I am 34 and single. I have a couple of term plans. I bought a cover from Birla Sun Life Insurance in 2007 and it covers me till 52. I bought another cover from Aegon Religare in 2011 and it covers me till 70. I need more insurance cover now because of revision in my compensation and an increase in loans and debts. I am looking to buy a term plan online again. Before doing that I have a few queries:
- Is it good to have three term plans?
- Is it wise to close/surrender the plan I bought eight years back and buy a new one for a bigger cover? I think it makes sense as I am paying a higher premium for a small cover, that too only till I am 52.
- Should I stick to the same insurance provider?
- Rayacho
- Two term covers are sufficient for the purpose of diversification.
- Yes, it is a wise decision to discontinue an old insurance plan that is costly and offers very little insurance cover, and opt for a new generation online term plan that is cheap and offers a bigger insurance cover.
- There is no extra advantage in sticking to the same insurance provider. While choosing an online term plan, opt for an insurance company that offers the cheapest cover. Also, choose a company with a higher claim settlement record.
Your life insurance policy should cover you until your retirement or till someone else steps into your shoes and share your financial responsibilities. Also, your insurance cover should be adequate to take care of the financial needs of your dependents. Try to buy a larger term cover if you think your standard of living is going to improve steadily and you will be borrowing more. You may also consider an "increasing term cover", where the cover would increase by a pre-fixed percent at regular intervals. However, these plans are expensive than plain term insurance policies.
This article was originally published on September 18, 2015.
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