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5 Reasons to Buy the Best Life Insurance Plan in India

Here are 5 compelling reasons to buy the best life insurance plan in 2025. You can’t miss it!

Written by : Knowledge Centre Team

2025-12-02

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11 minutes read

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Life insurance plans act as financial support for your loved ones in your absence. By including it in your financial planning, you build a corpus and provide life cover to your family. Life insurance policies help save tax and act as a long-term investment.

Key Takeaways

  • Life insurance provides financial protection to your family in case of unforeseen events.

  • It acts as a tax-saving and low-risk investment tool.

  • Buying early helps lock in low premiums and build a solid retirement corpus.

  • Life insurance policies can cover critical illnesses, disabilities, and income loss.

  • Different types of plans cater to unique financial goals.

Imagine this: you spend your life providing for a family. Your family is dependent on you for everything. Have you ever wondered what would happen to them once you are no longer there?

Life is unpredictable, and the pandemic has been a lesson. More and more people have started to invest in  life insurance policies  for their families, as human value has increased. However, those with existing life insurance policies have the edge over others.
Let us see why investing in a life insurance policy is a smart choice. 

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5 Reasons to Invest in a Life Insurance Policy

The COVID-19 pandemic has been a powerful wake-up call, highlighting just how unpredictable life can be. It has changed the way people view financial security, making it clear that preparing for the unexpected is no longer optional. One of the most important steps in this preparation is investing in a life insurance policy. In the face of such uncertainty, more and more individuals are now choosing to secure life insurance to protect their families’ financial future and ensure peace of mind during unforeseen events.

Here are 5 reasons why life insurance is important in 2026:

  1. Smart Financial Planning : Life insurance policies are an integral part of smart financial planning. It allows you to achieve your long-term and short-term financial goals. A life insurance policy cushions you in case of emergencies, particularly post-retirement.

  2. Financial assistance for dependents: Financial assistance is the primary reason that one gets a life insurance policy. It is a safety net for dependents and helps them repay any debts taken in the policyholder's name. Moreover, a life insurance policy covers any educational expenses of your children as they receive maturity benefits.
    It also acts as a replacement for the loss of income, especially if your family were solely dependent on you for income. Certain add-on riders also cover terminal illness, accidents, disabilities, and surgery.

  3. Diversification of Investments: Life insurance policies are low-risk investment options. You can diversify your investment portfolio by investing in life insurance. This ensures that you have a stable investment that balances your risk options.

  4. Retirement Corp: Life insurance can play a valuable role in building your retirement corpus, especially when you start early. One of the key advantages of buying a life insurance policy at a younger age is lower premiums. For instance, Rahul, aged twenty-five, will be charged a lesser premium than Sheela at thirty-three. This is because Rahul will be expected to pay premiums for a longer period. By enjoying low premiums, you can keep your investments intact.
    Lower premiums mean you can allocate more of your income toward long-term investments without straining your finances. Many life insurance plans, such as endowment or unit-linked insurance plans (ULIPs), also offer a combination of life cover and investment growth. Over time, the value of your policy can grow into a substantial sum, serving as a retirement corpus that provides financial security and income during your post-working years.

  5. Tax Benefi: A life insurance policy not only provides financial protection but also offers valuable tax benefits. It is considered a tax-saving investment under the Income Tax Act, 1961.
    Premiums paid towards a life insurance policy are eligible for deduction under Section 80C, up to a maximum limit of ₹1.5 lakh per financial year. This benefit is available to individuals and Hindu Undivided Families (HUFs).

To claim the 80C deduction, the premium must not exceed.

  1. 10% of the sum assured for policies issued on or after April 1, 2012.
  2. 20% of the sum assured for policies issued before April 1, 2012.

Maturity proceeds or death benefits received from a life insurance policy are tax-free under Section 10(10D), provided:

  1. The premium paid does not exceed the prescribed percentage of the sum assured.
  2. The policy is not under certain exceptions (e.g., high-premium policies issued after April 1, 2023, with annual premiums exceeding ₹5 lakh may have taxable maturity proceeds unless received on death).

Types of Life Insurance Policies

There are three types of life insurance plans available in India, and each has its unique features. These are tailored to suit the unique needs of people and have different premiums.

  • Term life insurance: Term insurance is the most popular form of life insurance in India. Term life insurance has low premiums, which makes it a popular choice with middle-class families. However, term life insurance has a specific tenure, such as 10 years, 20 years, and 30 years.

