I am 35 years old. Five years back, I had purchased a term insurance plan of Rs 50 lakh for 30 years. At that time, it was 10 times my annual income. But now my salary has increased. Can I increase my insurance? Can I add to my existing policy? If I change my insurance company, will I lose out any benefits? – Ajitesh Kumar
Firstly, based on the information provided, you will be eligible for an increase in the insurance cover. As a thumb rule, an individual should have a life cover of 10 to 15 times the annual income. This will ensure the sustenance of lifestyle in case of any eventuality. In fact, one should increase the insurance cover with every increase in income and change in lifestyle. The amount of life insurance coverage you need will also depend on other factors such as the number of dependents, children’s aspirations, financial goals, liabilities and affordability. You can supplement your insurance cover with a new product and ensure that you are adequately covered. Secondly, a few life insurers allow an increase in sum assured in a term plan based on key milestones such as marriage and birth of a child (generally up to two children). New-age term plans come with a wide range of options such as increasing sum assured. However, most of these options have to be selected by the policyholder at the inception. Thirdly, it is not advisable to exit an insurance plan prematurely as the life cover will cease and your financial security may be jeopardised in case of any unfortunate incident. Hence, as an insurer, we would recommend you to continue with the existing term plan till it matures since these products are all designed for long-term financial protection. You should certainly augment your cover with another term and a health insurance product to protect against life and health risks.