Taking Cover. Do you need that second policy?

Typically, one tends to buy life insurance and forget about it thereafter. But things change over time and so your life cover needs to change too.

So, do you need to buy a second insurance policy? Before you sign up, there are many factors to evaluate − the cover provided by your employer, your changing lifestyle, inflation, and whether riders can fulfil your objectives.

Consider employer’s cover Most salaried individuals have access to a life insurance policy that has been provided to them by their employers. These are usually group plans.

But keep in mind that such covers may fall short in meeting your complete financial needs, as the sum assured may be smaller than desired.

It is better to evaluate the insurance provided by an employer and then avail an additional plan to ensure sustained coverage between jobs or if unemployed.

Use benefits of existing policy Before you take cover for additional needs, you should also understand the benefits from existing policies. There are plans that provide access to the policy's cash value through withdrawals or tax-free loans. These can be used to fund needs such as a child's education. Therefore, evaluate if you need another plan after factoring in these payments.

Use riders to the maximum If you find that your insurance needs have increased, adding on riders to your existing cover may work well too.

Riders enhance insurance cover and also customise the insurance plans to one’s needs and objectives. Most often, the extra premium for riders is relatively low. Some useful and popular riders include:

Critical illness rider: This allows the insured to get the complete insured amount in the event of a critical illness specified in the rider. Usually, this rider covers serious illnesses including cancer, strokes, pulmonary illnesses and other major organ disorders.

Accidental death & dismemberment rider: This covers the life insured in case of accidental death or disability arising from loss of limbs, or sight, or both. It provides an additional benefit in case of accidental death and/or disability, thereby securing the family’s financial health in case of such loss.

Income benefit rider: In case of accidental disability or illness, an individual remains away from work for extended periods. The income benefit rider enables adequate financial protection through a percentage of the premium that is received as regular monthly income throughout the term of the rider.

Surgical care rider and hospital care rider: In case the insured is hospitalised to undergo a medically necessary surgery, the surgical care rider enables the insured’s family to remain free from financial worries by providing a lump sum benefit when the insured goes under the knife. The hospital care rider offers a daily cash benefit in case of hospitalisation for medically necessary treatment of any illness or injury from the first day and for the entire duration of hospitalisation.

The writer is MD and CEO, Birla Sun Life Insurance

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