LIFE INSURANCE: Got your first salary cheque? Now buy an increasing term cover
In order to take care of the growing financial needs of a family at different life stages, young individuals should opt for an increasing term insurance policy where the sum assured increases annually. The increase can be either a fixed amount or a percentage of the original sum assured at policy inception depending on the terms and conditions of the life insurance company.
After reaching the maximum limit, which is usually 100% of the sum assured, the policy will continue to remain in force for the entire period of the cover. In case the insured dies during the policy period, the nominee will be paid the entire death benefits. However, if the insured survives the entire term of the cover, he will not get any maturity benefit and the policy will terminate.
Protection against inflation
An increasing term insurance policy is ideal for those who have just started their career or have budget constraints at the time of buying a term plan and expect income to rise gradually over the years. Moreover, an increasing term insurance policy provides added financial protection against inflation as the coverage level increases along with the rise in the financial responsibilities of the insured as his age progresses.
Rakesh Goyal, director, Probus Insurance Broker, says the benefits include keeping pace with the increasing needs of the insured and their family, ensuring that the coverage amount is adequate throughout the policy term, and providing peace of mind during uncertain times. “It is ideal especially for young individuals who are expecting increased responsibility in the near future,” he says.
Similarly, Shailesh Kumar, co-founder and insurance head, Insurance Samadhan, says increasing term insurance should be bought mainly
Read more on financialexpress.com
