Preparing for the future is crucial, and Benjamin Franklin's wise words "By failing to prepare, you are preparing to fail" still hold true today. Unexpected challenges in life can affect our loved ones' financial security. But, with increasing level term insurance, you can prepare for their future needs.
This insurance is designed to protect your family's financial security in case of your unexpected passing.
Increasing cover term insurance
Increasing term insurance is a type of life insurance that provides coverage for a specific period of time, typically 10, 20, or 30 years. The coverage amount increases over time, usually at a predetermined rate, such as 5% or 10% per year. This means that if you pass away during the policy term, your beneficiaries will receive a larger payout than they would have if you had purchased a level-term policy with a fixed coverage amount.
Some fact points about increasing cover term insurance
Note-1
Generally, with increasing term insurance, the coverage amount goes up each year, but the premium you pay stays the same for the entire policy term. When you first get the policy, the insurance company considers the future increase in coverage when calculating the premium, so you don't have to pay more later on. Usually, the premium is higher in the beginning, to make up for the lower premium later when the coverage amount is higher.
Note-2
In some types of increasing term insurance, the amount of coverage goes up each year, but there's a limit to how much it can go up. Once the coverage reaches the maximum limit, it stays the same for the rest of the policy term.
Note-3
Increasing term cover plans in the market often come with some popular riders/addons. Riders in term insurance are additional features that expand the coverage of an insurance policy. By paying a little extra premium, you can choose riders that suit your needs. Some common riders that come with the most increasing term plans are
Accidental death and disability benefit rider, which pays an extra sum assured in case of accidental death or disability during the policy term.
Critical Illness Rider, which pays an additional sum assured if the insured person is diagnosed with a critical illness during the policy term.
Waiver of premium rider, which waives future premiums if the insured person suffers accidental death or disability.
Pros and Cons of this insurance
Pros
1. Shield against inflation
Money loses its value over time, which means that a 30-year term life insurance policy that covers you for 1 crore today may not be worth as much in the future. But with an increasing term policy, the death benefit increases over time, which helps to offset the effects of inflation and keeps the coverage amount valuable.
2. Keep up with rising Financial Requirements
When you're single, you usually don't have many responsibilities. But when you get married and start a family, your responsibilities increase a lot. You have to think about your kids, paying off your loans, building assets, and planning for your retirement. As your financial needs grow, your coverage amount should also increase. That's where an increasing term life insurance plan comes in handy.
3. Flexibility:
With an increasing level of term insurance, you can increase your coverage amount over time without having to buy a new policy or go through a medical check-up again. This is handy when your financial responsibilities increase over time, such as when you have kids or take out a mortgage. You can easily adapt your coverage to match your changing needs without any hassle.
Cons
1. Higher premiums:
Increasing-level term insurance can have lower premiums than a traditional permanent term policy with the same total coverage amount. However, the premiums for an increasing-level term policy may be higher than a policy with a fixed coverage amount for a fixed term
2. Limited coverage increases
The insurance company may limit how much your coverage increases over time. So, your coverage may not increase as much as you need to match your growing financial responsibilities. It's important to check the policy terms to make sure the coverage increase meets your needs.
Who should opt for increasing cover term insurance?
Starting a rising term insurance plan when you are young is advantageous. As you grow older and take on more responsibilities, your insurance coverage increases accordingly. Moreover, if you want a life insurance policy that can guard against inflation, then a rising term insurance plan is just what you need.
Conclusion
In conclusion, increasing level term insurance is a smart and effective way to protect your loved ones and secure your future. With its flexible coverage and affordable premiums, it offers peace of mind that your family will be taken care of in the event of an unexpected tragedy.