Can Sum Assured Value of Term Insurance Plans Be Increased?

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Term Insurance Plans purchased primarily to safeguard one's dependents against financial risk in the event of premature and untimely demise provides death benefit equal to the sum assured value to its beneficiaries. Generally speaking, it's a must have tool to secure one's family financially in case family members depend heavily on you in financial terms. The rule of thumb suggests a sum assured value equal to seven to ten times your annual income to provide for the financial exigencies in your absence.

Insurers do not provide for an increased cover during the life of the policy. However, with increase in financial responsibilities as say after marriage, one ought to consider either a new policy with the additional sum cover or zero in on a policy with the higher sum assured value. The provision to avail higher sum assured values in the already in-force policy is not available for the simple reason as with increasing age risk on the life of the insured increases.

This simply suggests that upon renewal of the term policy, policyholder is not provided with an option to get enhanced coverage.

To address this concern, few of the insurers including the likes of Birla Life Insurance have come up with Term Insurance Plans with increasing cover. For instance, Birla Sun Life Protector plan, in order to keep pace with the increasing cost of living and improved lifestyle, provides for an annual increase in the sum assured value @ 5% or 10%, till the cover value becomes double of the existing sum assured amount. Nonetheless, such policies come with higher premium amount and premium remains same throughout the policy term.

The provision of increased cover is however available in case of health insurance plans, wherein if the insured person continuing with the same health insurance plan who has not made the claim in the previous year gets entitled to a no-claim and loyalty bonus that increases its sum assured value by some marginal percentage.

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