I was told that I could only go for a limited sum assured when scouting for a life insurance plan. Is it true that I cannot take a high value cover? How can I increase the cover on my life insurance?
Tarun Chandel, Jaipur
The sum assured that you can take in a life insurance policy depends on factors like your income, age and even gender. The maximum cover that an insurer offers you will depend on their internal standards and practices. Generally, insurers offer life cover up to 20-25 times a person’s annual income when they are less than 35 years old. As one ages, insurers reduce the quantum of life insurance that they offer policyholders.
As you age, this multiple decreases. Which means, at 40, insurers may offer you cover that is only 15-20 times your annual income. In case you do not get your desired sum assured, you should still buy a plan with maximum possible cover now. As your income increases, you should buy new plans with higher sums assured, of course, you will need to inform the insurer when you are taking a new policy about your existing life insurance cover, so that there is no dispute when a claim is actually raised by your dependents at the time of your demise.
To increase the scope of your life insurance cover, consider adding accident insurance and critical illness to the basic life insurance policy. A personal accident insurance will give cover only for accidental death and not natural death. Likewise, critical illness will give you cover for conditions arising from the setting in of critical illnesses. The advantage of a personal accident policy is that it covers disability in addition to death and in case of critical illness, the money that comes your way could be used in any which ways that you deem fit – treatment or otherwise.
