Buying a term insurance plan is deemed as a part of risk management plans. However, it is just the first step as the buyer needs to regularly evaluate if the term cover amount is adequate to meet his needs. It is stated that change is certain and is the only factor which remains constant. As life and situations change, people must revisit their term plan and check if there is a need of modification. Here are some instances when it becomes absolutely necessary to revisit term plans:
Changes in personal life
Whenever there is any change in personal life, it is important to reassess term plan needs. If a person gets married or becomes a parent, it is evident that the dependents have increased in family. It indicates there is a need of increased cover so that there is adequate financial stability in case of any unfortunate event. So, it is advisable to reassess family needs and accordingly change the term insurance plan.
Payment of liabilities
A term insurance plan helps dependents on important goals, and also assists the person in the repayment of his liabilities. For instance, a home loan comes in the list of the largest loans in a person’s life. If the borrower passes away during the loan tenure, the dependents/ family members are required to bear the liabilities. Failure to repay the loan could force banks to sell the property. If there is adequate term cover, the family members/nominees can utilize this fund to repay the loan. Thus, people should revisit term cover when they take on large loans.
Change in career
Whenever there is a promotion, demotion or job loss, it is advisable to reassess the term plan. For example, a job loss brings lower cash inflows, leaving dependents vulnerable in case of unfortunate event. At the same time, if income has increased substantially from the time when a person bought the insurance, then a new term cover would be required to support the new lifestyle.