Life insurance is wonderful because it plays a vital role in providing contingencies in one’s life. We often buy life insurance plans for two reasons – premature death when leaving a dependent family and retiring without an adequate financial corpus. Analysing the risks and determining the available ways to mitigate them will help you in your financial planning. It is important to think about your family’s life if they lose their normal monthly income. Before buying life insurance, ask yourself: How long and how often would your family need financial assistance in your absence?
Term insurance plans are a financial means of ensuring the safety of your loved ones.To purchase the best term plan, you must take into account many factors, such as monthly income, expenses, liabilities, and financial goals. And when choosing a term plan, you need to choose the optimal level of sum assured to suit your needs. Failing to do so means that inflation could ruin all your financial plans for the future, even if you have term insurance. Here is how an increasing term insurance plan tackles inflation.
What is anincreasingterm insurance plan?
Increasing term insurance plan is a policy in which the sum assured selected at the time of purchase of the plan increases to a certain amount for each passing year. This feature is designed to take inflation into account. As we grow older, our responsibilities also increase. As income, expenses, and liabilities increase over time, the cover you choose when you start the plan may not be enough for your family at the time of claim. You need to buy a term insurance plan that offers features that you can take advantage of. An increasing term insurance plan can serve as that option.
How can increasing the guarantee amount in a term plan help you?
The feature that increases the sum assured allows you to grow your term insurance coverageat regular intervals of time. This will help you stay up with the rising living expenses of your loved ones. Here are the benefits of having an increasing term insurance plan:
- Tackles inflation
Inflation is the frequency at which the cost of goods and services go up over a specific period of time. The rate of inflation will continue to rise; therefore, it is necessary to take it into account when buying any financial instrument. Simply put, if you opt for an increasing amount of insurance in a term plan, you can easily manage the additional costs without any hassle. It is essentially growing the amount of money you would have to the level of inflation that would exist at the time of claim.
- Adapts to the changing stages of life
Did you buy a term insurance cover when you were a bachelor? And now that you are married, how do you plan to protect your partner’s financial goals? With an increasing term insurance plan, you can add your spouse to the same policy. As a result of changing life stages, your needs and requirements also change. Therefore, an increasingsum assured term plan will help you stay on track to manage your finances.
- Affordable premium
Even if you opt for the increasing sum assured option in the term plan, the premium will be lowand more affordable than other types of life insurance. The premium is fixed and does not create a hole in your pocket. Moreover, even if you choose to increase the sum assured frequently during the policy term, the premium amount will not increase.
If you are a young working professional and you feel that you do not need to increase your guarantee amount now, you can do it even later. You do not have to complete the entire documentation process to increase the guarantee amount of your current term plan. Take the help of a term plan premium calculator and buy an increasingterm life insurance plan today to be ready for every turn in life.