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Does Term plan with increasing cover make sense for 40 year old?
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05 May, 2021
by Maulik Shah
Hi
on comparing Bajaj allianz and other polcies for 2 cr Sum insured - the premium is coming to the same as 1.4 crs/ 1.5 crs increasing to 2 crs
On the other hand if I take a policy with 2 crs base increasing to 3.2 crs - the premium jumps up almost 50%
Considering this - if i need a policy with cover of 2 crs - does it make sense to go for increasing cover ? I am 40 years old - have dependents - but no loans
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Situations under which one may consider Step up Term cover ?
(Consider this as steps and/or criteria to identify if this step
up product is suitable)
A_ You currently do not have Required life cover
B_ To buy the required life cover, you do not have required surplus
C_ You know the GAP of need is increasing and so need of term cover would also keep increasing
D_ You have a negative medical history in the family, especially at early age
E_ You are planning to have a new or additional loan in near foreseeable future
F_ You have surplus, but multiple high priority needs to satisfy
(to be specific you are not even ready with required emergency fund, or medical
cover).
G_ There is currently inconsistency of Income, in near foreseeable future.(especially in less than a year)
H_ You are working for a company, where you are covered with term insurance, but planning to retire earlier than normal retirement age
I_ You are currently working for a company, but planning to leave the job, and start on your own in near future, so preparing for that cash flow need.
J_ Then if the premium difference in regular fixed term cover and step up term cover is reasonably low
If most of the above factors does not fit your current financial and/or life stage, consider buying fixed for life term cover.
(Disclaimer:
this is knowledge and experience share, and need not be taken as it is, as
every individual is living her/his own unique life, which may have different
scenario and so the need may change.DO proper need analysis and suitability
test with your financial planner.There is nothing like one size fits all)