3 Things to Know as Life Insurance Premiums Increase

ULIPs also carry a life cover sum assured which is a guaranteed payable amount in case of your early demise. Similarly, other life insurance investment plans including guaranteed plans provide a fixed sum assured as life cover.

3. Life Cover Under Pension Plans

Pension plans and retirement saving plans from life insurance companies also provide a limited life cover. If you have invested in such plans, you likely have this life cover as well.

Life insurance policies such asGuaranteed Savings Plans give you guaranteed income streams after you invest for a fixed term. Such plans carry a life insurance cover by default and add to the contingency fund available to your family in your absence.

5 Reasons to Review Your Life Cover

You should review your life cover whenever there is a significant change in your family’s lifestyle, income, or overall expenses. Following are the five most prominent events where you should consider upgrading your life cover:

1. Growth in Family Members

You may have some life insurance in your kitty. But it is now time to review it so that your investments are aligned to your current circumstances and future needs. Rise in living costs due to lifestyle changes, spiralling inflation are the top reasons.

Marriage, children and your aspirations are some of the top reasons to invest in life insurance plans. If your parents have sacrificed their earnings to give you a comfortable life and are retiring with inadequate savings, you will have to factor in that expense as well.

2. Additional Financial Goals

You plan to buy a spacious house at the end of 10 years from now which also coincides with your child’s Class 12 passing out the year. If you have planned to send him/her abroad for professional education, you will need a sizeable corpus for that as well.

3. Significant Rise in Income

If you are earning more now, your Human Life Value (HLV) is also much more than it was before. It is wiser to avail a larger term cover to safeguard your family so that they remain financially stable even in case of your unfortunate demise.

4. New Liabilities

Buying a home is always an exciting moment in life. Home loans are also now so easily available that anyone dreaming of a home can buy one depending on the repayment capability etc. But in the case of the demise of the borrower, the dream can turn into a nightmare as repayment defaults start piling up.

If the default continues, the bank may even attach the flat and recover the loan. To mitigate this risk, specific term plans can be availed to settle the loan in case of demise.

5. Rising Cost of Living

As illustrated in the table earlier, inflation can erode the value of your hard-earned money if not invested wisely. Another word of caution. Inflation numbers that you see in the news are average rates, which means that specific sectors will be affected more severely than others.

Healthcare inflation may be higher than average and you should be concerned because a significant portion of your savings may be spent on health during your old age. Education is another area you should be concerned about if you have kids or plan to have them soon.

Insurance is an indispensable part of modern investment portfolios. Although you may have invested some money in insurance, the deeper question is whether it is sufficient? It is time to relook at your insurance planning keeping in view the above factors and expanding your exposure to diverse insurance products that will give you safety, security and assurance.