Term insurance is one of the primary financial needs. The moment you start earning and taking up some of the financial responsibilities in the family, you should start thinking of a life insurance plan. To understand the ideal age of buying a life insurance policy, you need to understand the situations where life insurance will be most useful.
Consider the following two cases:
1. Sudheer is 23 years old and is the oldest in the family. He has just started earning and bears the responsibility of his 2 younger siblings, who are completing their education.
2. Himani is 29 years old, is single, earning and has no particular responsibilities at home. Her parents are financially independent, and siblings are all well settled in life.
Between the two cases, who do you think needs life insurance more? While the answer is obvious, you also need to look at the trade-offs.
Disadvantages of buying life insurance too late
Ideally, you should get your life and health insurance plans as soon as you start earning. Waiting often leads to the following disadvantages:
Thus, getting insurance as soon as possible with your income is the best choice for everyone.
How much life insurance is enough?
This is an important question to consider while buying life cover. You should understand that life insurance is a need and it comes before any investments. In fact, while planning for contingencies, the family must buy insurance first even before starting to save for emergency fund pool.
Thus, insurance takes precedence over any kind of investment. Also, insurance is meant for the financial protection of your family and you. So, what you are looking for is an insurance which will help your family sustain their lifestyle and meet their financial goals, and so on.
When it comes to life insurance it has to do so in the event of your untimely demise. But all of this must happen within the limits of your income. Founding principles of insurance does not allow the protection cover to profit from the insurance payout.
Thus, if your income is Rs. 10 lakhs a year, maximum life cover you can secure would be limited to 10 to 15 times this amount, which is sufficient for the family to maintain their lifestyle for a long time and meet their future goals.
Therefore, in the case of Sudheer, if his take-home income is Rs. 5 lakhs per annum, he can secure a life cover of up to Rs. 75 lakhs. However, this does not mean that he cannot increase the cover later.
Increasing the Term Cover - Why & When?
Under normal circumstances, everyone experiences growth in the family and financial responsibilities. Thus, the life insurance cover should also grow to keep up with your growing responsibilities, income and lifestyle.
So, when do you need to increase your life insurance cover?
How to get the ideal life insurance cover in India?
With the growing number of life insurance companies offering competitive solutions for life insurance plans, it’s easier than ever. All, you need to do is visit the website and select the online life insurance plans to see which one suits your needs.
Ideally, it would be the term insurance plan if you are buying purely for financial protection or buying life insurance for the first time. With online term insurance, you can input your information including your annual income and the calculator gives you the ideal life cover for you.
Check the benefits and select the additional covers available with the term plan, if you do not already have. For example, accidental death and disability cover is the most common addon cover with a term insurance plan.
Step by Step Process:
Here’s a step by step process for selecting and securing the best life insurance cover for your family:
With i-Select+ term plan from Canara HSBC OBC Life, you can also select a child support benefit. This cover provides an additional amount for your child’s goals such as education and marriage.
Remember your family will need a regular income to run the household and lump sum money to invest for future financial goals. With the i-Select+ plan, you can divide your total benefit amount to be paid as a lump sum and regular income.
Ideally term cover should last at least till your retirement. So, if you are 30 years of age now, you should select a 30-year policy term. You can keep the premium payment term either same as policy term or go for a lower period. This may increase your regular premiums to some extent.
Once you have completed the application form, you may have to appear for a medical checkup at the nearest assigned centre. Once done, the insurer will consider your proposal and issue the life insurance policy.
Insurers often modify the cover depending on various factors. You should not worry if the insurer has modified your proposal or asking for extra premium for the same cover. The insurer will do that if there is anything which causes them to assign a higher risk to your life.
This would mean two things – one, the risk on your life is higher than the normal, and two, you need the life cover even more now. Accepting the modified proposal only ensures a smooth claim settlement experience for your family.
So, do not worry and avail the best life insurance cover for a safe financial future.
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