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How to Buy the Right Term Insurance Plan in 2021?

dateKnowledge Centre Team dateMay 18, 2021 views157 Views
How to Buy the Right Term Insurance Plan in 2021?

All of us have aspirations and long-term financial goals, and to achieve these we make a regular monetary contribution to build a corpus. This enables you to save a certain amount that would help you stay financially secured in the future. You may have to make a downpayment for your dream house or pay for a child's higher education. But have you ever wondered what happens to your family when you're gone? As life is uncertain and death is a harsh reality which you cannot evade, it's better to prepare for it in advance.

A term insurance plan acts as a cushion for your family's financial requirements when such a tragedy strikes. It's a unique financial solution enabling a family to continue with their lives in your absence. A term plan offers benefits like large cover at affordable premiums, additional riders, and many others. However, choosing the right term plan involves focusing on several features that would help you and your dependents more than other policies.

How to Choose the Right Term Insurance Plan?

1. Assess Your Needs

Before you start searching for the best term plans available, it is important to analyse and evaluate the coverage you need. The first step involves calculating the amount of coverage, which depends upon the number of dependents, their lifestyle and future aspirations. You may also add inflation as another factor in this list.

Right Term Plan

2. Premium Cost

Term insurance plans are the cheapest form of life insurance and they offer pure life cover. So, you should opt for term plans with the lowest expenses as this would translate into lower premiums for the same cover. For example, if you go for Canara HSBC Oriental Bank of Commerce Life Insurance iSelect Star Online Term Plan with a sum assured of Rs.1.5 crore for a term of 26 years, you will just have to pay Rs. 974 per month or Rs. 10,818 per annum. Also, determine whether you are purchasing an offline or online term plan. Buying a term plan through online channels is beneficial and more economical as you get to compare different policies on key parameters.

3. Critical Illness Riders

Besides death, there are other unfortunate events, like accidents, disability, paralysis and critical illnesses that can threaten the financial stability of your dependents. So, it is prudent to opt for term insurance with critical illness rider as a value-added cover. With this, you will get a lump sum amount in case you are diagnosed with any life-threatening disease.

4. Claim Settlement Ratio

The CSR is the ratio of settled claims against the total claims filed during a particular period: the higher the ratio, the better the insurer. Generally, the CSR of higher than 85 percent is considered good. It indicates that the company is doing well financially and settling the majority of the claims. With the CSR of 97.1 per cent in FY 2020-21, Canara HSBC Oriental Bank of Commerce Life Insurance offers exclusive benefits like swift claim settlement to take care of your loved ones when you're not around.

5. Additional Covers

Most good term insurance plans offer you an accidental death cover along with other benefits. You may also check for income benefits wherein your family members receive a regular income from the plan rather than a lump sum amount to fulfil their financial obligations.

6. Solvency Ratio

It is one of the major factors that enable you to find out the capacity of a life insurance company to survive for the long term. Again, the higher solvency ratio indicates that a firm can pay off its claims on time and survive in the long run. Make sure your insurer must always have a higher value of assets than liabilities like Canara HSBC Oriental Bank of Commerce Life Insurance has.

3 Quick Steps to Buy a Term Plan Online

You can buy a term insurance plan online at the ease and comfort of your home. You can research about the product and compare it to find the best available term plan before buying online. Here is a 3-step guide to buy term life insurance plan online:

1. Choose coverage amount, term, and riders

Before buying a term plan online, you must figure out the coverage you need. You must always buy a plan with adequate coverage so that your loved ones can manage the financial shock if you happen to pass away. The next thing that you need to understand is for how long you want to insure yourself. Some plans like iSelect Star term plan offers whole life option. You can insure yourself till you turn 99. Add riders like accidental death benefit, child support benefit and others to enhance your plan.

Learn more about whole life option.

