Why is the Life Stage Option Important in Term Insurance?

Term insurance is an essential component of efficient long term financial planning. You can realise its importance at different stages in your life. As a primary responsibility, while you provide a financial safety net to your loved ones, you should also ensure that the funds will suffice for their financial needs. So how can you do it with your term policy? Here is a way to start!

What is the Life Stage Option in Term Insurance?

The life stage option in a life insurance term plan is an option that provides an opportunity to increase the sum assured at different stages in your life. For instance, you can increase the insured amount when you get married, get blessed with children, purchase a new house based on a home loan, etc.

Why is the Life Stage Option Important? 

The life stage option increases the term insurance benefits on the basis of your income and family commitments. Here are the details about the life stage option:

• In the 20s - While you are in your 20s, you will begin your career and start earning. You may not realise the importance of purchasing a term policy at this age. However, suppose you are an important earning member of your family. In that case, you will benefit from term insurance benefits at an extremely affordable premium rate when you purchase it at a younger age. On the basis of your family financial liabilities, you can decide on the sum assured that you need.

• In the 30s - At your early 30s or a slightly lower age, you might plan for your marriage. After getting married and blessed with children two or three years later, your responsibility of taking care of your dependents will increase. It means you will require a slightly higher amount of sum assured to accommodate the increasing financial needs. 

You can calculate the standard daily financial requirements and short-term and long-term money goals and increase the insured amount using the life stage benefit option.

• At your 40s - While you are in your 40s, you will start increasing your financial assets by purchasing a new house, car, etc. It is a basic need to get settled after your retirement. However, to accomplish such commitments, you will avail of loans from financial institutions. While benefiting from such loans, you must make the necessary arrangements to repay the liabilities efficiently. 

And, when you are not there, you should not let your loved ones take up the burden to pay off the debts. So, at this stage, you can increase the insured amount on the basis of your debts with the life stage benefit in term insurance. It will decrease the financial burden on your family and help you live peacefully.

• In your 50s - While you are in your 50s, it is time to plan for your retirement. While you may have fulfilled your financial liabilities, such as paying for your child's education and marriage, you must make necessary financial provisions to help your dependents live in harmony and financial independence after your retirement. And, when you are not there, it is of utmost importance. Therefore, you can increase the amount of sum assured even further with the life stage option.

We have seen how increasing family commitments get important at different stages in your life. As a moral responsibility, you have to work on the financial planning for an adequate inflow of money to help suffice your family needs in your absence. 

Hence, enhancing your sum insured based on these money goals should be prioritised. There are different term plans with the life stage option with customisable features. Many reputed insurers offer term plans with similar features. For instance, the Tata AIA term plan provides the life stage option that helps you increase the life cover as required on the basis of your financial needs. 

Conclusion

Term policy with the life stage option is a valuable feature of life insurance plans that will help you enhance the sum insured based on increasing family needs at various stages of your lifetime. Understanding the commitments and using the feature to the optimum level is certainly a wise decision. So, purchase term insurance and revise the sum insured as and when required to ensure maximum protection to your family!