A life insurance policy stabilizes your financial plan in case of an unforeseen event. It adds an extra measure of security for the future of your loved ones. Return from life insurance can be used to pay debts, expenses, loans, etc. Life Insurance provides protection even when you are not there.
What Is A Life Insurance Policy?
A life insurance policy is a contract between an individual and an insurance company that provides financial protection to the policyholder. The insured person has to pay the insurance company a monthly premium (fees) for a particular number of years as specified in their life insurance policy.
Based on this arrangement, if under unexpected and unfortunate circumstances the policyholder passes away, or if the policy matures, the insurance provider would pay a lump sum amount to the person or his/her family. This amount is called the death benefit. It is completely tax-free; the person or the concerned nominee can choose what they want to do with it.
Types Of Life Insurance Policy
If you are looking for a life insurance policy, you must already be familiar with term insurance and whole life insurance. You should know there are several more options than just these two. Based on your needs and financial situation, you can choose from any of the following options.
Term life insurance
Term life insurance policy offers temporary coverage. The term life insurance is considered the most affordable life insurance policy. The term insurance lasts several years before it is expired. If the policyholder dies within the specified period, a death benefit is paid to the nominee or the family.
Term life insurance policy offers more pocket-friendly premium costs than any other life insurance policy. You can broaden the coverage, and convert it into a permanent life insurance policy before it expires without undergoing medical underwriting.
Whole life insurance
The whole life insurance policy, on the other hand, offers full coverage till 100 years of age, it does not expire. A whole life insurance policy has a death benefit and a cash value. It is what you can consider a tax-deferred savings account, an investment included in a policy. They contain a cash value that accumulates interest at a predetermined fixed rate.
Every month a certain amount from your premium goes into the cash value of the policy with a guaranteed rate of return. This cash value can be withdrawn or loaned. This component of whole life insurance also makes it more complex than term life insurance due to the taxes, interest, surrender fees, and other stipulations.
Endowment life insurance policy
Endowment life insurance policy offers the benefits of both insurance and savings. It ensures that the death benefit is payable even if the policyholder is still alive by the maturity date of the policy. And if the policyholder passes away during the terms of the insurance policy, the nominee receives the sum assured with the addition of bonus or participating profits.
Money-back Insurance policy
Money back policy provides a periodic return along with the benefit of life insurance cover. It gives you money during the term of insurance. A percentage of the sum assured is given back to the policyholder at regular intervals during the policy term. The remaining portion is payable at the end of the term of the policy. In case the policyholder dies before the end of the term, the nominee is paid the assured total regardless of the premium payments received by the policyholder.
Unit Linked Investment Plans
Unit Linked Investment Plans (ULIP) offer flexibility in investment in addition to life insurance. It is one of the most flexible life insurance policies available in the market. A percentage of premium is used to provide insurance, while the rest is invested in the capital markets. The policyholder is free to choose from a variety of funds investing in equities, debts, market funds, etc.
Child Insurance Policy
A child insurance policy is another way to secure your child’s future. It is a savings cum investment plan, designed to meet your child’s financial needs. It allows you to build a fund for your child’s future education and dreams. Most of these policies provide annual installments and could be withdrawn once your child has reached adulthood. In case of your passing during the policy term, an immediate pay-out is payable.
These retirement plans allow you a financially safe and happy retirement. Helping you to live independently, without any financial worries. It is designed in a way so as to generate a regular income for the policyholder after their retirement which is referred to as pension or annuity. In case the policyholder passes away during the policy term, the nominee will receive an immediate payout.
Who Needs a Life Insurance Plan in India?
A life insurance policy is a way to ensure your wellbeing and provide a safety blanket for your loved ones in case of an unfortunate event or emergency. Who should get a life insurance policy and when they should get it depends on multiple factors.
- Parents with minor children: In case of the unfortunate death of a parent, the loss of income or care could create a financial crisis. Life insurance can ensure that kids will have the financial resources they might need. This insurance will also help fund your child’s education in the future.
- Parents with special needs adult children: For children who require lifelong special care and will never be able to support themselves, life insurance will ensure their safety and financial needs in case their parents pass away. A life insurance policy will act as a special needs trust for them.
- Young and single adults: Young and single adults do not need life insurance for the most part, but getting early life insurance will make sure that the premium stays low for when you need life insurance in the future. This is because the premium cost increases with increasing age due to the increased probability of diseases and deaths.
- New Families: Newly married couples, starting new families together should get a life insurance policy to ensure that the people depending on them have financial aid to lean on in case of unfortunate passing. Children and spouses will have the payout to help them build a future.
- People with a home loan: Homeowners know buying a home is not an easy task. Purchasing a home on a home loan means monthly EMIs. This expense puts a drain in your pocket. In case you pass away, your family might not be able to support themselves and give EMIs at the same time. To avoid such a crisis and sure their financial wellbeing it is important you get a life insurance policy.
- Business owners: A business owner or business partner has many people depending on him/her. In case something happens to you, these people will be put in a delicate position. Therefore it is important that you have separate life insurance to cater to your business obligations.
- Life insurance for parents: The only people who have consistently supported you both emotionally and psychically throughout are your parents. With aging, their financial wellbeing falls in your hand. It is a good idea to have life insurance for your parents. This will provide them with financial stability.
Benefits Of Life Insurance
A life insurance policy comes with many benefits and advantages:
- Life risk cover to protect your loved ones.
- Financial Security and death benefit in case of sudden death and passing.
- Investment and value return to build wealth and finance for future expenses.
- Tax deduction and benefits for a salaried person.
- Savings for future emergencies and unforeseen circumstances.
- Availability of policy loan in case of an emergency.
- Secure and guaranteed income after retirement for a happy and secure life.
- Secure your business and fulfill your business obligations.
- Life stage planning to achieve and manage your financial goals and future expenses.
Who Is Eligible For Life Insurance?
Life insurance is evaluated on a case-by-case basis. Life insurance is not just for healthy and wealthy people. Several companies are offering multiple types of policies specific to several needs. You can get affordable insurance even if your previous applications have been denied.
Although generally, the younger and healthier you are, it is easier for you to qualify for life insurance. Increasing age and health conditions lead to difficulties regarding the qualification of life insurance. Certain lifestyles consisting of regular alcohol consumption and tobacco or risky hobbies like adventure sports and sky diving also make your application harder to qualify.
Canara HSBC Life Insurance offers several life insurance policies to choose from. Here we help you plan and build a better and secure future for you and your loved ones. Compare different life insurance policies and choose what benefits you and caters to your needs the most. Canara HSBC life Insurance is IRDA registered. With lakhs of policies sold and a customer base of crores, we are known for our credibility. We have a network of more than 20,000 branches and 40 branch offices.
Choose from our best plans, term Insurance Plan, Unit Linked Insurance Plan, or Health First Plan to enjoy amazing benefits. With advantages of multiple premium payment options, the return of mortality charge, and pocket-friendly premiums, Canara HSBC Life Insurance helps you to be there for family and loved ones even when you are not here.