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How much supplemental life insurance coverage should you buy?

dateKnowledge Centre Team dateJune 22, 2021 views292 Views
Supplemental Life Insurance | Buy Life Insurance Policy

Life can bring a lot of things and a life insurance plan helps you remain prepared for it. However, when the job you have is one filled with risks and may lead to your death, your employer offers benefits to you and your family. This is also something that many companies offer even if the job is not risky.

Supplemental life insurance is provided by the employers or any private sector to its employees to provide coverage in crucial times, such as during the death of a member or costs that occur while performing rites and burial, to fulfill the needs of a large/joint family, and more. Most of the time, this life insurance plan is an added coverage that is available to the employees along with the other insurances while working in a company.

This insurance can be considered as additional coverage insurance that can be purchased with term-life insurance or any other type of insurance that comes under the life insurance plan India.

Purchasing this policy will be beneficial as it is an extra asset along with the traditional life insurances, which helps in increasing the value of the overall money accumulated from life insurances. The money accumulated on account of this policy can be of immense help, for instance, at the time of your death, as it will become a means of extra financial help.

The amount of money received from this policy is generally some multiple of the employee’s annual salary. Since the monthly salary might be insufficient for the employee to fulfill the needs of the family, the supplemental life insurance will help as additional financial aid.

Deciding supplemental life insurance coverage – How much should you buy?

Deciding on how much money to invest for supplemental life insurance cover is a very crucial decision and should be done with a proper plan and understanding. Important matters that play a vital role in the purchasing of supplemental life insurance include:

1. Buying a term life insurance, depending on the number of members in the family as well as the financial status, will allow one to know exactly how much coverage is required.

2. If there are debts, interests, cosigned loans, mortgages, then purchasing the appropriate supplemental life insurance will help in paying it off.

Another crucial point to focus on before determining how much supplemental life insurance to buy is to foresee the needs of the family members. According to financial experts, purchasing 10 to 15 times the annual income should be the minimum amount of coverage an individual should invest in.

Supplemental life insurance is also used as a replacement for income. If an individual happens to earn around Rs. 3 lakhs a year, there should be enough policy payout to replace this income as well as some extra money to bear the inflation. To be able to buy the right amount of insurance, it is essential to calculate the required face value beforehand.

How much does supplemental life insurance cost?

Various factors determine the cost of supplemental life insurance cover, one such important factor being age. To avail the supplemental life insurance at a company, a younger employee will have to pay less than a comparatively older employee. The premiums increase with age because the pricing of supplemental life insurance policies available through work are not confined.

One such plan that offers supplemental life insurance according to the paying capability of an individual is provided by Canara HSBC Life Insurance. Invest 4G plan is a unit-linked individual plan (ULIP) that allows you to custom-make the installments for payment, depending on your plans, goals, and ever-changing needs.

This plan comes under the non-participating policy, which means that any profits gained from this plan will not be shared, and also, no dividends are to be paid to the policyholders. It consists of the characteristics of both flexibilities as well as portfolio management options which enable you to have complete control over your insurance needs and savings. Some significant benefits of this plan include:

1. Protection of family: If you happen to face an accidental death, your hard-earned savings invested in insurances will protect your family.

2. The habit of savings: Be it in youth or after marriage, investing in supplemental life insurance cover will allow you to reap the benefits in your future.

3. Future plans: Plans can be anything. For instance, for a youngster, it could be going to college. For an adult, it could be to provide a secure life for the family. Regardless, signing up for a life insurance plan in India will promise you a happy and trouble-free future.

4. Creating a legacy: Making beneficial calculative plans, be it in terms of safeguarding the wealth to meet the future financial goals or even creating a legacy, will eventually provide you a golden future.

3 Factors to consider before buying a supplemental life insurance

It is important to carefully analyze the various supplemental life insurances provided by various groups. To avail oneself of maximum benefits, it is essential to assess the insurances before purchasing the most fruitful one. It can be done based on the following factors:

1. Pricing

Pricing depends on whether a group or an individual is purchasing the insurance. There are different prices for each group as well, which is determined by analyzing the demographics, policy design, life expectancy, past claims, and more.

2. Conversion

Some supplemental life insurances bought as a group or organization on request can be converted into an individual plan as well. If the group life insurance policy is reduced or terminated, converting the plan may be an option unless the employer has paid the premium.

3. Portability

Generally, supplemental life insurance acquired from an organization might not be portable meaning, if you happen to leave your job or retire, there may be chances of you losing the life insurance. But certain companies allow you to carry forward the life insurance. If you want to port the policy, you will have to pay its premiums since it will no longer be a group life insurance policy.

Is a term insurance policy portable?

Purchasing supplemental life insurance should be done with proper evaluation and plan so that you and your family will be able to reap maximum benefits from it in the future. Secure your family’s future with a supplemental life cover from Canara HSBC Life Insurance with products like Invest 4G, Guaranteed Savings Plan, and iSelect Star.

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