81 per cent of Indians believe that life insurance of less than 10 times their annual income is sufficient for financial security, according to the ‘Underinsurance Survey 2025’ by Bajaj Allianz Life Insurance and NielsenIQ. However, in reality, individuals just had 3.1 times their income life insurance, which is significantly below the industry-recommended thumb rule.
While one does not need a life insurance policy if one does not have a dependent, it is a good idea to take a life insurance policy as soon as one has dependents, as the premium is much more affordable when one’s age is less. However, while there is a thumb rule, one must regularly review their life insurance policy.
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When Your Life Insurance Policy Needs Review
Regularly check your life insurance policy to make sure it still fits your current financial situation. “As life changes, like getting a raise, having kids, or buying a house, your responsibilities grow, and so does your need for proper coverage. A quick review every few years can help you catch gaps early and make sure your loved ones have enough financial support if something happens to you,” says Kunal Varma, CEO and co-founder of Freo.
Significant life events often bring financial adjustments and new expenses. As partners share financial responsibilities and marriage shifts while having or adopting a child adds cost for education and upbringing.
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Says Aditya Mall, appointed actuary, Future Generali India Life Insurance: “People often take on a mortgage or significant debt to ensure the dependents are financially secure in the event of an untimely demise. Situations like retiring, loss of a spouse, or divorce also call for updates to life insurance policies to reflect one’s financial situation accurately.”
It's important to regularly assess one’s insurance plans to ensure individuals and families can meet evolving financial obligations tied to these significant milestones.
How To Identify And Fill Coverage Gaps
To identify coverage gaps, policyholders should assess their financial responsibilities against their policy's benefits, considering factors like outstanding debts, future expenses (such as a child’s education or a spouse’s retirement), and lifestyle costs.
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If coverage is insufficient, they can increase the policy's death benefit by opting for additional term insurance. “Alternatively, term policies can be converted to permanent ones to secure long-term coverage without undergoing new underwriting.
Policyholders can also enhance their protection through riders like disability income, critical illness, or accidental death benefits, as well as supplemental insurance from employers,” says Mall. Regular consultations with a financial advisor ensure strategies remain effective, coverage stays adequate, and families are financially secure over time.
Taking these steps can help you and your family feel more secure and prepared financially.
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