Phone NumberTo Buy: 1800-258-5899 (9 am to 6 pm)



Locate BranchLocate Branch

The Wrong Reason to Buy Life Insurance!

The Wrong Reason to Buy Life Insurance!

Abhinav is usually saddled with work and is unable to find time to get a hold on his finances. Every year around the tax planning, the Relationship Manager from his bank pitches him a great tax saving life insurance plan that will help him save tax. Abhinav gets an excellent door-to-door service. All he has to do is sign the ECS forms, while he leaves the planning to the expert.

He picks up a fresh Life insurance policy every year in addition to the renewals from the previous years. He doesn't know the cumulative cover he has, the type of policies he has invested in, and the kind of premium he is paying. All he knows is that these investments help him save tax.

The Indian insurance markets witness a huge surge in business in the January-March quarter as salaried tax-payers rush into the tax-saving mode. Almost 50% of the annual sales of insurance companies are achieved in this short span of time.

Unfortunately, there are many like Abhinav who opt for an insurance policy just to save some money in tax. Life insurance is undoubtedly a great tax-saving tool, but that benefit should not be the only reason to opt for it.

How to do it right?

The primary objective of a life insurance policy is to safeguard the financial future of your family and dependents from uncertainties in life. In case something were to happen to you, your life insurance policy should not only help cover for the immediate financial exigencies, but it should also help supplement loss of income, help the family stay on track for future goals and events, expenses towards your childs education or marriage for instance.

Therefore, when you are looking to invest in a life insurance plan, you need to weigh every single aspect of the investment, rather than blindly buying an inadequate or ill-advised insurance plan to save tax.

Firstly, you need to calculate the coverage you require to meet current and future needs. The amount should be enough to provide your family with a comfortable lifestyle, meet their financial goals, and also pay for major liabilities such as loans and mortgage.

Life insurance policies come with various riders such as accidental death, permanent disability, critical illness etc. Understand these well and add the ones relevant to you and your lifestyle to your policy. If you are susceptible to certain lifestyle diseases and ailments, these can help your family mitigate risk by being prepared for an eventuality.

Think through the right tenure for you. This depends on how much premium you can comfortably pay today, as well as how long you desire to work. Choosing a tenure of 30 years when you plan to retire in 20 is not a wise thing to do as it will add stress to your golden years.

Also, look at whether you need a spouse cover. Many policies offer an optional spouse cover that covers your spouse under the same policy. Not only does it help mitigate risk, but it is also cheaper than buying a separate policy for them.

Next, check the payout option that would be the most ideal for your family. Would you need lump sum payout or monthly payout or a combination of both to ensure that your family's expenses are taken care of?

While prioritising tax planning might save you some money in the present time, it could prove to be an expensive mistake in the future. Therefore, don't worry about saving until you are sure that you have secured your family's financial future. And if you don't wish to spend a huge amount on premium every month, you can consider opting for an inexpensive life insurance policy such as a term plan.

A term plan provides a safety net for your family at a reasonable investment. It is a pure protection plan that comes with benefits such as multiple payout options, built-in and optional covers, increased coverage and riders

These are far greater incentives to invest in a term insurance policy; tax deduction is just the cherry on the cake.

Make the smart choice

The iSelect Star term plan is one of the cheapest, most comprehensive life insurance plan available today. It provides life insurance and terminal illness cover along with cover against accidental death/disability. Also, if opted for at the start of the policy, you also get the option to increase life cover just as your life's responsibilities do. What's more, it offers complete flexibility when it comes to selecting the terms of the policy to ensure they are in line with your financial needs and aspirations.

So, the next time you are about to opt for a policy just to save tax, make sure to reconsider and think about the other benefits you could be missing out on.

Get a Call Back

Do you want us to call back Please fill the form below

Annual Income (In Lacs)

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.

Call BackCall Back Pay PremiumPay Premium
Back to top