Even the Best Term Insurance Plan Needs Review

Why Review Your Term Insurance Cover?

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 can leave much to be desired. Financial needs and commitments keep changing with time. As the family grows, more money is required for 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 you need to review if your term cover is enough every few years.

5 Life Events that Warrant Review of Term Insurance Cover

To be adequately insured all the time, you need to review your term insurance policy periodically.

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

[1] Getting married – Your spouse might be financially dependent on you. Increase your term cover amount to include your spouse’s expenses. In case of an eventuality, this would ensure that your spouse remains financially protected. [2] Having a baby – Having a baby is the most special moment in one’s life but also comes with huge financial responsibility. Raising kids and educating them is getting expensive over time. Once you have a baby, you should look at your 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 being the biggest loan you ever take in your life. And you do not want to leave this liability to your loved ones when you are no more. So whenever you take a home loan, review your term insurance coverage to include this amount so that it is taken care of in case you are no more to pay if off. [4] Getting a pay-hike – You recently got a promotion and now you are earning more. You and your family members upgrade your lifestyle which matches with your current earnings. Going back to the older lifestyle can be very tough. So you need to make sure that 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 regular expenses attached to it. If the need arises, buy an extra term insurance policy or upgrade your cover under the same policy, if possible. Adverse reports about your 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 can reconsider your 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 to cover your growing family’s future financial needs. So if you think you have done enough savings and investments, you might not require review of your term life cover in future. Your savings and investments will take care of your family’s future financial needs.

Key Takeaways

Your life insurance needs keep changing over time and hence you need to review your term insurance cover periodically. Additionally, review your term cover on occurance of important life events such as getting married or having a baby. 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. 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.