Buying a term plan where the sum assured goes up to match the growing responsibilities is ideal for young people. Such a policy helps combat inflation by ensuring that the coverage remains adequate even as the cost of living rises, providing long-term financial security for their loved ones.
Typically, young people at the beginning of their careers might not think about a very high sum assured. Their responsibilities tend to go up as they grow older, so it makes sense for them to opt for a plan where the sum assured goes up after a certain period. They can start with lower premiums, which gradually increase as the coverage expands, making it both affordable and future-proof.
An increasing term insurance plan automatically adjusts the sum assured to match growing responsibilities such as birth of a child or purchase of a home without needing additional policies or riders.
Ideally, the term insurance coverage should be 10-15 times of the individual’s current annual income. For instance, if the individual is earning `10 lakh per year at the age of 30, a sum assured of `1-1.5 crore is recommended. However, by the time he reaches 40, the income might have doubled, and so should the sum assured. At this stage, if he is earning `20 lakh annually, it would be wise to increase the coverage to `2-3 crore.
