Increasing Term Plan, as the name suggests, is a type of Term Insurance, where the amount of sum assured increases by a specific amount on an annual basis. This plan helps to cope up with the rising inflation & increasing financial obligations. The premium of an increasing term insurance plan is a bit higher than the base term plan, but allows an increase in the coverage amount as well without the need of buying another policy.
Under this plan, the sum assured increases by a certain fixed amount every year, hence providing enhanced protection. The policy tenure ranges between 10 & 30 years. The longer the duration of the policy, the higher the premium rates. Hence, the shorter the policy tenure, the lower the premium & the lower the amount of the sum assured.
The death benefit increases by a certain fixed percentage every year throughout the policy tenure, ensuring financial protection for family members.
Let us check the key benefits of increasing term insurance.
Benefits of Increasing Term Insurance Plans
- This coverage increases over a period of time, which ensures better financial protection.
- It is best suited for those who have long-term commitments such as loans, education, etc.
- Increasing the term plan offers coverage that increases over time, which further helps deal with inflation & increased financial obligations.
- The process to purchase the increasing term plan is simple, convenient, & hassle-free.
- The premium also increases with the increase in coverage, though they might be reasonable at the initial stage.
Eligibility Criteria
Provided are the eligibility criteria to be met to avail of Increasing term insurance:
- The insured’s minimum age should be 18 years.
- The insured’s maximum age should be 65 years.
- There is no minimum income requirement to avail of the plan.
- The nationality of an insured should be an Indian citizen.
- Some insurance companies may require an insured to have medical examinations performed to learn about health-related risks, if any.
- The medical reports will have an impact on the premium & maximum amount of sum assured.
- Apart from certain high-risk occupations, professionals, self-employed, salaried, & housewives can avail of the plan.
Documents Required
Provided is a list of documents required to be submitted along with the application form:
- Income Proof
- Salary slips – last 3 months
- Form 16
- Income Tax Returns for the last 3 years
- CA certificate for self-employed
- Bank statements – last 6 months
- Identity or Address proof
- Aadhaar Card
- PAN Card
- Electricity Bill & Rent Agreement (Address Proof)
- Voter ID
- Driving License
- Passport
- Nominee Details
- Address Proof
- Identity Proof of Nominee
- Medical
- Lab Test Reports
- Medical Examinations
- Age Proof
- Aadhar Card
- Passport
- Certificate of Birth
- School or College Leaving Certificate
- Other Documents
- Bank Account Details
- Policy Proposal Form
- Photograph
Steps to Purchase an Increasing Term Insurance Plan?
Provided below are the steps to be followed to purchase an increasing term plan:
Step 1:On the basis of terms of policy & stability offered, you should compare the available range of insurance companies.
Step 2: The premium amount should be calculated& the quotation for the plan should be requested.
Step 3: The amount of coverage should be considered along with the premium amount.
Step 4: Also, one should compare the Claim Settlement Ratio of the insurer. The higher the claim settlement ratio, the greater the chances of claims getting settled in a hassle-free manner.
Step 5: The application formshould be filled out with personal & medical data.
Step 6: The premium amount should be paid using a payment gateway.
How to Select the Right Increasing Term Plan
Below are steps to choose the perfect Increasing Term Plan:
Step 1:Consider your present& future financial obligations, like your loan EMIs, children’s education expenses, marriage expenditures, living costs, etc.
Step 2:Consider the inflation factor,then after calculating the relevant future costs, ascertain your future financial requirements.
Step 3:Compare the range of insurer companies available depending on the rates, terms & conditions & benefits they provide.
Step 4:Evaluate how the premium & coverage amount increases with the passage of time.
Step 5:Consider the flexibility of the plan in terms of critical riders that can be added.
Step 6: Onecan seek advice from the expert in case you need any professional help or any clarification is required.
Step 7:Ascertain the tax & legal implications of your policy.
Who Should Buy Increasing Term Insurance?
An increasing term plan is beneficial for the mentioned list of individuals:
- Young Professionals
Young professionals who have started their careers afresh altogether have high potential, but there is uncertainty about their future obligations. They can opt for an increasing term plan, as it provides sufficient coverage with an increase in income.
- Individuals with Inflationary Pressure
Individuals with high incomes should consider buying an increasing term plan to deal with the inflation factor. Individuals with high incomes & upscaled lifestyles also have more liabilities & are concerned about their future cost of living.
- Individuals HavingLong-Term Goals
Individuals with long-term goals, such as higher education & retirement, can also avail of increasing-term plans. Hence, in case of the sudden demise of an insured, increasing the plan will provide financial protection & help meet long-term obligations.
- Individuals with Dependents
Individuals on whom there is a responsibility of dependents can also opt for an increasing term plan. Children, for instance, require funds for higher education, parents may need medical facilities, or any other obligation may arise. Hence, this plan helps provide financial security to the nominees of the insured in case of their sudden demise.
Conclusion
The Increasing term insurance plan is best suited for young individuals who think their responsibilities &burdens will increase in future. It helps meet financial obligations & provides financial security to the insured’s family membersin their absence. By having a better underst&ing of how to select the right plan, one can protect the financial future of their loved ones.