18 May, 2021 | Term Life Insurance

Inflation-proof your Term Insurance Plan with an Increasing Cover option

Team Beshak
By Team Beshak
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Your expenses and liabilities are likely to increase as you grow older and take up more financial responsibilities. In order to meet these increasing responsibilities, you will need to upgrade your term insurance - so your family always has adequate cover. But, every time you decide to manually upgrade your policy, you’ll have to go through the whole documentation process again, undergo new medical tests, etc - and this could get tedious! 

Even worse - your upgrade could get rejected due to age and health-related issues.  

Instead of going through all these complexities, you can simply choose an increasing cover feature. Let’s understand how it works.
 

How does an increasing cover work?

When you choose an increasing cover option, your cover amount will gradually increase at regular intervals until it reaches a maximum limit, all without your intervention. 

As a result - increasing covers make upgrading the term sum assured seamless - with benefits such as - 

  • No additional medical tests: There is no need to undergo new medical tests at the time when your sum assured is increased
  • No additional documentation: You don’t need to submit any documents or proofs, every time your cover amount is increased. 
  • No risk of rejection: There is no risk of the upgrade getting rejected. You will definitely get the sum assured increase, regardless of changes in your health, habits etc. 
  • Single policy to manage: With an increasing cover - it means that you don’t have to keep buying additional policies to increase the overall sum assured. Meaning you only have to manage and pay premiums for one policy throughout the term. 
  • Single premium (for a few years at least): Most increasing covers give you a higher sum assured with time, for the same uniform premium amount. 
  • Single claim settlement for your family: In addition to the fact that you only have one policy to manage, your family too has only one claim settlement process to go through - so life is so much simpler for them!

Things to keep in mind

While there are so many things that make increasing covers a fantastic option to pick - there are some points that you must be aware of - so you know exactly what you’re paying for. 

1. Maximum increase limit: Some insurers put a maximum limit on how much your increasing cover can grow up to. The limits could be imposed as - 

  • A maximum multiple of the base cover (say 2X or 2.5X the base cover amount)
  • By a fixed percentage upto the term end (say 5% per year/ 10% per year)
  • By a fixed percentage (say 5%) until you’re 55 years old. 

2. Year from when increasing cover initiates: Based on your plan, the sum assured starts increasing after a certain number of years. Carefully note this, while you research for the plan. 

3. Cost might seem high: The premiums of an increasing cover, might seem higher when compared to a regular (non-increasing) plan. But, when you consider the premiums you pay over the term (and estimate their NPV - Net Present Value), you’ll see that increasing covers are actually cost-effective. We’ve done a sample calculation for you in this article. 

You might also be interested in: Can you use Lifestage Benefit to increase your term insurance cover amount? 

Comparing and choosing the best available Increasing Cover option. 

For years, it wasn’t possible to easily compare features associated with increasing cover options, across different term plans. But, now - things have changed! 

We bring you Beshak⭐Ratings, the first-ever unbiased and data-backed solution for insurance comparison. It is our endeavour to help our community members objectively compare term insurance product features - including increasing cover features, and make an informed purchase decision. 

Just hop on to Beshak⭐Ratings - and you can compare your most preferred plans.

What increasing cover features can you compare?

  • Year when cover starts increasing
  • % of increase every year
  • Maximum increase in cover possible. 

What’s the Beshak take?

Some insurers offer policies with increasing cover options where the cover keeps on increasing until you reach the age of 55 or even till the end of the policy term. If you purchase such a policy, not only will you have to pay a lower overall premium, but the cover will also increase far more than 2x for nearly the same premium amount. So overall, you will get a much better deal.  

To sum it up, an increasing cover can be a great way to ensure that your family is sufficiently covered throughout the term, at a very cost-effective premium. The icing on the cake is the fact that the process becomes very smooth and hassle-free - without any need for additional processes, medical tests or documentation. 

Taking all this into account, we strongly recommend that you always choose an increasing cover option for your term insurance plan.

If you have a question related to increasing covers, you can post it on our forum and get answers from insurance experts within 6-8 hours. 

Key takeaways
  • An increasing cover is a feature that systematically and automatically increases your cover amount without medical tests or documents. 
  • With an increasing cover, you can counter inflation as well as cover for your growing financial responsibilities over time
  • Your family will only need to go through a single claims process instead of multiple claims. 

You can compare increasing cover features on Beshak⭐Ratings, before making an informed decision.

Team Beshak
Written by,
Team Beshak, We breathe insurance :)

We are a group of young members of the Beshak community. We come together to brainstorm, write relevant and useful content for people (just like us) who want to figure insurance on their own. If you too want to share inputs/write for us - send us a "hey" to info@beshak.org

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