Even the Best Term Insurance Plan Needs Review

Even the Best Term Insurance Plan Needs Review

Term insurance cover is necessary if you have loved ones who depend on you financially. But buying the term insurance policy once and forgetting it is not enough. Even if you have best term insurance policy, your need to review it after every few years.

Financial needs and commitments keep changing with time. As the family grows, you spend more on day-to-day or long term expenses. The cover amount which you bought when you were 25 and single, may not be sufficient when you turn 35 and have a spouse, 2 kids and a home loan. Hence take a look at your existing term insurance policy periodically and make sure that your term insurance cover is enough.

4 Life Events that Warrant Review of Your Term Insurance Cover

When you add new members to your family or upgrade your lifestyle, your expenses increase. Make sure your term cover replaces all these future expenses in case you are no more to bring your monthly salary home.

Top 4 Life Events When You Should Review Your Term Life Insurance Coverage.

[1] Getting married – Your spouse might be financially dependent on you. Increase your term cover amount to include your spouse’s expenses once you get married. This ensures that your spouse remains financially protected in case of an eventuality.

[2] Having a baby – Having a baby is the most special moment in one’s life. It also comes with huge financial responsibility. Raising kids and educating them is getting expensive with time. Once you have a baby, look at your term coverage and try to enhance it if you think it falls short of covering all these future expenses.

[3] Taking a home loan – A home loan is a huge liability. Most likely it is the biggest loan you ever take in your life. You do not want to pass on this liability to your loved ones when you are no more.

When you take a home loan, review your term insurance coverage to include your loan amount in your term insurance cover. Thus your term insurance cover pays off of your outstanding home loan in case you are no more to pay if off yourself.

[4] Getting a pay hike – You recently got a promotion and a decent pay hike. Congratulations! You and your family members now upgrade your lifestyle which matches with your current earnings.

Going back to the older lifestyle is tough. Make sure that even your family does not have to do that when you are not around. Re-evaluate your term insurance cover requirements keeping in mind your current lifestyle and expenses attached to it. If you think that your existing term insurance cover falls short of covering this, buy an extra term insurance policy or upgrade your cover under the same policy, if possible.

Here is one more factor which warrants you to review entire your term insurance policy, not just your cover amount.

[5] Adverse reports about your life insurance company – This is not a life event for you but still calls for a review of your term insurance policy. Are you rearing negative reports about your insurance company? Then dig deeper. Find out what’s not good with your insurer. After all, you bought a term insurance policy to protect your family financially when you are not around. So your life insurer’s capacity to pay the future claims should not be compromised.

If you think that your insurer might not be able to pay huge claims in the future, you need to reconsider your term insurance policy and check out other options available in the market. If you want to know how much term insurance life cover you need at the moment, you can check out our term insurance calculator.

When You Do Not Need to Enhance Your Cover

Even if you just got married or had a baby, you might not need to enhance your term cover if you have enough savings. Your savings and investments can take care of your growing family’s future financial needs.

If you think you have done enough savings and investments, you might not require review of your term life cover in future.

Summary

Review your term life insurance every few years to ensure your coverage keeps pace with life events like marriage, having a baby, or buying a home. Buy another term policy or add extra cover in the existing one to meet growing term cover requirement and protect your loved ones.

Key Takeaways

1. Your life insurance needs keep changing over time and hence you need to review your term insurance cover periodically.
2. Additionally, review your term cover on occurance of important life events such as getting married or having a baby.
3. Buy an extra term insurance cover if you are getting a home loan so that you do not leave behind a huge debt for your family to pay off.
4. If you have built sufficient wealth over time which you think would be enough to take care of your family’s future financial needs, you might not need to enhance your life cover.