You can always increase your coverage by upgrading to a better policy or getting an increasing term insurance policy that allows you to invest more as your financial state improves. But the question is what are the ways to increase cover option in term life insurance policy? Read below to learn more.
The basic idea behind a term life insurance policy is that you pay a certain amount of premium over a period of time in instalments. In return, your beneficiaries get a death benefit from the insurance provider in the event of your premature death during the tenure of the policy. The time such plans cover can range from 90 years or more. Additionally, you get different cover options and riders. So, these might pay for or give you additional payment in case of other issues. These may include terminal illnesses like cancer, sudden death by accident, and other situations.
Opt For An Additional Term Insurance Plan:
If you want to increase your cover options, you can get another policy with better coverage. But, you will have to live the entire process of selecting, finalising, and making a payment for the same all over again. As the medical exam is not valid six months after the first application, you will also need to undergo a medical diagnosis and if you have health impediments, there are chances of being charged a higher premium. You also have to keep in mind that you have to take care of 2 different policies simultaneously, hence meaning the nominees have to file two claims which can become exhausting, especially in trying times.
Opt For An Increasing Term Insurance Plan:
An increasing term insurance plan means the amount of death benefit increases annually. This is perfect if you develop your financial stature over time since term insurance considers a very long span. Although the premiums remain the same throughout the tenure of the policy, it is possible that you will have to pay higher premiums for the early years of the policy. Usually, in such term plans, the annual rate of increase of the assured amount varies from 5 % to 10 %, also depending on the tenure of the policy.
Life-Stage Growth Term Insurance:
If you buy such insurance, it will grow with different milestones of your life without going into additional exhausting processes. These crucial stages might include marriage and childbirth as they increase your financial liabilities. Therefore, in this case, you should buy the policy very early, well before you marry because it is at marriage that you get the highest growth which is 50%. Then, with the first childbirth, your policy grows to 25% and another 25% with your second child.
Additional coverage options for existing policy: riders:
Riders will help you extend the coverage of your term insurance policy. There are different kinds of riders that you can go for:
Waiver of Premium:
This rider comes in handy only when you are unable to continue the policy and pay the premium on time because of death or accidental disability, etc. In that case, the future premiums of your policy are waived off and the policy continues as per schedule. But, the condition here is that there must be some kind of prescribed situation or event that makes you unable to pay the premium. Hence, in those cases, you can still enjoy the cover options or their benefits without having to pay the usual premiums.
Income Rider:
The term insurance policies generally give a lump sum amount to your nominee as a death benefit. However, if you think handling such an amount at once might be difficult for your family, you can go for an income rider and your family will get a fixed income every month till the nominee survives or as per the conditions in the claim as a death benefit.
Accident and Accident Disability Benefit Rider:
This rider covers the situation when you become disabled in the event of an accident. From insurance companies, you can get it as a cover option for temporary disability also. In other cases, the company might waive off your premium value considering the fact that you lose a proper source of income due to the onset of a sudden disability.
Critical illness coverage:
If you need the lump sum of payout in case of any critical diagnosis that this cover option provides, it must be one that is predefined as a critical illness by the insurer.
Take a different life insurance plan with Term Rider:
If you happen to choose a different life insurance plan with lower coverage, then you may choose to opt for a term rider wherein the coverage can increase significantly with a comparatively lower premium.
So, you can always increase your coverage by upgrading to a better policy or getting an increasing term insurance policy that allows you to invest more as your financial state improves. But, undoubtedly, getting riders is the easiest way to increase your cover options in a life insurance policy. Also, since term plan premium rises with age, it is prudent to opt for high coverage as early in life as possible to get the maximum benefits.