Do you have any idea about increasing term insurance? Want to explore how such a term insurance plan can be useful? Then read this guide and understand thoroughly about increasing term insurance.
In general, It is the most extraordinary term life insurance where the sum increases at the fixed rate every year. There will be some dedicated amount of sum handed over to the nominees when there is an unfortunate death of the policyholder during the policy term. Such plans can also be very useful to meet the financial requirements in the future without any issues.
Initially by considering the health of the policyholder, the amount of coverage will be decided in the increasing term insurance plan. Hence, everyone can get benefited through this insurance plan and hence applying it today can be useful for your future events.
Impact of Increasing Term Insurance
In the proper increasing term insurance plan, the sum assured or the amount of coverage will increase according to every year’s predefined amount till the policy term.
After the term completion, the insurance policies can be renewed or extended. But during renewal, the premium is offered based on the person’s health and age. According to the other benefits, the new premium values impose limitations or get higher. Now here you can explore what is increasing term insurance and how it is better than other insurance policies.
During these unfortunate circumstances and restraints, it is better for you to go with the increasing term insurance plan. If you have a large family, you can buy this plan without any hesitation. Those who have a child and want to secure their future can sure apply for this term insurance plan today and grab the benefits. You can also increase the amount of coverage to meet the protection requirements during different milestones.
Most of the premium has an extraordinary increasing cover option. It can let you to get 10% more amount of coverage every year after completing the policy every year. You can also make use of the Block your Premium option to increase the assured base sum for around 100% at the same premium rate.
Working of Plan:
You can explore the increasing term insurance meaning by knowing how it works. Generally, the this plan mechanism focus on giving financial security to the policyholder’s loved ones. It can effectively mitigate the inflation effects without causing any trouble. The death benefit is related to an index like the specific inflation rate or CPI – Consumer Price Index.
The coverage amount of policyholder can get huge growth at regular intervals to meet the increasing cost of living. It ensures that the payout can retain the purchasing power over time that can protect the financial requirements of the beneficiaries over the extraordinary impact of the inflation.
You can explore which component increases in term insurance by understanding the working with a great example.Before go through the example, you must understand the fact that it is just a figure. The actual numbers may differ based on the plan you choose and its terms & conditions.
Example:
Mr.XXX applies for an increasing term insurance plan with the coverage amount of around Rs. 25 lacs. There will be an increase in the original coverage amount for around 5% every year according the plan’s terms and conditions. The maximum increase will be 100% of the coverage amount. Mr.XXX has taken this plan for the period of around 25 years.
It means that the assured sum will increase around Rs.1.25 lacs every year. Till 20 years, the amount will get increase after the coverage amount will never increase over 100% sum assured limit. It will let the amount of coverage to increase by 100%. But after 21st policy year there won’t be any increase. Now by going through this example, you can get the clear idea about what is increasing term life insurance.
Features of increasing term insurance:
There are many essential features this insurance covers. Knowing such features can help apply this insurance plan without any hesitation. Take a look at below and explore the features :
- Premiums
The increasing term insurance premiums may remain the same or increase according to the terms and conditions of the different insurers. It is always better to read the policy documents to understand much better about the premium payment structure. The insurers can go with the premium payments in monthly, annual, semi-annual or annual mode for the better premium payment term too. It can give you better idea about what is an increasing term life insurance policy.
- Benefits
During the unfortunate death of the policyholder within the policy tenure, their nominee can get the assured sum of amount according to the terms and conditions. But submitting the necessary documents like death certificate, they can get the amount of coverage. There are certain plans that offer certain different range of payout options. With such options, you can go with the suitable payout to be made in any time period along with the monthly installments. Here you can also find what is increasing term life insurance and is it worth it or not.
- Coverage
There is some limit to the increasing amount of coverage in certain increasing term insurance plan. After the amount of coverage reaches the maximum limit, it will remain constant for the further policy tenure. Then for the complete policy term, the rate will be remains the same or increase according to the sum assured.
- Riders
Generally, riders are the add-on benefits to improve the base coverage that people add to their insurance policy. Terminal illnesses, critical illnesses, accidental total permanent disability rider, accidental death riders & waiver of premium riders are the common term insurance riders. Here you can learn more about the term insurance rider and grab some exclusive benefits after applying the policy.
Advantages of This Plan:
There are many exclusive advantages you can get through the increasing term insurance plan. Take a look at below and know such advantages.
- Adapt to changing financial needs
This term insurance plan can let you meet your financial goals without issues. It can easily adapt to the changing financial goals. Generally, the financial requirements may change based on your growth in life. For example, the term insurance cover that you get when you are single will not be enough after your marriage. Through that, now you can get the idea that how is increasing term life insurance normally sold.
- Beats inflation
You can fight the inflation through the increasing cover. The amount of coverage today will not be enough tomorrow. Hence to beat the inflation, you must the need the increased amount of coverage for the future. Such plan helps you beat inflation without any issues.
- Helpful in saving tax
This plan helps you save tax under the Section 80C act. Nominees can grab the death benefit which is free from tax.
From the above mentioned scenario, now you have got the idea about what is increasing term insurance. So why are you still waiting? Apply for this insurance plan today and protect your loved ones expenses in the future.
