Things you should know when Increasing Term Life Insurance Co
In case you unexpectedly passed away, term life insurance is a popular way to protect your loved ones financially during a specific period of time. As time goes by, it is possible that the contract that you previously purchased may no longer provide as much coverage as you need.
Can you increase term life insurance coverage? Term insurance policies typically pay out over a predetermined number of years and have fixed death benefits. You do have choices, though, if you need to increase your coverage. Here are some tips for improving your term life insurance and reasons to think about it.
Term Life Insurance and Changing Coverage Needs
If you die before the contract expires, the term life insurance provides a payment to your beneficiaries. Typically, a term contract lasts for 10,15,20, or 30 years, and it is meant to cover financial obligations that end before the term does. While a 10-year term might be appropriate for a small business loan, you might choose a 30-year term to cover a 30-year mortgage or the following 30 years of revenue you anticipate making.
Often the blessings you have received reflect the additional responsibilities and obligations in your life. For example, a promotion at work, a new child, a larger home, or the opportunity to care for aging parents who have done so much for you growing up. However, the feelings of increased financial responsibility also accompany these obligations. We need to protect the ones who rely on us with additional life insurance, as this could alleviate some stress.
If you are getting married or divorced, that could also impact coverage of other life events. Similarly, some of these challenges mean you might need less coverage, so it’s good that you can cancel a term contract without facing a penalty. You could alternatively decide to preserve the additional coverage while possibly shifting the beneficiary to a nonprofit organization or another relative.
How to Increase the Death Benefit on Your Existing Coverage?
Renew or Convert Your Policy: Some term life insurance policies come with renewal options or conversion features. Therefore, if your policy includes these features, you may have the option to renew the policy for another term or convert it into a permanent life insurance policy without the need for a medical exam. Renewing or converting can allow you to increase your coverage and extend the protection period.
Purchase a New Policy: If your existing term policy doesn’t have renewal or conversion options or if they are not suitable for your needs, you can consider purchasing a new term life insurance policy with higher coverage. Keep in mind that as you get older, premiums may increase, so it’s generally more cost-effective to buy life insurance while you are young and healthy.
Add Riders: Some insurance companies offer riders, which are optional add-ons that can enhance your coverage. Furthermore, examples include accelerated death benefit riders, which allow you to access a portion of the death benefit if you become terminally ill, and guaranteed insurability riders, which enable you to purchase additional coverage at specific life events without undergoing a medical exam.
Combine Policies: If you already have multiple term life insurance policies, you may be able to combine them into a single, larger policy to increase your overall coverage. This can help streamline your coverage and potentially save on administrative costs.
Shop for Better Rates: If you believe you need more coverage, it might be a good time to shop around and compare rates from different insurance providers. Moreover, you may find more competitive rates or better policy options that suit your current needs.