  • Whole Life Insurance: Whole life insurance, as the name suggests, provides coverage for the insured's entire life, not just a fixed term. As long as premiums are paid, the policy remains active and guarantees a death benefit, no matter when the policyholder passes away. In addition to lifelong protection, these policies often accumulate a cash value over time, which can be borrowed against or withdrawn. Whole life insurance is suitable for those who want both permanent coverage and a way to build wealth or leave a legacy for their family.
  • Endowment Plans: Endowment plans are a blend of insurance and savings. They offer a lump sum payout either on the death of the insured during the policy term or on survival until maturity. These plans are designed for those who wish to ensure financial protection while also saving for future goals. The premiums are higher than term plans, but they provide the added benefit of a guaranteed maturity amount. Endowment policies are ideal for individuals who value security and prefer assured returns, even if they are lower than market-linked instruments.
  • Unit Linked Insurance Plans (ULIPs): ULIPs combine life insurance with investment. A portion of the premium goes toward life cover, while the rest is invested in market-linked funds such as equity, debt, or a mix of both. The value of the policy fluctuates based on market performance. ULIPs are flexible in terms of fund switching and are best suited for individuals who are comfortable with some level of risk and are looking to achieve long-term financial goals like wealth creation, buying a house, or funding higher education. However, since the returns are market-dependent, they are not guaranteed.
  • Money-Back Plans: Money-back plans are insurance policies that provide periodic payouts during the policy term, in addition to a lump sum at maturity or on the death of the insured. This feature makes them attractive to those who want regular cash flow while still maintaining life cover. The periodic payments help cover recurring expenses or planned costs, such as education fees or EMIs. These plans offer lower returns compared to pure investment options but appeal to conservative investors who prioritise guaranteed, steady returns and financial security.
  • Child Insurance Plans: Child insurance plans are specifically designed to help parents build a financial cushion for their child’s future needs, such as higher education or marriage. These plans offer a mix of savings and protection. In the event of the parents' death, most child plans waive off future premiums, but the plan continues and pays the promised benefits when due. This ensures that a child’s key life goals are met without financial interruption. Such plans are an excellent choice for long-term planning with the added comfort of life cover for the parent.
  • Retirement or Pension Plans: Retirement or pension plans offered by life insurers are designed to help individuals build a retirement corpus over time and then convert that corpus into a regular income post-retirement. These plans typically include an accumulation phase (where you invest through regular premiums) and a payout phase (where the corpus is used to buy an annuity that provides lifelong income). Some plans guarantee a fixed pension, while others offer growth linked to investment performance. These are ideal for individuals who want to secure financial independence in old age and avoid outliving their savings.
  • Group Life Insurance: Group life insurance is offered to a group of individuals under a single master policy, usually by employers to their employees. It provides basic life cover at lower premiums due to pooled risk and is often extended as a workplace benefit. While the coverage may not be as high as individual plans, it acts as a valuable financial safety net. Many group policies also offer the option for individuals to increase their coverage at their own cost. This type of insurance is beneficial for organisations looking to provide basic protection to their employees.

Best Life Insurance Plans Offered by Canara HSBC Life Insurance

Canara HSBC Life Insurance has a wide variety of life insurance plans that you can choose from as per your financial goals and requirements. Choose the best life insurance plan to provide a safe and secure financial future for your loved ones.

  1. iSelect Smart360 Term Plan: This versatile plan can cover your spouse and has a limited premium payment option. Moreover, you get an increasing sum at an affordable price. Canara HSBC Life Insurance also gives you multiple payment options.

  2. Promise4Growth Plus Plan: This is a guaranteed savings plan that not only provides life cover but also ensures a lump sum maturity benefit. Designed for individuals seeking financial predictability, the Promise4Growth Plus Plan by Canara HSBC Life Insurance helps build a secure financial foundation while also fulfilling short- and medium-term goals such as child education, home renovation, or emergency funds. The plan comes with flexibility in choosing the policy term and premium payment frequency, making it suitable for salaried individuals as well as self-employed professionals who want peace of mind through stable returns.

  3. Wealth Edge Plan: It is a smart choice for those looking to combine life insurance with long-term wealth generation. This is a Unit Linked Insurance Plan (ULIP) that offers market-linked returns by investing in a diverse portfolio of equity and debt funds. The plan also offers loyalty additions and wealth boosters to enhance returns for long-term investors. With options to switch funds and partial withdrawals, Wealth Edge offers flexibility, transparency, and potential for capital growth while ensuring that your family remains protected through life cover. It is especially ideal for individuals in their early or mid-career stage who wish to grow their wealth while safeguarding their financial responsibilities.

Wrapping Up

Life insurance is a necessity in today’s world of uncertainty. Whether it’s the rising cost of living, unforeseen health emergencies, or the growing importance of long-term financial planning, a life insurance policy acts as a powerful tool to safeguard your loved ones' future. As highlighted, it goes far beyond just a death benefit. It helps build a retirement corpus, reduces your tax burden, diversifies your investment portfolio, and provides essential financial support to your dependents.

With a variety of policy options available, such as term plans, ULIPs, endowment plans, and retirement solutions, you can choose the one that best aligns with your financial goals and risk appetite.

The earlier you start, the better positioned you are to enjoy lower premiums, greater returns, and enhanced financial stability. Secure your future, protect your dreams, and take the first step toward responsible financial planning, because your loved ones deserve nothing less.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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Life Insurance - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover