Marriage, birth of a child, taking a large loan like a home loan and pay hikes are four major life events when you should increase your life insurance coverage. Here's why.
Hello and welcome to Fundoomoney, your 24X7 buddy for all your money matters! Your loved ones need to be financially secure at all times. They should be able to lead their regular lives and pursue their dreams without financial worries, even in your absence. To help you ensure that there’s life insurance. That is also why you need to increase your life insurance coverage after four major life events. Which are these events? We tell you all about them in just a little while.
Here are four life events which call for an increase in life insurance, typically by buying a fresh term plan, in case you don’t have one that allows you to enhance the coverage.
When you get married
After marriage, you need to secure your spouse’s future financially. Of course, your financial advisor or financial planner can help you out, but as a thumb rule, ensure that you increase your life insurance cover at least by 5 times your annual income. You may consider a higher amount, say 10-15 times of your annual income, if your spouse is not working.
When you have a child
While some family elders might gently remind you of your enhanced responsibility with the entry of the bundle of joy in your world, your first port of call needs to be increasing your life insurance cover. The coverage should be able to meet your child’s regular expenses and major future expenses like higher education in your absence. Thumb rule: increase life insurance cover by at least 5 times your annual income.
Big ticket purchase with a loan
If you buy a big asset like costly car or a home with the help of a loan, in your absence, your family may become financially vulnerable to loan repayment. The family members may find it difficult to maintain it and might even have to sell it off. To prevent this from happening, increase your life insurance for an amount equal to the amount of outstanding loans.
Substantial increase in income
Your lifestyle and future goals typically get enhanced with increase in your income. To protect both for the sake of your family’s future, you need to ensure that your life insurance coverage keeps pace with the financial progress in your life.
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