The press release explains that an increase in an individual's salary should trigger a review of their term life‑insurance cover because the financial responsibilities tied to the new income level are larger. It notes that a term plan is intended to replace a portion of future earnings for the family, and as annual income rises, the replacement amount should rise accordingly. A frequently cited benchmark is to hold coverage equal to 10 to 15 times the current annual income, but the release cautions that this is only a starting point and must be adjusted for household specifics such as a home loan, education expenses, parental support, and the growth of existing investments.
Lifestyle inflation is highlighted as a factor that quietly raises monthly expenses; examples include higher rent or EMI, increased school fees, greater household support costs, and higher medical or elder‑care spending. The document advises using a term‑plan calculator to move from a vague estimate to a structured figure. The calculator process involves five steps: (1) enter the current annual income rather than the income at policy inception, (2) add major liabilities like home, education or business loans, (3) factor in the number of dependents and the years of support required, (4) subtract any existing life‑cover and liquid assets earmarked for family needs, and (5) review the resulting premium for affordability. The outcome may confirm that existing cover remains sufficient or reveal a gap that can be planned for.
The release also points out that higher income improves the ability to afford larger cover, especially if the insured remains within a favourable age and health bracket, since premiums rise with age, health condition, lifestyle, policy term and sum assured. Consequently, waiting too long to adjust cover can be inefficient. It recommends reviewing the term plan after any major salary increase, promotion, marriage, childbirth, adoption, acquisition of a large loan, change in a spouse’s income, emergence of financially dependent parents, or when existing investments become large enough to affect coverage needs.
Overall, the advice is to treat the term plan as a dynamic protection tool that may require a higher sum assured, a longer policy term, an additional policy, or no change at all, depending on the balance of liabilities, assets and future goals. The only way to determine the appropriate action is through a systematic review using the calculator whenever income changes meaningfully.
(Disclaimer: The above press release is provided under an arrangement with NRDPL. PTI takes no editorial responsibility for the content.)