Life Insurance: When should I increase my life insurance cover? What are the options available?

Life insurance plans come with dual benefits of savings options and insurance coverage. As we progress in life it’s important to review the life insurance coverage amount as it may help to meet certain emergencies.  Our responsibilities increase as we progress in life and many people may need increased income or savings as they grow old. In such situations, while earnings and savings need to be increased it’s important to review the insurance coverage at different stages of life.

An increased insurance coverage will help to ease the financial burden as well as help the family to avoid monetary problems in case of the unfortunate death of the earning member.

Here are a few factors that you should consider to review and increase your life insurance coverage at different phases.

When should you increase life insurance coverage?

1. One of the major stages when investors need to increase their insurance cover is when they get married as it brings a lot of financial responsibilities on the life insured.

2. Besides marriage, one must also expand their life insurance coverage after having kids as it will extend the benefits to the children in the future.

3. In case a person's income has increased along with his financial responsibilities, investing more money in a life insurance plan will help to keep up with maintaining the lifestyle and any financial emergencies in future.

4. You can also increase life insurance coverage to fund the education of your children. As higher education is becoming more expensive these days, investing some money in a life insurance plan can help your children to pursue their education in case of some unforeseen events.  

Options to increase life insurance cover

1. Top up cover: One of the best ways to increase the insurance cover on an existing policy with the top-up option that allows the life insured to enhance coverage amount depending on the needs. This is helpful for young investors who are able to invest in larger plans initially but can later increase the coverage.

2. Add riders: One can always opt to add policy riders to their existing insurance plans as it clearly adds value to the life cover. Some of the popular riders include Accidental Death Benefit Rider, Waiver of Premium Rider and Income Benefit Rider.

3. Buy a new plan: While one can opt to buy a new policy to expand his coverage for future needs, it may not be a reasonable choice. As the premium amount for life insurance plans also increases in accordance with the age of the policy holder you may end up paying more for a lesser insurance amount. At the same time many life insurance plans require medical tests after a certain age limit.