5 Red Flags You’re Underinsured – And How to Fix It Today

Security in life is not a luxury but a necessity. We take simple steps every day to protect ourselves – we lock our house doors, we wear seatbelts while driving, etc. But when it comes to financial security and life insurance, do we truly pause to think if we’re adequately covered? Or is it just something we check off our to-do list?

Many people assume they are covered with a high insurance amount, but with inflation and increasing costs, that may not be enough to protect your family in the future. You should really ask yourself if your insurance plan really meets your needs for the long term.

So how do you know if your coverage is good enough or falling short? Let’s understand some of the common red flags and more importantly how do you address them.

Firstly, let’s understand what is “being underinsured”.

Most of us have bought a life insurance policy through someone in the family who is an agent and let’s be honest; this policy and life cover have been chosen based on what we could afford at that time or something that is “reasonable” to pay as premium.

Did you ever consider that your insurance coverage should grow with you?

For most of us, probably not. But think about it—your income has grown, your lifestyle has evolved, and your responsibilities have multiplied. Yet, your life insurance cover? It’s remained unchanged. That’s what being underinsured truly means: having coverage that no longer matches the life you’re living today.

How to determine the current coverage amount?

Use a life insurance calculator that help us assess our current needs and recommend the right insurance cover that we need. It factors in income, outstanding loans, lifestyle expenses, and future goals like children’s education or retirement.

Another important aspect is accounting for inflation

A ₹50 lakh cover ten years ago may not go very far today. Inflation quietly eats away at the value of your life insurance. In real terms, your family may receive far less than you intended.

What to do instead?

If your policy is more than five years old and hasn’t been reviewed, it’s time to evaluate it right away. Consider topping it up or getting a new plan with inflation-linked features.

INL Super Suraksha Term Plans have affordable premiums starting from ₹13/day*. Click here to check out.

Third consideration is - life has changed but policy cover hasn’t

You have had several milestones in the last decade – marriage, buying a new home, having a child etc., and these milestones come with new financial responsibilities. But if your insurance plan is still stuck in your single-life days, it’s not going to cut it.

What should you do now? 

Each life event should trigger a coverage review. Your insurance must reflect your current reality, not your past self.

Relying on employer-provided coverage – bad idea!

Group life insurance is great until you leave your job or retire. Then you are left without a safety net, and employer plans usually offer limited coverage that won’t be enough for long-term family needs or larger illnesses.

What you should do instead -

Always have a personal plan that stays with you, regardless of where you work.

Missing out on critical riders

Life insurance does not only mean death cover. What if you are diagnosed with a serious illness or suffer a disability that keeps you away from working? These scenarios can derail your finances faster than you think.

What you should do instead -

Add-on riders like Critical Illness or Accidental Disability provide a financial cushion in tough times. They are affordable and can make a massive difference when combined with your existing policy.

Time to act

Here’s a simple action plan:

• Assess your needs: Use online tools to calculate the ideal cover.
• Review your policies: Dig out your existing plans and see how they stack up.
• Speak to an expert: A trusted advisor can help you bridge the gaps.
• Stay updated: Revisit your cover every couple of years, especially after big life changes.

A simple thumb rule: Your cover should be at least 10-15 times your annual income, plus any outstanding liabilities.

So, don’t wait for a wake-up call. Review and recalculate your safety net.

Not sure which insurance to buy?

Click here and Talk to our Advisor right away.

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Mktg/RNLIC/blog_underinsured/V1/Aug25

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