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What is the right time to invest in life insurance?

What is the right time to invest in life insurance?

Invest in life insurance

Urban Indians are more likely to purchase life insurance after the birth of a child in the family. 52% of families with kids have a greater awareness of the importance of buying life insurance as compared to 29% of those without kids.

Conventional wisdom favours the purchase of life insurance during the later stages of one’s life. However, in order to safeguard the key milestones in their life and that of their loved ones, people of every age bracket should come to the realization that integrating a life insurance policy is a must in their financial portfolio.

One of the most commonly asked questions when it comes to life insurance investments would be, is there a right time to invest in a life insurance policy? The answer to that question would be: the earlier the better. However, if you haven’t invested in a life insurance policy yet, it’s never too late either!

Let us take a look at how a life insurance policy can provide financial protection to you at various stages in your life.

18-25 years

You have just stepped into adulthood, are pursuing higher education or have just landed your first job. You are in the prime of your health with no dependants and little to no responsibilities. While buying life insurance might not figure on your priority list, you can get a policy with a higher sum assured at the lowest premium at this stage precisely because of the reasons listed above. Absence of any liability and disease makes you a low-risk investment to the insurer who would easily offer you a lower premium as compared to someone 10 or 20 years older. Besides, you would need to buy an insurance policy later in life, so it only makes sense to invest in one early on, to stay protected longer and that too at affordable rates.

At this stage of life, investing in a simple term plan, which provides the benefits of increasing coverage can prove beneficial. In such a term plan, as your liabilities grow over the years, so does the amount of coverage offered. This thereby ensures that you are adequately prepared for what lies ahead.

25-35 years

People in this age group would have either recently got married, be planning to get married or be already settled into their matrimonial life. They take on more responsibilities as the breadwinner of the family as well as at work. They also look towards fulfilling their financial goals and milestones. For instance, one might have taken a loan to buy a car, or would be paying off a mortgage for their dream home. Since your financial liabilities are increasing by the number, this is an opportune moment to invest in a life insurance policy to safeguard your family members from the burden of repaying your debt, in the event of your unfortunate demise. Over and above that, the need to grow your wealth and prepare for the responsibilities that lie ahead is also looming large. At this point in time, a unit-linked life insurance plan (ULIP) can come in handy and help you grow your wealth while protecting the needs of your loved ones. Since you are younger, you can afford to take risks and be an aggressive investor; you can invest in equity funds through your ULIP that help you grow your wealth substantially.

To invest in a ULIP, you can opt for the Invest 4G ULIP from Canara HSBC Oriental Bank of Commerce. The plan comes with different portfolio strategies, fund choices as well as an option to switch and redirect funds as per your choice.

35- 45 years

In your late 30s, your family is growing in size as you bring children into this world and become proud parents. Not only does the number of dependents increase, but so does your sense of responsibility. You are managing the household budget as you give your children the best education money can buy and also take care of your aged parents and their medical needs. The need to create a nest egg for the future of your loved ones is more pronounced than ever. And so is the urge to protect them from any uncertainty that arises in your absence, leaving them financially vulnerable. This is especially true if you are the sole earning member of the family.

Even if it is late in life, one must realize that buying life insurance is vital to giving your loved ones a secure future. At this point, your best bet would be an endowment plan. An endowment plan also allows you to grow your wealth, while protecting the financial security of your family. Since an endowment plan is more risk-averse than ULIPs, it helps you accumulate a risk-free corpus.

Above 45 years

Having spent a considerable period of your life working, you might be looking forward eagerly towards a retired life. The steady income that you received during your active working life, would also cease once you retire. In order to prepare for retired life, as well as guarantee that your spouse is well looked after in the event of your absence, a suitable life insurance plan is necessary even in your later years. In this case, an annuity plan, that helps you build a corpus specifically for retirement, while also providing life cover, can be the perfect solution.

Conclusion: To sum up, there exist various life insurance plans in the market that take into account your age and align with your goals accordingly. So, put simply, the right time to invest in life insurance is now.

Each life stage comes with its own set of responsibilities and life insurance helps you be prepared for any eventuality, thereby ensuring a financially secure future for your family. So become a policyholder now to stay protected for long!

Speak to an insurance specialist now!

Frequently Asked Questions (FAQs) Related to Life Insurance Policies

The premium is one of the most important factors to consider before buying a life insurance 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 plan. 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.

Life 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 chance of contracting diseases is low. Young people also opt for the best life insurance 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. Life insurance policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the best life insurance 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 physician’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 life insurance 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 plan.

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: A life 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 life insurance policy, the insurance companies generally pay 80% of the total premiums paid.

Buying the best life insurance plan 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. The best life insurance policies online insurance offer higher benefits. Customers should, however, buy online life insurance 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 life insurance policy to increase the cover or avoid claim rejection. In case of multiple life insurance 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 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 a life insurance policy, the insurance company asks for the nominee details. Only the person named as the nominee in the life insurance plan can cash out 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 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 beneficiary receives the death benefit. In case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment option is chosen, the policy works as a source of regular income.

It is a popular misconception that life insurance plans are only for accidental deaths. A term life insurance plan like iSelect Star Term Plan 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 a life insurance plan in your early 20s because it 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 the best life insurance plan 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 life 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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