Term insurance benefits are primarily limited to the death benefits paid out by the insurance company.
In case the insured person passes away during the policy term, the death benefits under the plan is paid out to the nominees. The amount paid out maybe enough to help the family members meet their everyday needs and fulfill their life goals.
This is why it is important to choose adequate term insurance coverage when you buy a term insurance plan. But what do you do if you find that the term insurance coverage you opted for is not enough? Is it possible to hike your term plan coverage after buying it?
While that is not possible in all term insurance plans, some term policies offer a feature called life stage protection, which can help you hike your coverage as needed at different life stages.
How does Life Stage Protection Work?
Life stage protection is a beneficial feature that some term insurance plans offer. As per this feature, you can increase the sum assured under the plan by a predetermined percentage at certain specified milestones in your life.
Typically, life stage protection comes into effect at the following key milestones in your life.
- When you get married
- When you have your child (this is generally valid up to two children)
- On taking a home loan
So, for example, say you have purchased an online term insurance at the age of 25, with a sum assured of Rs. 1 crore. Now, say the plan offers life stage protection with a 50% hike when you get married and a 25% hike upon the birth of your child (up to two children). So, in this case, here is what your term insurance coverage may look like at the concerned milestones. Typically, there is a cap on the maximum amount up to which the coverage can increase.
Particulars | Increase in term insurance coverage | New coverage after the hike |
---|---|---|
Your marriage at age 30 | 50% of Rs. 1 crore = Rs. 50 lakhs | Rs. 1.5 crores |
The birth of your first child | 25% of Rs. 1 crore = Rs. 25 lakhs | Rs. 1.75 crores |
The birth of your second child | 25% of Rs. 1 crore = Rs. 25 lakhs | Rs. 2 crores |
The birth of your third child | No hike | Rs. 2 crores |