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6 Benefits of Buying Saving Plans with Guaranteed Income

dateKnowledge Centre Team dateApril 22, 2021 views211 Views
6 Benefits of Buying Saving Plans with Guaranteed Income

One of the main goals of financial planning in life is to have a safe and comfortable retirement without depending on anyone else. Having a guaranteed income even after one’s career years are over can ensure that the standard of living that you are used to is not taken away. To ensure such a steady inflow of cash, it is highly advised that you sign up for saving plans with guaranteed income, many of which are now available in the Indian market.

Why should you buy Saving Plans with Guaranteed Income?

Many investors who are pre-retirees often rely on stocks or other investments that have fluctuating market values to safeguard their retirement. To prevent getting lost in a sea of uncertainties as your retirement age comes closer, it is useful to diversify your financial portfolio with investments that are low in risk and high in returns. This is where income annuities or insurance policies that double as fixed-income saving plans come into the picture.

ULIPs for planning your retirement

Aside from the possibility that you may outlive your savings, such saving plans with guaranteed income can benefit you in other ways:

1. Reduction of Risk of Returns

People who are nearing retirement are understandably reluctant to take up investments that are high in terms of risk. It is always recommended to direct your income towards ventures like life insurance so that people who are dependent on you for livelihood are taken care of in the unfortunate event of your demise.

If you invest in savings plans with guaranteed income, the safety of you, your partner, and your family is pretty much assured because the loss of your professional income will not be felt as sorely. Such savings plans are also far removed from the volatility of the market, so you do not have to worry about the rising and falling figures of stocks for the safety of your retirement.

2. Financial Stability

Even though retirement is something people look forward to, the idea of not being well-off during the last few years of your life can be quite taxing for many professionals. While many people rely on their offsprings or extended family to take care of them, having a stable income of one’s own is the most comfortable way of living because you can always support your family in their times of need.

Learn which insurance is best to get guaranteed monthly income after retirement.

A fixed paycheck that is cashed into your account regularly will give you the psychological support you need as your medical expenses and prescription bills grow larger. Especially considering how there is a higher chance of medical contingencies once you near your death, a fixed income can be highly beneficial for your mental health.

3. Provides a Retirement Corpus

Savings plans with guaranteed income after retirement allows you to continue saving long after the peak of your career. Considering how some of these income plans allow you to defer taxes unless you withdraw funds, savings is made a whole lot easier.

Many savings plans also offer you the option to withdraw the assured sum in parts as a monthly income or as a lump sum amount, which is beneficial if your family has any urgent financial needs that require immediate attention, like a child’s marriage or education.

4. Easier to Budget your Retirement

It is far easier to plan out the specifics of your retirement when you know you will have a steady influx of cash on a regular basis. The comforts of a retirement house, as well as coverage for your spouse, can both be taken care of if you have a guaranteed income plan.

Learn 8 reasons to buy a guaranteed income plan.

5. Diversification of your Financial Portfolio

Instead of putting all your eggs in one basket, investing in savings plans with guaranteed income safeguards your financial portfolio in case all of your high-risk investments do not pan out as planned. It is important to have different investments with varying levels of risk so that you can take maximum advantage of the financial options available to you, and savings plans are a great investment for the diversification of your investment portfolio.

6. Plenty of Options to Choose From

The insurance market in India today offers a diverse array of savings plans with guaranteed income. Canara HSBC Oriental Bank of Commerce Life Insurance offers Guaranteed Income4Life, which is designed to help you achieve your long-term financial goals while saving you money in the area of taxes. A few benefits of Guaranteed Income4Life are:

  • A Guaranteed Regular Income after retirement will ensure that you are self-sufficient and comfortable in the penultimate years of your life.
  • Limited premium pays so that you can align the premium payment with your financial status and goals, depending on the stage of your life when you purchase the plan.
  • Nominees will be paid death benefits upon the demise of the policyholder.
  • You can choose from – Guaranteed Income, Guaranteed Long-term Income, and Guaranteed Life-long Income options as per your income and needs.
  • Assured loyalty additions provided that all due premiums have been paid off.

Having a savings plan like Guaranteed Income4Life will ensure that the remainder of your life after retirement is spent in comfort and not in anxiety. Adding such a guaranteed savings plan to your financial portfolio will ensure diversification, low-risk, and safety in case of medical emergencies that are likely to occur with old age.

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Frequently Asked Questions (FAQs) for Life Insurance

The premium is one of the most important factors to consider before buying a 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. 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.

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 chances of contracting diseases is low. Young people also opt for 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. Policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the 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 physicianâ 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 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.

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: An 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 policy, the insurance companies generally pay 80% of the total premiums paid.

Buying life insurance 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. Online insurance policies also offer higher benefits. Customers should, however, buy online 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 policy to increase the cover or avoid claim rejection. In case of multiple 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 the 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 life insurance, the insurance company asks for the nominee details. Only the person named as the nominee in the policy can cash out a life insurance policy 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 the 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 family receives the death benefit. In the case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment options are chosen the policy works as a source of regular income.

It is a popular misconception that life insurance is only for accidental deaths. A term life insurance plan like iSelect 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 life insurance in your early 20s because it’s 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 life insurance 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 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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