I'm 38 years old and hold a senior manager position at a mid-sized company. While I have a group term life insurance plan provided by my employer, I'm unsure whether the coverage is adequate to meet my family's financial needs. How can I assess if the sum assured is sufficient? Additionally, is there an option to enhance my coverage through a top-up or additional policy to ensure complete protection?
Advice by Satishwar B., MD & CEO, Bandhan Life Insurance
Thank you for asking this important question about safeguarding your family’s future. Even at 38, with a promising career ahead, it’s wise to look beyond the group term life insurance offered by your employer. While that group policy is a valuable benefit, it can sometimes fall short of providing complete financial security for your loved ones. Being proactive now can help you avoid larger financial worries down the road and ensure your family remains stable, no matter what life brings.
How Much Life Cover Do You Need?
A general guideline is having a life cover of at least 10 to 11 times your annual salary, but this can vary based on unique factors. For instance:
● Your Age & Responsibilities: At your current stage, you still have many earning years ahead, and buying a personal policy early is typically more cost-effective. Consider inflation and potential future expenses so that your coverage adequately replaces your income if you’re not there.
● Liabilities & Loans: Outstanding debts like home or car loans should be fully accounted for in your policy. Otherwise, these debts could weigh heavily on your family.
● Spouse’s Income: If your spouse depends on you or earns significantly less, a higher sum assured ensures they won’t be left in a financial bind.
● Children’s Education & Lifestyle Needs: Costs for education can rise quickly, and everyday living expenses keep going up. Your life cover should account for these increases over time. To get a more accurate figure, tools such as a Term Life Cover Calculator can help. These are readily available online, including on our own website www.bandhanlife.com.
Ways to Enhance Your Life Cover
If your group term life insurance seems insufficient, there are multiple ways to boost your protection:
● Top-Up Option: Some employers allow you to “top up” your group coverage by paying extra. This can be a straightforward way to increase your sum assured.
● Purchase a Separate Term Policy: It’s strongly advisable to have an individual term plan of at least 10–11 times your annual salary for comprehensive coverage. Unlike group policies, this personal policy remains with you even if you change jobs, ensuring your loved ones stay protected against any unforeseen events.
Choosing the Right Term Plan
Term plans today come with features tailored to different life stages:
● Increasing Sum Assured: Ideal if you expect your responsibilities to grow, such as when raising a family.
● Extra Riders: Add-ons like accidental death cover can further strengthen your policy. Why Group Insurance May Not Be Enough While group term insurance is a helpful perk, it has certain drawbacks:
● Limited Coverage: Often, it covers only a few times your annual income, which might not be sufficient for long-term stability.
● Tied to Your Job: Leaving or changing employers typically means losing that coverage.
● Limited Flexibility: Group policies rarely offer riders or other customisation options you might want.
Final Thoughts
Ultimately, group term life insurance should be treated as just one part of your coverage, not your sole line of defence. Your family’s needs are unique, and an individual policy ensures you’re covered no matter where you work.
After you’ve calculated how much coverage you need, check if your employer offers a top-up and then decide whether an additional term plan is necessary. Buying when you’re still relatively young and healthy can mean lower premiums, but more importantly, it guarantees peace of mind for you and your loved ones.
In my experience, the biggest regret people have is waiting too long to secure adequate life insurance. My advice is simple: if you suspect your group coverage isn’t enough, ACT NOW.
Life is full of surprises, and ensuring your family’s financial future shouldn’t be postponed. By taking these steps today, you can rest assured that your loved ones will have a financial cushion if something unexpected happens. That peace of mind is priceless—and well worth any extra steps you take to protect your family now.
Remember, each day you delay could mean higher premiums or insufficient coverage. If you have any lingering doubts, speak to a financial advisor or insurance expert who can assess your situation in detail. Take the leap and give yourself and your family the security they deserve.