Marriage is synonymous to change. With this new chapter in life comes a lifelong commitment, new relations to nurture and most importantly a gamut of responsibilities and changes in one’s life. With marriage, your earnings, savings, insurance and investments change from being just ‘yours’ to ‘ours’. Your whole thought pattern shifts and managing finances more coherently becomes an even more integral component for you.
The very first changes that people make in their financial portfolio after marriage entails health insurance and medical insurance. However, not as much attention is given to the term insurance plan taken before or after marriage. As per a 2019 survey, close to 65% of urban Indians have a life insurance policy but just one in five people have got term insurance. The importance of this plan is quite overlooked. So, if you have it already, you must make it more beneficial for yourself and your family.
Myth or Truth
Term insurance can’t be changed or it is too laborious to get it changed. It is better to look for some other alternatives! Keep reading the blog to know how much truth the above-mentioned assumption holds and more.
Why is It Necessary to Make Changes in the Term Plan After Marriage?
Making changes in the term plan is quintessential for individuals after they are married due to several reasons. Some of the major benefits that it offers are the following-
While these are the usual benefits when you do not make the changes most of these will not give you optimum benefits when you get the sum. The responsibilities, lifestyle and a whole gamut of changes happen and that is why you need to ensure that your term insurance plan is also in alignment with those changes in order for you and your family to have a more peaceful and secure life amidst the uncertainty.
Let’s see up to what extent the plan can be altered.
To What Extent can You Alter the Term Insurance Plan?
Depending on the insurer you have chosen, the flexibility and frequency of the changes would differ.
Too many changes are discouraged but given the benefit of doubt that there could be errors in the nomination process. To change the name you can tell the insurer the reason that you wish to make your husband/wife the nominee. The process is quite simple-
- Fill change of nomination form online or offline
- Submit the copy of the policy document and the nomination form to the insurer.
- You must also get an acknowledgement for the change of nominee from the insurance company to enjoy a smooth claim settlement in the future.
Note: You can also have multiple nominees in the list like your kids or other family members.
Change Sum Assured
As your responsibilities increase after marriage it is a great move to increase your term insurance amount to provide for people in the family later. Otherwise, your family might end up compromising on their needs to make their ends meet. However, depending on the plan and insurer, some plans allow you to change the sum assured and some don’t. There are certain plans which allow you to increase the cover based on the life stage events.
A. Based on the plan, if allowed- There are three life stages where the increase is sum assured is allowed by most of the insurers.
1. 50% of increase in the term insurance cover at the time of marriage.
2. And 25% each at the birth of 1st child and 2nd child.
So, check with your insurer to raise your sum insured.
B. If not allowed- In this case too, you should not feel disappointed. Other options to increase the sum assured are-
1. Buy another term plan after checking your eligibility for the same.
2. Buy term plans in different and smaller digits and varying policy periods.
3. Remember to opt for an increasing term plan when purchasing.
Important: The Ideal Term Insurance Plan
An ideal term insurance plan must offer the option of Life stage event term insurance plan. The same means that the increase in cover basis on life events is allowed. So, make sure you ask your insurer if this option is available and be more careful on this part when you or someone else you know gets a term plan.
Would a Free- look Period be a Better Alternative?
Free-look period is your best bet when you get any life insurance plan which includes a term plan as well. In this, the policyholder is given a 15 day period to reconsider the policy and specifications. You can utilise this period to read the documents word to word carefully and take the final call.
It is always a great idea to have yourself covered in a group term plan by the employer even after having your own independent term plan. So, opt-in always!
You can also get the changes related to the sum insured, nominee and other specifications done. If you think it is not the right policy for you, you can also cancel, the insurer will change a minimum fee and return the premium amount to you.
So, always ask for the free-look period so that you have time to ensure you are making the right investment decision.
Make the changes or buy a new term insurance plan, do whatever it requires to build a protection nest for your spouse and the family you would be starting. Remember that the sum assured is 20-25 times more of your current annual income and when your annual income increases, you can also your eligibility for another term if necessary; and to not make false disclosures, they can lead to rejections.
Have a happily married and secured life!