Importance of Regularly Reviewing and Updating

Table of Content

1. Term Insurance - Your Lifesaver in Times of Need

2. Reasons to Review Your Term Plan Regularly

Most of us view term insurance as a one-time decision—buy a plan, pay the premiums, and feel secure about the financial protection it offers. But as life progresses, our financial responsibilities change. The plan we chose in our 20s or 30s might no longer provide sufficient coverage to support evolving goals. Many people opt for the best term insurance plan for 1 crore during their late 20s or early 30s, thinking it’s adequate. However, as life goals expand—like buying a home or funding children’s education—they may find that a higher cover, such as ₹2 crore, is more appropriate. That’s why it’s important to review your term plan regularly and upgrade when needed.

Term Insurance - Your Lifesaver in Times of Need

Insurance is a financial tool that provides a sense of security and peace of mind. It serves as a safety net to protect you and your family from unforeseen financial hardships. The primary objective of a term plan is to provide a substantial lump sum to your beneficiaries if something happens to you during the policy term. The amount can help your family cover daily expenses, outstanding debts, future financial goals, and more. 

Now, let’s explore why you need to review and update your term life insurance plan intermittently.

Reasons to Review Your Term Plan Regularly

• Changing Life Circumstances
  

  Your financial situation will evolve. When you’re young, you may have very few dependents or financial responsibilities. For example, a young man in his early 20s may have to worry about a vehicle loan and helping his parents once they retire. However, an individual in their early 30s may have to worry about taking care of their spouse or paying for their child’s education while also looking after hospital bills for elderly parents. Reviewing your policy allows you to evaluate your finances and account for changing circumstances.

• Beneficiary Changes
  

  The beneficiary is the person who will receive the sum assured payout from your term policy. Your choice of beneficiary may change over time. Initially, you may select your mother or father. After a few years, you may want your spouse to be the beneficiary. When your family grows, you will likely want your children to be the beneficiaries. Reviewing your policy encourages you to take stock of your life and update your beneficiary accordingly.

• Income Increase
  

  Your income changes drastically over time. Frequent increases in your income will likely lead to an increase in your standard of living. An outdated sum assured may not be enough to help your loved ones maintain their new standard of living if anything happens to you. Consider evaluating your term insurance coverage whenever you get an increment. Adjust the policy coverage to meet your family’s evolving needs.

• Inflation Considerations
  

  Inflation depreciates the value of your money. Although Rs. 1 crore may seem like a large sum now, it may not be sufficient for your loved ones in 20 or 30 years. When the inflation rate increases, you should consider reviewing your policy to evaluate how much your loved ones will need in the future.

• New Debts
  

  Almost every young professional dreams of owning their own home. A safe abode to relax and enjoy with their loved ones. However, most people need a loan to help them achieve this goal. While you can comfortably manage loan repayments now, your loved ones might struggle without you. Ensure you review your term policy coverage whenever you take on new debt, such as a home loan. Get adequate coverage to protect your loved ones financially and help them repay debts during a difficult time.

Regularly reviewing and updating your term plan ensures your loved ones have the financial protection they need to face life’s uncertainties. When you update your policy, you can rest assured that your family will remain financially protected. Schedule time every three to six months to evaluate your term plan and secure a brighter future for your loved ones. 

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