how-to-choose-life-insurance-policy-as-per-salary

How to Choose a Life Insurance Policy Based on Your Salary?

Find the right life insurance plan for your income and life stage while avoiding common mistakes and securing your family’s future.

Written by : Knowledge Centre Team

2025-08-02

889 Views

8 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

Choosing a life insurance policy based on your salary is a crucial task. The cover amount (also known as the Sum Assured) should be adequate to protect your financial goals. Apart from selecting an adequate Sum Assured, you should choose a suitable life insurance policy to help you achieve your milestones.

There are various types of life insurance policies  designed to meet for different financial goals. You can protect your life goals and create wealth with different types of policies, such as term plans, endowment plans, or ULIPs, depending on your needs.

Key Takeaways

 

  • Choose your life insurance cover based on age, income, and family responsibilities.
  • Review your policy regularly to keep up with life changes and inflation.
  • Avoid common mistakes like underinsuring, hiding health facts, or ignoring nominee updates.
  • Enhance your cover with riders and consider child and pension plans for long-term security.
  • The right life insurance plan protects your family’s future without straining your budget.

Below 30, Income up to ₹50,000 Per Month, No Dependents

This is the age when you can start saving. It is also the age of living life to the fullest, and often you may find your money running out before the end of the month.

The key is to strike a balance between your earning and expenses. This will determine your financial position a decade later or even throughout your life. A life insurance policy is a financial instrument that offers protection as well as savings opportunities.

Consider the following types of policies if you earn up to ₹50,000 a month:

  • Critical Illness Cover: This will safeguard your parents’ savings if you have any medical emergency.  It provides a lump sum payout on the diagnosis of a serious illness, helping you cover expensive treatments without depleting family savings. This ensures you can focus on recovery instead of worrying about medical bills, and protects your loved ones from sudden financial strain.
  • Accidental Death and Disability Cover: If you work in a dangerous environment, such as mining, you must get this cover. It will pay compensation for as long as you are unable to earn an income due to an accident. In case of death, it will pay your nominee a death benefit. Even if your job is not high-risk, this cover can provide an extra layer of security against unforeseen events.
  • Term Life Insurance Plan: This plan is a must-have once you start earning. The earlier you start, the lower your premiums will be. This pure protection plan will help secure your family’s future by providing financial support in your absence. It pays the nominees a death benefit if something happens to you. Therefore, it is wise to buy a term plan as early as possible to get maximum cover at an affordable premium.

Get Life Cover Instantly

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy Holder Name

Policy No.

Policy Number

Address of the Policyholder as per records

Address

Unclaimed Amount

Unclaimed Amount
Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

Between 30 to 40, Income Up to ₹1.5 Lakh a Month, Married

By this age, you should have already achieved many of the previous milestones. However, if not, make sure you meet all of them before choosing life insurance plans for this age group. There are usually two scenarios here. First, both you and your spouse are earning, or second, only you are the earning member.

Only a few aspects will differ based on whether both spouses are earning or only one:

  • Increase Your Mediclaim Insurance Cover: You should include your spouse in the same plan after getting married. Even if your spouse is working and has a separate insurance policy, it’s advisable to buy a family floater cover for broader protection and easier management of claims.
  • Income Benefit Plan: Certain term life insurance plans offer this benefit. With this option, you can have an assured source of income to support you during difficult times. For example, iSelect Smart360 Term Plan by Canara HSBC Life Insurance offers a steady income benefit option. With this feature, the policyholder will get a monthly survival income equal to 0.1% of the sum assured when they age 60 until the end of the policy term. Please verify the exact percentage and terms as these may vary.
  • Unit Linked Insurance Plan: Life insurance plans like ULIPs allow you to continue investing beyond the initial five years. So, if you do not need the money after five years, you can continue investing and enjoy further growth. Otherwise, you can withdraw the funds completely tax-free, subject to prevailing tax laws under Section 10(10D) of the Income Tax Act.
  • Pension Plan: Retirement may seem like a distant goal when you are young. However, the money you invest now will provide maximum growth for your retirement funds. Thus, start now, even if it is with a small amount. The earlier you start investing in a life insurance-cum-pension plan, the better it is. Building this habit early ensures a financially secure retirement.

Above 40, Income More than ₹1.5 lakh a Month, Two Children

Adding children to the family completes the family unit and paves the way for a stable future. However, this stage of life required careful investment planning.

