Varun, a 29-year-old software engineer got married last year. The newly wedded couple was living their life to the fullest. They made sure that they have everything to live a modern life where electronic devices formed an inseparable part of the household. Both of them were having the latest smartphones, laptops, and an Android TV along with subscriptions of various premium applications. Every weekend they used to go out shopping followed by dinner at some high-end restaurant.
On top of all this, they were having yearly memberships in a few clubs and in a gym too. So basically, they had everything which a newly wedded couple could desire.
Life was perfect. But all this took a toll on savings and they certainly lacked adequate savings plan. In the bustle of this life, Varun had all but forgotten about investing anything in essentials like term life insurance.
Part of the reason could be the fact that his employer had provided him with large health and accidental insurance.
One fine morning Varun found that one of his neighbours, Praveen, passed away in an accident. Praveen was of the same age as him and lived with his wife and a small child in the same building. Varun knew his lifestyle was somewhat a hallmark of the modern lifestyle, the same as his own.
Praveen was running a business and was doing good but planned for emergencies like this. The news shocked the whole neighbourhood. Everyone tried supporting the new family but within few months Praveen’s wife started planning to move back to her parents. On inquiring, Varun came to know that his friend had not invested in a contingency plan and did not have any life insurance.
Fortunately, Praveen’s home loan had a term life insurance policy which covered the liability in case of Praveen’s untimely demise. But the policy only covered the home loan balance and did not provide anything to the family. Being new to the business, his savings were not enough for his wife to manage her and the baby’s monthly expenses.
This incident opened Varun’s eyes and forced him to think of the emergency situations similar to what Praveen’s family is now facing. He discussed this matter with his wife and they both decided to check their monthly expenses and make a budget.
Their first month’s budgeting exercise gave them the following picture of their outflows:
Varun also realised that more than 60% of credit card expenses were unnecessary and some even unrecognizable.
Varun and his spouse realized that they were getting into the habit of spending money without even realizing the value of the outflow.
This wakeup call was enough for them to immediately seek professional help with their financial life.
The Professional Financial Advice
Financial advisor, fortunately, did not find Varun’s situation exceptional. In fact, she told them that this is the same story for most of the young families today, especially those in cities. In the hurry to meet the peer pressure for good lifestyle more important financial decision often take the back seat.
She told them to always remember two facts while deciding on spending money on anything:
Term Insurance Plan & Contingency Plan
The advisor shared that the money allocation should begin with the contingency plans first. Which will include the following:
Advisor also educated Varun and his wife on the best life insurance policy adding that the plan should have the following features and benefits:
The possibility of online purchase and monthly premium payment would be added advantages for Varun. However, the features above are very important for Varun and his wife.
The advisor also told him that it’d be better if he adds his wife under the umbrella too. She explained her important contribution in his life and how it may change if anything happens to her.
Varun was in for a pleasant surprise when he found out the premium for adequate term insurance for himself (death benefit sum assured of Rs. 1 crore). The premium of the term insurance plan with Rs. 1 crore life cover and all three additional benefits came a little over Rs. 15,000 a year.
Divided into monthly instalments, Varun can easily include some Rs. 1300 in his monthly budget. They realised how easy it’s going to be for them to maintain and stay safe with this minuscule amount into their monthly budget.
They already have so many monthly subscriptions running which they often end up not using, and the cost of financial safety is equal to only one of them.
Cost of financial security through a term insurance plan is low enough for you to automate the premium payment and forget. Additionally, you do not have to be involved with the policy regularly. You can enjoy your life and invest in your family’s financial goals, all the while staying safe under the insurance umbrella.
Canara HSBC OBC Life’s iSelect Star term insurance can offer you all the benefits discussed above and more under a single plan. The best part is, you can even choose to pay the entire premium for the next 30 years of life cover with all the benefits in a single instalment.
Opting for single premium payment is the only good reason why you may not have a term insurance premium in your monthly budget. Otherwise, make sure you have opted for auto-debit of the premium from your account before you start sending money to any other activity.
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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.
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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