How to Get Higher Term Cover than Your Eligible Amount ?

Assessing Your Requirements

How much term insurance cover is enough for you?
Answering this question in a moment may not be easy. But you can start this way.

What do you want your term insurance policy to do in your absence?
Protect your family financially by taking care of all your loved ones’ financial needs till they become independent. 

So the financial needs of your family can be a good starting point. Check out how much you spend every month so that your family lives comfortably and all their needs are taken care of. This is the minimum amount your family needs to have every month, of course adjusted for inflation in the longer term, even if you are not there to bring your monthly income home. Based on each month’s expense in the future, you need to find out how much you need to have today. This is called Expense Replacement Method.

This is not an easy task. But don’t worry. We have made it easy for you.
Just provide us a few details and our term insurance calculator will give you your recommended term insurance cover amount. 

Check out our Term Insurance Calculator 

Checking the Eligibility

The term insurance cover which you can get from any life insurance company is not only driven by your needs, but also by your eligibility.
And your eligibility for term insurance cover is directly linked to your annual income. 

Most companies offer a maximum cover amount of 30X to 35X of annual income for a young person of 25 or 30 years of age. If you are around 40 years old, you might be just eligible for 20X of your annual income. So if your term cover requirement depending on your monthly expenditure is Rs. 2 Crore and the amount of term cover you are eligible for based on your annual income comes out to be just Rs. 1 Crore, you will most likely be offered a term cover of just Rs. 1 Crore. 

In such a situation, how can you possibly unlock a higher cover? Let’s check out.

Increasing Term Cover Option

Most life insurance companies offer increasing cover options where your term cover under your existing policy increases with time. This increase can happen either at regular intervals such as every 5 years or it can happen on the occurrence of a special life event such as having a baby. 

For example, suppose a plan offers a 25% increase in term cover amount every 5 years up to a maximum of 100% of the initial cover amount.
If you start with a term cover of Rs. 1 Crore, your cover amount will increase by Rs. 25 Lakh every 5 years till it doubles.
So after 5 years, your cover will be Rs. 1.25 Crore.
After 10 years, your cover will be Rs. 1.5 Crore.
After 15 years, your term cover will increase to Rs. 1.75 Crore.
And at the end of 20 years, your term cover amount will reach to Rs. 2 Crore.

Of course, your cover will grow slowly over time. But this increasing term cover is a good option to consider if you face eligibility issues based on your current annual income. 

Adding Riders

Another great option to have extra coverage is to add riders along with your term cover.

Accidental Death Benefit: Accidental death benefit rider provides extra benefit in case of accidental deaths. If you take a term cover of Rs. 1 Crore, you can add an accidental death benefit rider cover of Rs. 1 Crore. In case you pass on due to an unfortunate event of an accident, your family receives the accidental death benefit amount of Rs. 1 Crore along with the regular death benefit amount of Rs. 1 Crore. So the total amount received by your family in such a case is Rs. 2 Crore. 

Building Your Corpus

Suppose you are not eligible to get a term cover due to any other reason such as your medical history or risky profession. What would you do?
You cannot leave your family without any financial cushion, especially when you are the only breadwinner in the family. 

A great way to provide a financial cushion is to start saving early and building a corpus for you and your family to rely on in future. Save a portion of your income every month and invest according to your needs and risk taking ability. When invested regularly, this amount will grow into a decent corpus over time.

Though this amount may not be as big as term insurance policy could provide, this would definitely act as support. And if you think you have accumulated enough money to take care of your family in case of any eventuality, here is the good news. You don’t need a term insurance cover at all. 

Key Takeaways

1. Want to buy a term life insurance policy? First thing you need to do is assess your term cover requirement. And now you can do this by using our term insurance calculator.
2. Life insurance companies usually provide term cover based on annual income and other eligibility criteria. So there is a possibility that you might not be eligible for the amount of cover you are looking for based on your assessment.
3. In such a situation, you can use features like increasing term cover option or rider cover such as accidental death benefit rider to enhance your term coverage.