Many insurance experts suggest that it is best to purchase a term plan with an optimal level of sum assured to suit the individual needs. But, if are not able to purchase a policy with high sum assured initially, you can opt for an increase sum assured plan. Read on to know more about it and its benefits.
A life insurance policy is a necessity for all. It plays a significant role in providing financial protection to you and your family during unforeseen events that may occur anytime. Most people a life insurance policy for two reasons – giving financial security to the family in the event of untimely death, and for retiring with adequate funds.
Analysing the risk and determining the means for mitigating it can help you plan your finances. This essentially means you must plan for your family’s future when they do not have a regular monthly income. Before you invest in a life insurance policy, you must ascertain two critical things – how long will your family need financial support and what amount? Term Plan is the best financial tool that can assure financial security to your family.
Today, as the insurance policies have evolved, there are different types of term plans in the market. And, one of the most popular types is the term plan with an increasing sum assured option.
What is an increasing sum assured term plan?
A term plan with increasing sum assured is type of insurance policy where the sum assured amount that you choose at the time of buying the policy increases by specific percentage every year. This feature is mainly designed to help the policyholders meet the challenges of inflation. As you grow old, your responsibility also increases. The cover that you may have chosen while buying the policy may be inadequate in the latter years, as your expenses and liabilities grow overtime.
Benefits of buying an increasing sum assured term plan in tackling inflation
The increasing sum assured feature of term plan allows you to increase the insurance coverage amount every year. Thus, it helps you manage the increasing expenses of the loved ones.
Inflation is essentially a financial term to denote the increasing prices of the goods and commodities over a period. The inflation rate keeps on increasing every year, and hence, it is pivotal to consider this factor while investing any insurance plan. In simple terms, if you choose an increasing sum assured term plan, you can manage the expenses in the future without any hassles.
You may have purchased a term insurance when you were young and probably when you were a bachelor. But, after marriage, you may have the additional responsibility of protecting your partner and children. With an increasing sum assured term plan, you can easily manage your changing financial needs.
Even if you are choosing a term plan with increasing sum assured feature, the premium for such plans remain affordable. The premium will remain constant and it will not burn a hole in your pocket. This means, even as the sum assured increases during the policy tenure, the premium remains the same.
Final Word
So, now that you are aware of the significant of an increasing sum assured term plan, make an informed buying decision and be prepared for the future.
