Boost term cover with rising income and liabilities

Increase health cover to tackle rising medical costs; consider super-topup and critical illness plan

- SANJAY KUMAR SINGH & KARTHIK JEROME

Harsh Kumar (name changed on request), a 54-year-old Bengaluru resident, meticulously reviews his investment policy in December every year. This year, at the suggestion of a golfing buddy who is a financial planner, Kumar also turned his attention to his insurance portfolio. "A robust insurance portfolio provides the foundation upon which a strong investment strategy is built," his friend said. Considering this, Kumar reviewed his policies and discovered significant gaps in his term and health insurance coverage.

Reviewing term coverage

If you have started working and have dependents who rely on your income, you must buy term insurance at the earliest. "Premiums are lower when you are younger. Premium in a term policy remains unchanged throughout the policy tenure, so a lower price is beneficial," says Srinivasan Balasubramanian, chief of products, ICICI Prudential Life Insurance. He adds that as one ages, the onset of health conditions can cause insurers to charge higher premiums.

A good rule of thumb is to purchase term cover amounting to 7-10 annual income, plus outstanding liabilities. While choosing the cover, select an appropriate tenure. "The term cover should last until your liabilities are paid off and your children have started earning," says Rhishabh Garg, head of term insurance, Policybazaar.