How to Increase Coverage in Your Life Insurance Policy
Since change is the only constant in life, it’s wise to review your life insurance policy as your circumstances evolve over time. This assessment doesn’t need to happen monthly or even annually; rather, it should take place when you encounter key life milestones. Certain major life events may require you to increase your insurance coverage. Here’s how you can raise the coverage levels in your life insurance policy:
Top Up Your Plan
Many term plans—the most popular and recommended type of life insurance—come with a top-up option. These plans are designed to adapt to your changing needs. The simplest and most efficient way to increase your life insurance coverage is often by topping up your existing plan.
Check if your policy includes an increasing term feature. If it does, your coverage will automatically grow each year without requiring you to make manual adjustments. However, keep in mind that the premium will also increase annually.
If your plan follows a life-stage growth strategy, your coverage will increase each time you reach a personal milestone—such as getting married or expanding your family. However, not all term plans offer top-up features. In such cases, you may need to explore alternative options. Experts at Insuranks can help you make informed insurance decisions based on your unique needs and preferences, providing tailored recommendations to ensure you have the right coverage at every stage of life.
Change the Term Plan to a Whole Life Policy
Whole life insurance offers lifetime coverage, meaning your beneficiaries will receive a death benefit even if you live to be 100 years old. In contrast, a term plan only provides coverage for a fixed number of years—if you outlive it, no benefits are paid.
One advantage of whole life insurance is that it allows you to expand your coverage while also building cash value, which can be withdrawn later. Switching from a term plan to a whole life policy is usually straightforward and doesn’t involve many fees.
However, there are some downsides. First, few insurers offer the option to convert a term plan into a whole life policy. Second, whole life insurance premiums tend to be significantly higher. Third, most people don’t need lifelong financial protection for their dependents. Lastly, the cash value component of whole life insurance may be subject to taxes, potentially increasing the overall cost.
Purchase a Fresh Term Insurance Policy
Another option is to purchase a new term policy with additional riders. While this can provide broader coverage, it often comes at a higher cost and requires more paperwork. You’ll likely need to undergo fresh medical examinations, and managing multiple policies can be complicated.
Even top-up policies may require some health checks. Be sure to inform both insurance companies if you have multiple policies—failure to disclose this could lead to claim issues later on.
Endnote
Choosing the option to increase your coverage when purchasing a term plan can help you avoid hassles later. It ensures that your policy continues to meet your needs and that your loved ones can handle the claim process easily.
