In today’s world, technology has kept advancing to such an extent that everything is accessible at our fingertips. However, one thing that will always remain unpredictable is life risks. While one may not be able to anticipate them, they can, however, be financially prepared for them with the help of term insurance.
Term insurance provides coverage against risks to your life. However, priorities change at different life stages. This means your general life cover may not be adequate to cover up these changes. This is where you can take advantage of the life stage benefit option in your term insurance. What is this option and how does it benefit you? Read more to find out.
What is term insurance?
Term insurance is a type of life insurance policy. In term insurance, you as a policyholder get into an agreement with your insurer wherein they will provide life protection cover to your family. As they are your dependents, they could be left financially vulnerable in your absence. If you pass away during the term of the policy, your dependents will be compensated with a sum assured under the policy. This amount can help them manage the necessary expenses while having financial security from life risks.
What is the life stage benefit option?
In a person’s life, there are different life stages, such as gettingyour first job, purchasing your first house or car, getting married, or the birth of your child. At every stage, priorities change and so does the cost of providing your loved ones with better financial protection.
When you buy term insurance, your main priority would be the financial security of your dependents, such as your parents or partner. However, changes in situations call for the need in the increase of the existing life cover your term insurance provides. There is a provision in your term insurance to meet the requirements that arise from these changes.
You can include the life stage benefit option, which is available to you as a rider when you purchase your insurance policy. Riders, or add-ons help in enhancing the coverage of your policy. With this add-on, you can increase the coverage your policy provides at any stage of your life.
For example, you purchased the policy when you were 27. You get married at the age of 32 but you do not feel the need to increase the coverage as the existing one covers your parents and your spouse. However, 3 years later, you have twins. This changes the whole dynamic for you as not only has your cost of living increased, but the dependency on your term insurance also increases as well. If you were to pass away suddenly, the sum assured that your dependents receive would help them to a limited extent.
Based on this example, you should take advantage of the rider, which would adjust your sum assured and would increase at that life stage.
Should you opt for this benefit?
As mentioned earlier, different life stages can drastically increase your insurance requirements. Many think it is better to purchase a new policy at every life stage. However, as you grow older and opt to buy new term insurance, the cost of that policy would be higher than your existing policy. This means shelling out more money, which could also cause financial instability for you.
Your existing policy comes with this benefit, which negates the need of purchasing a new policy altogether. Taking advantage of this benefit makes more sense than paying premiums for two policies that basically provide the same feature. Not only will it help you save money by eliminating the need for another policy, but it will also ensure that your loved ones remain protected in your absence.
If you want to know more about such term insurance benefits before you purchase one for yourself, you can get in touch with your insurance advisor.