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Crucial Life Milestones for Reconsidering Life Insurance Cover
A life insurance policy is a financial product that safeguards the future of a policyholder's family in case they pass away. However, most Indian citizens either do not have a life insurance policy at all or have insufficient coverage.
Purchasing a life insurance plan should be a one-time decision. Policyholders must reassess the coverage needs of their families at different phases in life. Let us take a look at some of the most important life stages where a life insurance policy must be reconsidered.
Important Life Stages to Reconsider Your Life Insurance Cover
1. Getting Married
The expenses of a person tend to shoot up once they get married. The change in lifestyle habits tends to add financial responsibilities. Consequently, household expenses, such as grocery bills, medical bills, and clothing, will also increase accordingly. For example, if an unmarried individual has a monthly household expense of ₹ 50,000, the expenses will shoot up to ₹ 1,00,000 (approximately) after ten years, considering a projected inflation rate of 7%.
Hence, it is necessary to reconsider a life insurance policy to secure the financial future of your family after your demise. Further, while doing so, you should also take the inflation rate into consideration.
2. After Childbirth
The addition of a newly born to a family brings not only immense joy but also adds considerable responsibility. Every parent wants to give their child a bright and better future. Nevertheless, fulfilling all the dreams of a child demands considerable financial backup. Hence, parents should consider increasing the coverage of their insurance plan to secure their child's future in case of unforeseen circumstances.3. Purchasing a Property on Loan
Purchasing a property is indeed one of the most significant financial achievements for any Indian resident. However, at times people might require to opt for a home loan in order to buy their own house. Opting for a home loan adds up to the financial liabilities of an individual. Hence, policyholders should reconsider their life insurance policy so that their dependents do not face any hassle in closing the loan after their unexpected demise.4. Significant Change in Income
Change in income is one of the important stages in life of any individual. In this stage, one should consider revisiting the insurance plan as well. This is because an increase in income leads to an increase in household expenses and a better lifestyle. Hence, policyholders should consider reviewing their life insurance plan so that their family continues to maintain a decent lifestyle even in their absence.5. Unplanned Changes in Family Situation
Changes in the family's situation due to unforeseen life events, like accidents or disability, make reviewing a life insurance plan inevitable. For example, if any of the family members become permanently disabled, the financial responsibilities also tend to increase.
While the biggest financial achievements are a result of good preparation and planning, one can never predict what the future holds for them. Usually, marriage, purchasing a property or having a baby are among the most important phases in life of any person. And the need for reconsidering a life insurance plan becomes necessary during these stages to safeguard the financial future of the family members.
Frequently Asked Questions
What do you mean by reviewing a life insurance policy?
What are the components of a life insurance policy?
Is Life Insurance policy maturity amount taxable?
Important Guides Related to Life Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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