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    FAMILY PROTECTION

    Term Insurance: How Big Should Your Cover Be?

    Last Updated On 16-09-2020

    The uncertainties of life spare no one, whether you are a high-earning individual or belong to a middle-income group. However, the insurance coverage can at least reduce the financial burden that that befall your loved ones after such unwanted eventualities. But there is one thing that needs to be considered so that you are perfectly protected under your term insurance - the size of your cover. No matter how good your insurance policy is or how credible your insurance provider, the incorrect estimation in relation to your cover can defeat the whole purpose of purchasing insurance. Nevertheless, there are some factors that will help you decide on your term life insurance coverage size.

    Current Annual Income
    Your coverage is directly linked to your current annual income, which is why it is important to factor in your current income and expenses that you regularly incur while purchasing your term cover. 

    1. Premium payments change with the change in the coverage amount, so if you opt for a large cover, you can expect the premium to be on the higher side and vice versa. Moreover, the ability to pay the premium depends on your current income, which is why you need to assess your income and expenses to ensure enough savings for the premium.

    2. Your current income indicates the pattern in lifestyle. So, when you grow old, it can be obviously inferred that your income should be X times your present income, where X would be determined by taking into consideration the inflation. Initially, X was 10 times, but with the present rise in the cost of living, X can be set at least 20 times.

    Current and Future Financial Liabilities
    Besides, financial security, one of the basic aspects of seeking term insurance is to meet your financial liabilities, both current and future. In case you have a loan to your name, you would not want its burden to befall your dependents after your death. Therefore, it is essential to purchase adequate term insurance coverage that would cover the credit as well as ensure that your dependents do not face financial burden in your absence. Furthermore, if you have financial assets to your name such as savings account, mutual funds or stocks, you will only require a limited sum assured to ensure the financial protection of your dependants.

    Short-Term & Long-Term Financial Goals
    Most individuals have a specified set of financial goals to achieve in their professional career. These short-term & long-term goals are crucial in determining your term life coverage. Most of these financial goals revolve around financial security of self and the family members such as owning a house, marriage, children's education, etc. Term insurance plans can be of great help to such individuals on the path of moving towards their respective goals.

    Choosing of Riders
    There are varieties of insurance riders available for you by many insurance companies, which can broaden the scope of your coverage. However, these riders are applicable for certain and are directly linked to it. Therefore, one must be careful while choosing these rides so as to get the maximum benefit out of it. For instance, an accident rider can financially protect you from an event of an accident, thereby taking care of all the medical expenses, while also providing an additional amount of money even when you are disabled or do not survive the accident. Similarly, is the case with critical illness rider or premium waiver rider. Therefore, your option to choose the rider modifies your coverage accordingly.

    Age at the Time of Buying the Policy
    The age of the policyholder is the most basic parameter because the greater the age, the greater is the probability of any unwanted mishappening. So, this factor influences your coverage up to a large extent. However, most insurance companies list down the policy premium, vis-à-vis the age, in a simple tabular format, which makes it quite easy for you to decide on your coverage.

    With all the information available at your disposal, it would be fairly easy for you to evaluate your requirements and accordingly calculate your coverage. In the case of more information, you can also call customer support or ask for a quote.

    Visit PNB MetLife to know more about life insurance, Term Insurance & Term Plan

    Disclaimer:

    The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.

    PNB MetLife India Insurance Company Limited
    Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka.
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    Call us Toll-free at 1-800-425-6969.. Phone: 080-66006969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203

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    As your trusted life insurance partner, PNB MetLife is with you amidst the current COVID-19 outbreak. Our policies also cover COVID-19 Claims. In case of a Death Claim, kindly submit the signed Claim Intimation Letter mentioning the policy number, brief of the insured event and other claim documents on the email mentioned herewith. Please write-in to us at claimshelpdesk@pnbmetlife.com or indiaservice@pnbmetlife.co.in. You can also call us on 1800-425-6969 for death claims intimations and for any queries on Monday - Saturday between 10:00 am - 7:00 pm.

    PNB MetLife Insurance, amongst the trusted Life Insurance companies in India, aims to provide a wide range of Life Insurance products that suits the needs of an individual at every stage of his life. Life Insurance Plans range from Term Life Insurance PlansTerm PlanProtection PlansLong Term Savings Plans , Retirement Plans & Child Education Plan.

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