"The only constant in life is change." - Heraclitus
As humans, our needs and aspirations are constantly in flux, shifting and growing in tandem with each new stage of life. From the carefree days of youth to the responsibilities of adulthood, we are constantly navigating a changing landscape of challenges and opportunities. And in the face of these ever-evolving circumstances, one thing remains constant: the need for protection and security.
That's why it's so important to have a powerful, flexible tool like term insurance in your corner. It's a powerful tool that offers flexible, affordable coverage for a set period of time, giving you peace of mind and the freedom to focus on living your best life, providing the protection and security you need to thrive at every stage of life. But what if you could take that protection to the next level, tailoring it to your unique needs and goals at each step of the way?
That's where the life stage benefit rider in term insurance comes in, offering a versatile and dynamic way to ensure that your coverage always keeps pace with your changing circumstances. In this blog, we'll dive deep into the world of life stage benefit riders, exploring how they can help you build a secure and stable future no matter what life throws your way. So buckle up, and join us on a thrilling journey through the power and potential of the life stage benefit rider in term insurance.
What is a life stage benefit rider in Term Insurance?
Life stage benefit is a beneficial feature in term insurance that boosts your insurance coverage without the need for extra paperwork or medical exams during important milestones in your life. These milestones include things like getting married, having children, or taking out a home loan, and are pre-determined by your insurance provider. If you reach any such life stage, you can inform your insurer and pay a higher premium to increase your coverage. The new, increased coverage will take effect on the next renewal of your policy.
For example, suppose an individual buys a term life insurance policy at the age of 25 with a coverage amount of Rs. 50 lakhs. As the individual gets married, starts a family, and takes on more financial responsibilities, they may realize that the original coverage amount may not be sufficient to protect their family's financial future in the event of their untimely demise. To avoid such a situation, adding the life stage benefit rider while purchasing a term plan can be a sound financial decision. If, for instance, the individual gets married at the age of 30 and chooses to exercise the life stage benefit rider option, they can inform their insurer and pay an additional premium to increase the coverage amount from Rs. 50 lakhs to Rs. 75 lakhs. The upgraded coverage amount will be effective from the next anniversary of the policy without the need for any additional medical tests or paperwork.
Why Should You Consider Life Stage Benefit While Investing in a Term Insurance Plan?
Financial planning can serve as a compass to navigate the unpredictable journey of life. While planning for the future, it is important to account for all the uncertainties that lie ahead, especially the financial ones. So, why not make it easier for yourself and your loved ones by opting for the Life Stage Benefit in your term plan?
Gone are the days when individuals had to purchase a new insurance policy every time a new need arose in their life. This approach is neither feasible nor economical. Instead, choosing a policy with provisions for the Life Stage Benefit allows for insurance coverage to increase at definite intervals based on the policyholder's needs. With this feature, greater financial security can be offered to loved ones in the policyholder's absence.
It's like a fairy godmother who magically increases the sum assured by the policy at the onset of every crucial stage in your life - marriage, children, home loans, and so on. All of this without you having to lift a finger or shell out more money for a new policy. Plus, with the Life Stage Benefit in your term plan, the premium would still be affordable, just like with regular term policies.
Consider opting for the Life Stage Benefit in your term plan to enhance your financial security. This can provide you and your loved ones with protection and peace of mind, regardless of the challenges that life may present.
Let us give you an interesting example,
Let's take a look at Mr. A's story. When he was just 25 and single, he was wise enough to purchase a term life insurance plan with a 'Life Stage Benefit' feature. Fast forward to four years later, he found himself married to Mrs. A, and to account for the new addition to his family, he increased his coverage by 50% of the base sum assured to ₹1.5 crores.
But Mr. A wasn't done yet. Two years later, he welcomed a beautiful baby girl into the world, and his responsibilities grew once again. To make sure his family was always protected, he increased his coverage by another 25% of original base value to ₹1.75 crores.
But Mr. A's ambitions didn't stop there. When he took out a home loan of ₹50 lakhs, he increased his term plan cover yet again. And when he passed away, his wife was able to take on the responsibility of their daughter's education and marriage without the burden of financial worries.
The 'Life Stage Benefit' feature is a powerful tool that enables policyholders to increase their sum assured in line with their rising financial responsibilities. In the unfortunate event of the policyholder's death, their beneficiaries will receive the full increased sum assured. Therefore, those seeking to protect their loved ones and secure their financial future may want to consider a term life insurance plan with the 'Life Stage Benefit' feature.
