Term life insurance is a must for every household, particularly if life’s uncertainties are taken into account. Why does it matter? Suppose something unfortunate befalls you at a juncture when your family is financially dependent on you. In such tragic circumstances, not only will they be shattered due to losing you, but they will also have to grapple with mounting financial difficulties as a result of the calamity in question. Would you want something like this to occur? Obviously not.
Hence, getting the right term plan is essential not only for your mental peace (knowing that your family will be financially secure in your absence) but also to ensure that your family members do not have to depend on anyone in such situations. They can meet their future life goals and objectives without having to eliminate them or compromise with them in any manner.
Many people also worry that their family members will be able to maintain the same lifestyle even in their absence. Term life insurance plans will ensure this, along with helping your children reach their higher education goals and stay financially independent even when you are not around. Now, coming to your policy, if you have one already, then reviewing and updating it is a must at periodic stages of life. Here’s why.
Re-examine and Update Your Policy Periodically
Your term life insurance should not be fully static. It should keep evolving with you, and you should periodically review and update it to ensure that your coverage needs are met in the best possible manner. Let us take an example to help you understand the reason for regular reviews and updates.
Rajesh is a 25-year-old who has just started a job and purchased a term insurance plan. He does not have any financial dependents but has taken the policy to provide a safety net for his parents (who are the nominees). He opts for a coverage amount of Rs. 25 lakh at a comparatively lower premium amount every month.
Rajesh does well in his job and is promoted to a managerial position. He has also found his dream partner and got married. He has also purchased a home with a loan and is now 32 years of age. He decides to review his policy and finds that the coverage amount is not sufficient for his growing family and liabilities in case something happens to him within the policy period. Thus, he purchases a new policy with a higher coverage amount of Rs. 75 lakh, accounting for his home loan and other future financial needs. He also adds his wife as a policy nominee.
Rajesh and his wife have a little child when he is 36 years old. He is still paying his home loan and is now looking to invest in his child’s higher education and his own retirement. He appoints a legal guardian for his child, as minors cannot directly claim benefits, and also purchases another policy to increase his total coverage to Rs. 2 crore. This additional coverage helps cover his remaining debts, future education requirements, and other financial needs.
Conclusion
These examples illustrate the need to regularly update and review term life insurance to stay in sync with one’s evolving requirements. Don’t keep the term plan unchanged; rather, dynamically adjust it to match your needs. Be mindful that increasing your coverage will come with a rise in premiums, and policy flexibility may vary by insurer, so it’s essential to check your policy terms before making changes.
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