your life. It also comes with a huge financial liability in the form of a home loan. If you have a term insurance plan, you may need to increase the coverage to consider the outstanding loan amount in case of your death. This will ensure that your family does not have to bear the burden of repaying the loan, and can continue to live in the home without any worries.
What to Consider:
- Calculate the outstanding mortgage amount and your home’s current value.
- Consider the financial needs of your family to maintain the home.
4. Changing Jobs or Starting a Business
Your career is an integral part of your life and income. If you change jobs or start a business, you may experience a change in your income level, lifestyle, and goals. If you have a term insurance plan, you may need to increase or decrease your cover amount depending on your new income and expenses. You may also need to update your policy details, such as employer name and occupation, along with other information.
What to Consider:
- Calculate your current income, including bonuses and benefits.
- Review your financial goals, such as retirement planning or investments.
- Adjust your term insurance coverage to accommodate your increased income and financial ambitions.
5. Significant Debt Reduction
Successfully paying down significant debts, such as student loans, credit card debt, or personal loans, is commendable. It lightens your financial burden and improves your overall financial health. However, as your debt decreases, your insurance needs may change.
With fewer financial obligations, you may not require as much coverage as you did when you had substantial debts. Review your term insurance policy to align it with your current financial situation and consider the appropriate amount of coverage while maintaining adequate protection for your loved ones.
What to Consider:
- Select a term that aligns with your debt repayment timeline.
- Consider adding critical illness or disability riders for extra protection.
- Consider term insurance tax benefit.
Conclusion
These are some of the crucial life events when you should revisit your term insurance cover and make necessary changes. By doing so, you can ensure that your term insurance plan remains relevant and adequate for your changing needs and goals.
If you are looking for a term insurance plan that offers flexibility, affordability, and reliability, you can check out some of the best term insurance plans in India. These plans offer various features and benefits such as high sum assured, low premium rates, multiple payout options, riders such as the return of premium option, critical illness cover, accidental death benefit, etc.