2. Fill in your personal and medical history

When you decide to buy a life insurance policy, the insurers need to assess your personal and medical history. Fill in the application form and enter all the details that you are asked. You will also be asked a series of question on your existing health conditions. Ensure that you provide accurate information to avoid rejection of your application.

3. Decide the premium payment term and pay premium

Insurance companies are offering plans that have various premium payment terms. You can choose to pay the premium in a single bullet or for a limited duration of 5/10/15/20/25 years. Also, you can choose to pay the premium only during your working years i.e., till you turn 60. Once you decide the premium payment frequency, you will have to seal the deal by paying your first premium.

Learn which is cost efficient: paying premium monthly or annually?

When considering a term plan, do keep in mind is that not all insurance policies are the same. Some provide standard features, while insurers like Canara HSBC Oriental Bank of Commerce Life Insurance offer a host of invaluable features that would help you and your family in the long run. Choose an online term plan that suits you the best as per your financial requirements and circumstances to take care of your loved ones in your absence.

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Frequently Asked Questions (FAQs) for Life Insurance

The premium is one of the most important factors to consider before buying a policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the premium calculator available in the 'Tools and Calculator' section of www.canarahsbclife.com.

Life insurance plans come with several riders which increase the efficiency of the policy for the buyer. For instance, if you have a history of terminal illness in your family it would be advisable to opt for terminal illness rider with your term insurance. Riders or add-ons help in customising the standard policy benefits for the requirement of different families. The iSelect term insurance plan comes with a built-in cover for terminal illness, and option for protection against accidental death or disability. You can also opt to cover your spouse's life under the same policy by paying an additional premium.

Insurance companies calculate the premiums based on several factors such as age, gender and occupation.

Age:It is one of the biggest factors that influence life insurance premiums. Premiums tend to be low when the life insured is younger as the chances of contracting diseases is low. Young people also opt for policies with longer tenures and pay premiums for a longer duration, which makes the policy cheaper for young people.

Gender:The insurance premium for women is generally lower when it comes to life insurance plans. Women live longer and pose a lesser risk of a claim leading to lower premiums for them.

Lifestyle habits:The premiums for people who smoke or drink is always higher due to higher health risks.

Policy term:Policy terms are also taken into consideration by insurers while deciding the premium amount. Policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the policy also determines how much you will have to pay for the plan. People who buy life insurance policies online have to pay lower premiums as compared to offline policies.

Occupation:The nature of your work is an important factor that influences the premium amount. Certain occupations like shipping and mining are considered more dangerous as compared to jobs in services industries. The insurance premium rises with the risk profile.

Processing life insurance claim is a transparent and smooth process with Canara HSBC Oriental Bank of Commerce Life Insurance.

In case of the death of the life insured, the nominee will have to intimate the company by filling a Death Claim Form and sending it to the nearest branch office.

Once the form is received, the claim is registered by the insurer.

After the registration of the claim, the company will send the claims pack along with the related forms such as physicianâ s statement form and employer certificate that need to be filled.

Along with the duly filled forms a few documents such as original [policy document, death certificate, copy of bank passbook, hospital or treatment records, photo identification and address proof have to be provided.

The claim is processed on the submission of relevant documents. Once the documents are verified, the claim amount is released post all due diligence.

Household expenses rise with age. The cost of children's education increases along with other lifestyle expenses. The iSelect term plan offers an option to increase the cover according to the life stage. If opted, the insurance cover increases by 25% at every 5-year terminal till the 20th policy year.

Even though a life insurance policy is bought to protect your family in your absence. There are chances of the claim being rejected due to several factors.

False information: If the policyholder provides false information or conceals important information while buying the policy, the insurer has the right to reject the claim after his/her death.

Type of death: Deaths due to suicide in first policy year, intoxication or pre-existing disease is not covered under life insurance.

Premium payment: The payment of premiums on time is of utmost important to avail the benefits of life insurance. Life insurance policy may lapse on the failure to pay the premiums

Nominee details: An insurance company can put the claim on hold if the nominee details have not been filled or not been updated by the policyholder.

