Author
Bowtie Team
Updated on
2025-07-10
Disclaimer: This article is translated with the assistance of AI.
Already have life insurance but wondering if you need a top-up? How do you know if your coverage is enough? What should you consider before increasing your life insurance? The Bowtie team has all the answers for you!
What Does it Mean to Top Up Term Life Insurance?
Many people opt to top up their critical illness insurance, meaning they purchase an additional critical illness policy on top of their existing one to make up for insufficient coverage.
Similarly, topping up Term Life Insurance means that the policyholder adds another life insurance policy to their current one to address any shortfall in coverage.
Why Top Up If You Already Have Life Insurance?
Quite a few folks already have a life insurance policy, but as time passes and life stages change (think mortgage payments or supporting kids), the coverage amount (i.e., death benefit) might no longer be enough to provide a financial safety net for their family. This is especially crucial if the insured is the main breadwinner. Having sufficient life insurance coverage ensures that, in the unfortunate event of their passing, their family can maintain their current quality of life.
Additionally, some people may have previously purchased Whole Life Insurance . When they realize the coverage is insufficient, some choose to buy an additional, more affordable Term Life Insurance policy (pure life coverage) as a top-up to boost their protection and meet current needs.
How to Calculate Your Life Insurance Coverage Needs?
Wondering how much life insurance coverage you need or if your current policy is enough? Here are three handy methods to calculate the right amount of life insurance for you:
Human Life Value Approach
The Human Life Value Approach is a method to estimate the amount of life insurance a person needs by discounting their expected future income to its present value. This helps determine how much life insurance coverage the policyholder should have.
When calculating, the policyholder should consider the following factors:
- Expected future income
- Discount rate
However, the Human Life Value Approach doesn’t account for the policyholder’s actual circumstances, such as family responsibilities, existing assets, or debts. So, this method only provides a rough estimate of the life insurance coverage needed.
Needs Approach
The Needs Approach is based on the insured’s actual financial needs and current financial situation. This includes personal and family expenses (like living costs for dependents, education fees, medical expenses), debts (such as property mortgages), other costs (like funeral expenses), minus their assets (such as cash or other investments). Here’s the formula to calculate the required coverage using the Needs Approach:
Personal & Family Expenses + Debts + Other Costs – Assets = Required Life Insurance Coverage
Keep in mind that unless the family plans to sell their primary residence to cover living expenses after the insured’s passing, the home should generally be considered a place to live, not an asset, when calculating life insurance needs.
Death Benefit Protection Gap Calculation
The “Death Benefit Protection Gap Calculation” is another variation of the Needs Approach. Simply take your protection needs and subtract your available assets to find the gap.
Protection Needs include:
- Future medical expenses for dependents
- Future education expenses for dependent children
- Future family expenses
- Existing family debts
Available Assets include:
- Savings and investments
- Retirement plan-related assets
- Existing life insurance coverage
Factors to Consider When Deciding to Top Up Life Insurance
If you’re thinking about getting additional life insurance as a top-up, here are some key factors to consider:
1. Is Your Current Life Insurance Enough for Beneficiaries?
Imagine this: As the main breadwinner, if something unfortunate happens to you, will your current life insurance payout be enough to sustain your family’s lifestyle?
Take a young couple who just bought their first home. If one partner tragically passes away, having sufficient life insurance coverage beforehand can act as an “emergency fund” to cover hefty mortgage payments.
2. Are Top-Up Life Insurance Premiums Affordable?
When considering additional life insurance, beyond whether the coverage is enough, you also need to think about whether the total premiums after a top-up will be manageable. Many opt for lower-premium options like Term Life Insurance as a top-up solution.
For instance, with Bowtie Term Life , a 30-year-old non-smoking male can get HK$3,000,000 coverage for just HK$114 per month (before discounts). It’s a cost-effective way to top up your life insurance and address any coverage gaps.
3. How Much Liquid Assets and Other Income Do You Have?
The primary purpose of life insurance is to provide financial security for your loved ones. So, when deciding whether to top up your coverage, consider if your current liquid assets and other income sources can still offer long-term financial support to your dependents if you pass away.
Besides the estimation methods mentioned, you can also click here to answer a few questions, and Bowtie will help calculate the life insurance coverage you need!
4. Can Your Current Coverage Keep Up with Inflation?
Many people understand that life insurance protects their family and future generations, so they might have purchased a policy early in life.
However, over time, inflation erodes the purchasing power of money, and the coverage amount in your policy may lose value, potentially leaving the death benefit insufficient.
Topping up your life insurance allows you to increase coverage, reducing the risk of insufficient funds to support your family due to inflation.
On a side note, in the latest Budget Speech, Financial Secretary Paul Chan projected Hong Kong’s average annual underlying inflation rate to be 2.5% over the next few years (2025 to 2028).
Bowtie Term Life: Your Top Up Choice
If you’re looking to top up your life insurance, why not consider a “pure protection” term life insurance with low premiums and no strings attached?
Bowtie Term Life is a term life product that provides a lump-sum payout to beneficiaries upon the insured’s passing. Its key features include:
- Pure protection with no savings component
- Offers coverage up to 40 times higher than typical savings life products at the same premium*
- Monthly premium as low as HK$38 per HK$1 million coverage
- Optional add-on “Last Wish Rider” provides an additional lump-sum payout of HK$300,000 for insured individuals diagnosed with a terminal illness and given less than 12 months to live
- * Based on standard premiums for a 35-year-old non-smoking female with HK$1 million coverage; Term Life Insurance: Data reflects standard premiums for term life products (20-year coverage period) in the market as of July 1, 2020
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