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Should I consider buying a life insurance plan if I am single?

dateKnowledge Centre Team dateAugust 13, 2021 views234 Views
Buy Best Life Insurance Plan | Life Insurance Plan

Graduating from University and taking up the first job is one of the happiest moments for any individual as it marks the beginning of financially independent life. The icing on the cake, if you bag an offer to work in a blue-chip major or a public sector behemoth. You start a new journey that is no longer as linear as it used to be until you completed graduate studies. You have your plans, strategies, aspirations and ambitions to make it big in life, buy that dream house, raise a family, travel around the world and retire like a King.

With money comes a desire to spend on materialistic comforts and latent desires. In the hullabaloo of life, there arises a common conundrum-should you buy life insurance? After all, you are single without any commitments.

The Single Person’s Dilemma

Some of the thoughts crossing your mind:

a. Do I really need life cover if I’m single?
b. How much life insurance do I need if I am single?
c. What are the benefits of life insurance for singles?
d. Is life insurance for singles available?

Why Do You Need Life Cover While You Are Single?

Life Insurance is always planned for the long-term and to mitigate against risks that may arise in the unforeseen future. If you are single and Gen-Z, the following reasons should get you thinking about life insurance and its importance in your investment portfolio.

1. Financially Dependant Parents

Your parents worked hard all their lives to give you the best possible education. They spent a significant portion of their incomes to help you reach where you are today. Although they may not say it directly, it is possible that they are not financially stable. They hope that you will take care of them in their sunset years.

But what if the almighty has some other plans in store and you do not live long to handhold them. A life insurance policy guarantees the Sum Assured to them so that they can make ends meet even in grief.

2. Age Advantage

The premiums payable on Insurance Policies depends on age and health condition. As you age, the cost of buying a policy will increase significantly. If you are currently 25 and single and decide to defer buying an insurance policy until you marry at say, 40, you will probably end up paying much more.

3. Ailments

Deferring purchase decisions has another drawback. If you develop some ailments by then, you may run the risk of either not getting covered by life insurance or being charged significantly higher than normal.

4. Protection for Future Family

Life happens! Even if you are determined to stay single, your decision may change at a later stage in life. You may regret not being able to financially secure your family in case you are considered ineligible for an Insurance Policy as per actuarial norms.

5. Financial Liabilities

Take the case of Arjun who availed a home loan of Rs 25 Lakhs at the age of 28, got married at 30 and unfortunately died at 34. If the home loan is not covered by life insurance, the bank can attach/auction the property and recover the dues. If it is covered by life insurance, the insurance company would pay the outstanding dues and therefore Arjun’s family will not be displaced.

6. Tax Benefits

Amount paid towards premiums are deductible, under section 80C, from your taxable income. Learn how does life insurance help in saving tax.

How Much Life Cover Do You Need When You Are Single?

The magnitude of life insurance depends on the insurable interest of the nominee. If Rakesh, aged about 30 years, earns Rs 15 lakhs per annum, his family will stop getting that income in case of Rakesh’ untimely demise. A simple thumb rule states that the Sum Assured in a life insurance policy should be around 10-15 times the annual income.

The underlying logic is simple. 10-15 times the annual income gives 10-15 years to the family to strengthen alternative sources of income. For example, the spouse may pick up new skills and start earning or children may grow up and become financially independent etc. In the above example, Rakesh should opt for a cover of approximately Rs 1.5 Crores to Rs 2.25 Crores.

Which Type of Life Insurance Plan Should You Buy When You Are Single?

The type of life insurance depends on each person’s circumstances, aspirations and affordability. Some of the most comprehensive policies offered by insurers with a rich legacy such as Canara HSBC Oriental Bank of Commerce Life Insurance are listed below:

(1) Term Life Insurance

Online term life insurance plans like iSelect Star Term Plan offer some amazing features for you to offer adequate financial safety and prepare for your future as well:

Increasing Cover Option

As your income will grow, for the first decade of your life your lifestyle and responsibilities will continue to grow with your income. With these, your life cover need will also grow. The iSelect Star term policy allows you to choose one of the following options to ensure, that your term cover keeps up with your growth:

  • Steady growth: The life cover automatically grows every year until it doubles
  • Life-Stage Increment: Request for higher sum assured at crucial stages in your life:
    • Marriage
    • Childbirth
    • Home purchase

Whole life coverage

At a young age your premium could be low enough for you to consider a 99-year cover. Have the financial protection as well as prepare for the legacy for the next generation.

Pay Till 60 Option

Select the premium paying term so that you pay only for a defined period such as before retirement.

There is also a return of premium option that gives all your paid premiums back at the end of the policy tenure. The best part is the increasing life cover option that is best suited for single/unmarried individuals. The life cover can be increased at appropriate life stages so that the individual gets the best of both worlds.

(2) For Retirement Savings & Wealth Creation

Invest 4G is a comprehensive plan that empowers you with both wealth creation and life cover. This combination gives you solid control over your investments and insurance requirements. Some salient highlights:

a. You have the option to invest in equity, debt, balanced and liquid funds simultaneously

b. Multiple portfolio management strategies ensure that you can manage your portfolio without regular involvement

c. Loyalty additions and wealth boosters ensure you get a superior return on investment

d. The systematic withdrawal option is very lucrative because it provides a safety cushion during financial emergencies

(3) Savings For Short-Term Goals

Saving to fulfil your short-term financial and lifestyle goals is also important. Although nowadays borrowing is a common theme for the new earning members of the society, you can take a better path.

While borrowing will afford you assets like a car or expensive electronics sooner, they cost far more with borrowed money. But if you save for these goals, you not only end up with more money, but you also have better choices for products. Especially when the saving plan can offer tax-free maturity value and savings.

The Invest 4G ULIP Plan from Canara HSBC Oriental Bank of Commerce Life Insurance, provides the perfect solution for you. The plan gives you the option for partial withdrawals once the five-year lock-in period ends. Thus, while you continue to save, you can simultaneously use part of the savings to fulfil your wishes.

Life Insurance should be availed when you do not need it, because you may not get it when you need it the most. There is no “right” age to buy an insurance policy, but the benefits of signing up early are tremendous. Life Insurance should be a priority if you wish that your family never struggle for money.

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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

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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