Term plans are often included to mitigate financial risks in case of sudden death. Although, this is important, most people overlook the importance of regularly assessing their insurance coverage requirements.
As your situation changes, individuals are advised to revisit their term plans and if considered necessary, they are advised to increase coverage. Here are some circumstances in which you should consider increasing the coverage under your term plan.
Marriage or Childbirth
When you get married or have a child, the number of dependents increases, giving you more responsibilities. You now need to ensure the financial security of more people in case of your sudden demise. This is why you are advised to reassess family requirements and account for changed goals, which have an impact on the coverage under your term insurance policy.
Beneficial in Repaying any Liabilities
Term insurance policies are not only beneficial in offering financial security to your dependents, but can also help in repaying liabilities. In case you suddenly pass away with outstanding loans like home or personal loans, your surviving family members become liable for repayment. If they are unable to repay this outstanding, they may lose secured assets, which can have a severe impact on their wellbeing. With sufficient insurance coverage, the death benefits received can help to repay these loans. For this reason, it is advisable for you to revisit term cover and make necessary changes to account for outstanding liabilities.
Career Change
If you have made a career change, it is imperative to reassess your term coverage. Loss of employment can reduce your cash inflow, which means your family is more vulnerable to financial difficulties in case of your sudden demise. On the other hand, if your income has significantly increased, you may be incurring higher monthly expenses. The insurance coverage you may have availed would become inadequate to meet these higher outflows and reassessing the amount will be beneficial.
Changes in Your Family Situation
Changes in family situation, resulting from circumstances such as an accident resulting in permanent disability or retirement of your parents makes it necessary for you to modify the insurance coverage under your online term plan. Such changes will increase your responsibilities, making it important for you to provide additional financial stability to your family members in case you suddenly pass away.
It may not be easy to assess your insurance coverage, but it is no less important. If you have difficulty making an accurate investment and are unsure of the changes that should be made, seek assistance from a financial adviser.
About HDFC Life
HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.