Limitations of life stage benefit
- Limitations Based on Remaining Policy Years: Some insurers may require that you have a minimum of 5-10 years (approximately) remaining to be covered in your policy years before they can avail of the Life Stage Benefit upgrade on your existing plan.
- Age restrictions: Once you hit a certain age (usually around 45 or 50), you may not be able to upgrade the policy using Life Stage Benefit, according to some insurers.
- Rider-based restrictions: Some insurers/plans may put the brakes on your Life Stage Benefit if you have opted for certain Riders with your term plan.
Step by step guide on how to avail for the life stage benefit rider
Wanna level up your term insurance game with the Life Stage Benefit? Here's how to make it happen:
Inform your insurer about adding the life stage benefit rider while buying a term insurance plan.
Inform your insurer within 6 months to 1 year of reaching a life stage event to exercise the upgrade.
Submit proof documents to your insurer to apply for an upgrade.
The newly upgraded sum assured is effective from the next anniversary of the policy.
Your premium will increase accordingly with the upgrade of your sum assured.
Step-1: First things first, when you're purchasing your term insurance plan, be sure to inform your insurer that you want to add the life stage benefit rider to your policy.
Step-2: As you progress through life and reach certain milestones, you'll want to inform your insurer within 6 months to 1 year of the life stage event to exercise the upgrade. For example, if you get married, have a child, or buy a new home, these are all events that could impact your financial obligations and require more coverage.
Step-3: You'll need to submit proof documents to your insurer, such as a marriage certificate, birth certificate, or property deed, to apply for an upgrade.
Step-4: When your upgraded sum assured is approved, it becomes effective from the policy's next anniversary date. If you inform your insurer of a life stage event within six months, the new coverage will start from the next policy renewal date. For instance, if you get married in July and inform your insurer, your new coverage will start on the next policy anniversary date, which could be in January.
Step-5. It's important to keep in mind that your premium is also going to increase accordingly with the upgrade of your sum assured. But the good news is that you'll have peace of mind knowing that you and your loved ones are financially protected during life's big moments.
Life stage benefit v/s Manually buying additional policies
Opting for a Life Stage Benefit can be more advantageous as compared to manually upgrading, which can often be tiresome. Like in term insurance, if you opt for manually buying additional policies instead of opting for a life stage benefit rider in order to increase the sum insured/coverage.
Here are some potential obstacles that you may encounter while buying an additional policy manually -
- First off, prepare yourself for a fresh round of documentation. You'll be embarking on a whole new policy journey, which means you'll need to tackle all the paperwork again. But that's just the beginning.
- You'll also have to undergo another set of medical tests. If you've developed any health issues since your last check-up, brace yourself for the possibility of rejected policies or sky-high premiums. The stakes are high, and the risks are real.
- Managing multiple policies can be a headache, and in the event of a claim, the loved ones of the policyholder will have to navigate the complex and exhausting process multiple times while trying to cope with their grief.
Life stage benefit is a game-changer for term insurance. It's the one feature that makes term insurance not just a policy, but a lifeline. It's a plan that evolves with you, keeping up with your life's milestones and the financial responsibilities that come with it. And the best part is, you don't have to plan for it ahead of time! Just inform your insurer within 6 months to 1 year of the life stage event, submit some proof documents, and voila - you're upgraded.
Whether it's getting married, having a child, buying a new home, or even reaching a milestone birthday, life stage benefit has got your back. Your policy becomes more than just a piece of paper, it's a safety net that ensures your family's future is secure.
FREQUENTLY ASKED QUESTIONS
When should I opt for life stage benefit in Term Insurance?
Opt for the life stage benefit in term insurance when you anticipate significant life changes that will increase your financial responsibilities, such as marriage, having children, or buying a house.
Can I add life stage benefit to my existing term insurance plan?
Yes, you may be able to add the life stage benefit to your existing term insurance plan, depending on the terms and conditions of your policy and the insurer's guidelines. Check with your insurance provider to learn more about your options.
How much does it cost to add life stage benefit to my term insurance plan?
The cost of adding the life stage benefit to your term insurance plan may vary depending on the insurer, the sum assured, and other factors. Typically, you will need to pay an additional premium to include this feature in your policy. Contact your insurer for specific details on the cost of adding this rider.
How does the life stage benefit in term insurance differ from other types of riders?
The life stage benefit in term insurance is a unique rider that enables policyholders to increase their coverage amount in line with their changing financial responsibilities over time. Unlike other riders, it is designed to address the evolving financial needs of policyholders over time.