Life insurance is meant to provide financial protection to your loved ones in the unfortunate event of your untimely and sudden demise. Term insurance is the variant of life insurance that provides protection for the tenure of the policy and pays out a death benefit if the insured dies during the time period specified in the policy while the policy is active - or in force. The entire rationale behind term insurance is safeguarding your family financially. To do that in the most effective manner, you need to make sure that the sum assured under the policy is adequate to help your family live comfortably even in your absence.
But then again, your family and life needs will keep changing and evolving through time. Consider this: you buy life insurance at the age of 25, when you were single and had no dependents to take care of. So, you draw a basic term insurance cover. Five years down the line, you get married and now you have a spouse and possibly a kid to take care of. Meanwhile, your parents are growing old. You wish to be able to attend to their needs also. Giving your loved ones a comfortable life means that the amount for which you initially took the term insurance won’t suffice any longer. Wouldn’t it be great if you had the option to hike the sum assured under your policy? Wouldn’t you be more at peace knowing that your family is financially provided for against any hardships?
You could consider topping-up your plan or buy a term insurance rider or a separate cover, you need to go through the documentation process and medical examinations all over again. You would risk increasing the premium due to any new diagnosis you have had since the time of the last policy purchase.
Life-stage protection can be an effective option to cater to such needs. Life insurance term plans offer a life-stage protection feature, which allows you to increase your sum assured or cover at different milestones, without any medical examination. This feature is usually made available during the key milestones of life. First, when you get married. And second, at the birth of a child (up to two children).
Keep in mind that
- The maximum cap may be different depending upon your insurer and your specific term insurance policy.
- There is generally a prescribed cut-off period for each life event within which you should approach your insurer.
- This feature is available only for life cover and not on any riders and is limited to pure term insurance plans with the Life-Stage protection option.
With this term insurance feature, you will not have to go through the hassle of documentation and/or medical tests. The premium would simply be calculated and revised based on change in age along with higher sum assured and remaining policy term.
It is a great way to increase the amount assured under your vanilla term plan. When the sum assured is increased, the premium is also re-calculated in accordance with the higher sum assured, your increased age and other policy terms.