  • Investing in Child Insurance Plans: These plans safeguard your child’s future goals, like marriage and education. Child insurance plans have a goal protection feature, which ensures the plan continues until maturity, even in your absence.

    The insurer will deposit all the due premiums into the policy on your behalf. Your family will receive a lump sum in the event of your death, and your child will receive the amount you intended at maturity.

Common Mistakes to Avoid When Choosing Life Insurance

Many people buy life insurance in a hurry or without understanding the details, which can lead to problems later. Being aware of common mistakes can help you make a smarter choice and ensure your family gets the full benefit when needed.

  1. Underinsuring Yourself: One of the biggest mistakes is choosing a cover amount that is too low. Your sum assured should ideally be at least 10–15 times your annual income, so that it covers debts, living expenses, and future goals.
  2. Relying Only on Employer Insurance: Many people assume their company’s life cover is enough. However, employer-provided insurance often lapses when you change jobs and may not be sufficient for your family’s needs.
  3. Hiding Medical History: Some buyers hide health conditions to get lower premiums. Doing this can result in claim rejection later, so always share complete and honest information with your insurer.
  4. Choosing Only for Tax Benefits: It’s tempting to buy life insurance just to save tax under Section 80C. However, the main purpose of life insurance is protection, and tax savings should be a bonus, not the only reason.
  5. Not Updating Nominee Details: People often forget to update their nominee after marriage or children. Keeping your nominee details current ensures that your claim amount goes to the right person without any legal complications.
  6. Not Comparing Policies: Buying the first plan offered by an agent can be costly. Compare different plans, benefits, claim settlement ratios, and premium costs before making a decision.

Why Reviewing Your Life Insurance Regularly is Important?

Many people buy life insurance and then forget about it for years. However, your financial needs and life circumstances change over time, so your cover must keep pace. Regularly reviewing your life insurance ensures that your policy remains sufficient to protect your family’s current and future goals.

Major life events such as marriage, the birth of a child, a salary increase, or taking on new loans can significantly affect how much cover you need. If your cover is outdated, your family may face a shortfall when they need it most.

A periodic review also helps you adjust for inflation, which reduces the real value of your sum assured over time. By topping up your cover or adding riders, you can strengthen your financial protection as your responsibilities grow.

It is a good practice to review your policy once a year or whenever a major life event occurs. This small habit can give you peace of mind that your loved ones will always have the right level of support, no matter what the future holds.

Conclusion

Life insurance is an essential part of an investment portfolio. It is more than just an investment tool. It provides invaluable financial protection for your loved ones when they need it most. Insurance is not expensive, but not buying the right cover could prove costly in the long run.

Our aim is to help you choose a life insurance plan that aligns with your unique goals, income, and stage of life. Whether you want pure protection, a steady income benefit, or wealth creation through market-linked plans, we offer solutions that adapt as your needs evolve.

As you plan for your future, take time to review your life cover regularly and make informed choices. With Canara HSBC Life Insurance, you can be confident that you have a trusted partner to secure your family’s dreams and build lasting peace of mind.

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.

Recent Blogs

Life Insurance Policy Lapse: Impact, Risks and What You Can Do?
16 Jan '26
3003 Views
10 minute read
Know what a life insurance policy lapse means, why it happens, how it affects coverage and benefits, and the options available to restore protection.
Read More
Life Insurance
Best Investment Options with High Returns in 2026
10 Jan '26
9682 Views
16 minute read
Best Investment Options in India. Looking for investments to meet your long-term financial goals? Here are the best investment plans for the year 2026 in India.
Read More
Life Insurance
Have Multiple Life Insurance Policies? Things You Should Know
09 Jan '26
1290 Views
7 minute read
Is it legal to own multiple life insurance policies? Would it cause any problem in claim settlement? Discover your answers here.
Read More
Life Insurance
What is Survival Benefit in Life Insurance?
06 Jan '26
3233 Views
7 minute read
Learn about survival benefits in life insurance, how they work, and their key features. Understand eligibility and payouts with Canara HSBC Life Insurance.
Read More
Life Insurance
Types of Life Insurance: Which One is Best for You?
05 Jan '26
3118 Views
9 minute read
Learn about different types of life insurance policies with Canara HSBC Life Insurance. Discover the best plans in India in 2026 and know how to buy them online.
Read More
Life Insurance

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