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How Much Life Insurance Do You Need When You are Unmarried?

dateKnowledge Centre Team dateJuly 07, 2021 views117 Views
Buy Best Life Insurance Plan | Invest 4G

Bachelor life has its advantages. You may love the freedom, the time-out with friends and frequent parties. This is also a great time for exploring new ways of amusements in life. Another part of life that is greatly defined by your efforts in this time of life is financial matters.

Your financial decisions at this age have a profound impact on your thought process and financial stability for a very long-time. Therefore, careful financial decisions can help you compound your financial growth and ensure stability later in life.

Buying a life insurance plan is one such financial decision. You could be overwhelmed initially with the amount of information available on the subject. However, deciding on your needs is simpler than it seems.

How much Life Insurance Cover do you Need?

The amount of life insurance cover for you depends on your present financial value. Your financial value or worth depends on your annual income. Thus, your life insurance need depends on your present income.

However, your life cover amount should provide your family with the following, while you are still living a bachelor life:

a) Adequate money to look after their regular expenses if you have a direct financial dependent.
b) Money to pay off your ongoing debts.
c) Meet any other financial need related to your untimely passing.
d) Also, if you are saving to fulfil a financial goal for a family member you would want to protect it from your sudden demise.

An amount equal to 15 times the annual expense of the dependent family member is enough to provide a lifetime income to the person. The loan amounts are easy to judge, and you can take an educated guess for other expenses.

ULIPs for planning your retirement

Overall, the life cover to look after the first three heads would be about 5 to 8 times your annual income.

Why do you Need a Life Insurance Plan?

If you know the basic concept of life insurance, you will think that you don’t need it until you have financial dependents. Though life insurance need has little to do with your direct dependents, i.e., spouse and children.

Once you have a source of income you will face financial responsibilities, loans, and other liabilities at every turn in life. This is the financial part of your life, and life insurance can help you in more than one way, apart from protecting your family members:

a) Reduce your tax outflow
b) Invest for tax-exempt wealth
c) Secure future goals with guaranteed investments
d) Safeguards retirement

Life insurance plans are a great way to preserve your wealth, whether it’s for your future or the next generation’s. Additionally, plans like Invest 4G ULIP, give you the option to invest aggressively in equity and debt portfolio for a tax-free maturity sum.

Still, the question remains, ‘how much life insurance should you really have?

Benefits of Buying a Life Insurance Early

One of the major advantages of buying a life insurance coverage early in your life is the lower premium cost. If you choose to pay an annual premium for your life cover, the premium remains the same throughout your life.

Since the premium for the same amount of cover is lower for younger policyholders, you can enjoy the lower premium throughout your life. Thus, instead of limiting your life insurance cover to 5 to 8 times your annual income, you can go for the maximum eligibility.

Maximum life cover eligibility for term insurance cover is 10 to 15 times your annual income. However, you also need to take care of future conditions.

Read more about the advantages of buying a life insurance plan at an early age.

Securing Financial Goals with the Best Life Insurance Plan

Securing your financial goals with life insurance is a slightly different affair than securing future income and present loans. This security would need that your family member can receive adequate money upon your early death to fulfil the goal on her own.

Since there is no certainty when the amount would be needed or needed at all, figuring out this amount is not easy. However, specific life insurance plans can make your decision easy.

Life insurance plans like guaranteed savings plan and unit-linked insurance plans (ULIPs) are investment focused plans. With these plans, you also get the option to safeguard the goal from untoward incidents.

Plans like Invest 4G and Guaranteed Savings Plans from Canara HSBC Oriental Bank of Commerce Life Insurance offer premium protection option. This option will allow the insurer to continue investing the due premiums in the plan on your behalf.

Thus, even after the family receives the sum assured from the plan upon your demise, the investments continue. The plan will ultimately pay the maturity value of the invested sum to the family at the time of intended maturity.

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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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