Suicide: If the life insured commits suicide within 12 months of buying the policy, the insurance companies generally pay 80% of the total premiums paid.

Buying life insurance online is not only safe but a better option. Online life insurance policies have lower premiums and the individual is not required to visit the insurer's branch or a bank. Online insurance policies also offer higher benefits. Customers should, however, buy online policies only from credible insurers and should check for SSL certificate on the website to ensure that the website is legitimate.

The cost of life insurance policies varies depending on factors like age, gender and occupation. The average cost of life insurance plans, especially term plans, is very low compared to the amount of coverage offered.

An individual is allowed to have multiple life insurance policies. People opt for more than one policy to increase the cover or avoid claim rejection. In case of multiple policies, even if the claim is rejected by one insurer, the beneficiaries may receive the benefit from a different insurer.

Life insurance policies are of different types. In the case of unit-linked or endowment policies the policyholder receives the maturity benefit at the end of the policy term. However, in the case of term insurance plans, there are no maturity benefits. The death benefit is only paid out after the death of the life insured.

When you buy life insurance, the insurance company asks for the nominee details. Only the person named as the nominee in the policy can cash out a life insurance policy in case of death of life insured.

A life insurance policy is generally taken for a specified period. After the policy duration of a term plan gets over, the policy simply terminates and ceases to exist. However, in the case of unit-linked plans or endowment, you can use the policy as a tool for retirement planning and the accumulated corpus is used by the insurer to pay you monthly amounts for your entire life.

If a policyholder purchases a term plan for 25 years and dies during the policy term. The family receives the death benefit. In the case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment options are chosen the policy works as a source of regular income.

It is a popular misconception that life insurance is only for accidental deaths. A term life insurance plan like iSelect also covers terminal disease along with death. A terminal illness cover is important as health insurance pays only for the cost of treatment and hospitalization, but a terminal illness cover pays you a lump-sum amount which takes care of other expenses. On the other hand, unit-linked policies such as Invest 4G cover death and also provide decent returns for other financial goals such as buying a house of child's education.

It is ideal to buy life insurance in your early 20s because it’s is the time when people have just started with their professional life and so there are lesser responsibilities and financial liabilities to take care of. Also, if you buy life insurance at this age, you will be paying relatively lower insurance premiums since it’s a due fact that mortality rate in case of young people is low. And that is why insurance companies offer lesser premium rates to younger people as they think that they are most likely to be fit and healthier with less chances of filing a claim in future.

Once you have cancelled your life insurance policy, you will instantly lose your life insurance cover. Afterwards, your insurance company will get in touch with you and ask for valid reasons regarding the cancellation of your policy. In case you cancel your life insurance policy within the grace period, i.e. 15 to 30 days, depending on your insurer, then insurance company will reimburse the premium amount paid by you. But, no refunds will be paid to you if the policy is cancelled after the grace period.

Yes, you can take life insurance under Married Women’s Property (MWP) Act, 1984 only if you are a married man and a resident of India. Buying a life insurance plan under MWP Act would be helpful in saving your family’s financial well-being when you are not around. As per this policy, only wife and children would be eligible to receive the death benefits. You can also buy a policy if you are a widower or a divorcee. However, in that case, you can give your child’s name as your beneficiary. It is very simple to buy a life plan under MWP Act. All you need to do is to fill up an MWP addendum while purchasing an insurance policy.

Yes, there are different payment options for you to pay premiums. Here’re some of them

    1. Regular premium payment option – This premium payment option allows you to pay premiums equal to your policy term either monthly, quarterly, half yearly or annually.

    2. Single payment option – Through this premium payment option, you can pay the lump-sum amount in one single payment.

    3. Limited payment option -In this premium payment option, you can pay premiums for a specific period of time less than policy term either monthly, quarterly, half yearly or annually, but benefits of insurance can be enjoyed for a longer period of time.

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