One of the primary goals for a family head is to make sure their family is financially secure, even when they are not around. In your absence, you do not want them to reduce their level of standard or run out of money at critical points in their lives. While you have little control over life’s uncertainties, you can do a lot to ensure your loved ones’ future security by planning ahead of time. One of the appropriate methods to do this is to purchase a term insurance plan.
Term insurance provides a comprehensive financial safety net. Beyond the primary benefit of a guaranteed sum assured upon death, it offers payout flexibility, covers terminal illnesses, and provides potential tax benefits. Some plans even provide premium returns. Riders such as accidental death compensation, permanent disability coverage, and critical sickness coverage can be added to provide further protection. However, to make sure their family is comprehensively secure, it is important to choose the right sum assured using the term insurance calculator.
While all of these advantages are significant, one such benefit that most of the policyholders aren’t aware of is the Life Stage Benefit. It is a unique feature that allows policyholders to increase their coverage as their life stages grow, ensuring that changing financial demands are taken care of without extra paperwork.
Why Should You Consider Life Stage Benefits When Choosing a Term Insurance Plan?
Most insurance companies have specified life stages such as getting married, having children, purchasing a home, or beginning your own business as milestones.
Term insurance is intended to meet both long- and short-term goals. As time passes, the duties/obligations rise, and the sum assured that you chose years ago, when the circumstances were completely different, begins to feel insufficient. For example, as a recent graduate, you purchase a term insurance policy. For the time being, your coverage will be adequate. You eventually settle down and start looking for a house to buy. After a few years, you will be accountable for your children’s upbringing and education. You will have to pay for their continued education later. As a result, the original sum assured will most likely be insufficient to cover all of these expenses and hence, you need to again use the term insurance calculator and calculate the sum assured that will be sufficient for the future goals. As a result, insurance requirements vary depending on the stage of life.
The life stage benefit works on the basis of “One size DOES NOT fit all,” which means that the initial coverage of your term plan cannot cover all of your life stages. When you choose a Life Stage Benefit with your term life insurance policy, you can increase your sum assured at critical points in your life to meet increasing financial obligations that may come as life progresses. Furthermore, this benefit does not require you to pay additional fees or a large premium. A Life stage Benefit provides you with an additional sum assured amount at a specific period in life, without affecting your base sum assured.
Let’s demonstrate this with an example
Rahul purchased a ₹50 Lakh term life insurance coverage by using a term insurance calculator when he was 24 years old and single. He took a term plan with the ‘Life Stage Benefit’ option. At the age of 28, he married Pooja. He raised his coverage to ₹75 Lakh (50% of ₹50 Lakh + 50 Lakh) using the Life Stage Benefit feature to accommodate an additional dependent.
After two years, they were blessed with a baby daughter. He again stepped up his coverage by 25% of the base sum assured to ₹87.5 Lakh (25% of ₹50 Lakh + ₹75 Lakh), accounting for the additional expenditures of raising and educating the child.
After 2 years, he got a home loan of ₹50 Lakh and increased the term plan coverage. His total term insurance coverage was about ₹1.37 crores. Following his death, his wife was able to take on the duties of their daughter’s education and marriage thanks to the term plan with life stage benefit feature.
Who is it most beneficial for?
A Life Stage Benefit feature allows you to increase your coverage limit as your life progresses. This option is especially handy for young investors because it allows them to upgrade the term cover without the need for additional documents or paperwork. All you have to do is pick this feature when purchasing your term insurance, choose the sum assured using the term insurance calculator and you will have the flexibility to increase your sum assured by paying an additional premium,
So we are saying,
Life Stage Benefit is particularly popular due to its versatility and simplicity. It allows you to grow your sum assured in accordance with your increasing financial responsibilities. Furthermore, in the event of your demise, your beneficiaries will get the additional sum assured. The best part is that you can use the Life Stage Benefit at any time during the duration of your policy, as long as you select the benefit when acquiring the term insurance policy. When purchasing term insurance with this benefit, be cautious and thoroughly look into all of the policy’s features and benefits. Including a life stage benefit in your policy will enhance your coverage and provide financial security for your family.
