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Online Term Insurance for a Fool-Proof Contingency Plan

Online Term Insurance for a Fool-Proof Contingency Plan

contingency plan with term insurances

Contingency plans are an important yet most underestimated part of any project. If everything goes without an unfortunate event, your contingency savings can be used for other big goals in life. But on the inverse, one hazardous event can tilt the opinions to the other extreme, and then the question may come, “why did we not spend more time and effort on this?”

Your life is also a huge, costly and a long project. It becomes even bigger when you have a family to look after and have children. A life insurance plan makes an important part of an emergency plan. Therefore, to have adequate contingency planning for your family, you have to have a life insurance in place, which will ensure they have enough financial support to continue the journey, if an unfortunate event strikes.

Here’s what your contingency plan should address, and how you can make it strong enough to meet your family’s needs.

What Is A Contingency Plan for Family?

A family’s contingency plan is completely financial and has one single objective – “ensure adequate and timely financial support to the family.” A good contingency plan for a family will help the family sail through most of the financial distress without harming their long-term investments.

For example, in the case of emergency hospitalisation, your income and normal household expenses will be affected. Also, you still need the treatment so that you can quickly get back to your profession and start earning.

In other words, your contingency plan should enable you to resume your normal course of life as soon as possible after a hazardous event. While you should include other things, financial support is the most difficult to achieve in the hour of need.

So, advance preparation helps, and here’s what all you need to include in your contingency plan:

  • Emergency funds: A pool of liquid funds or savings which you or family can withdraw at short notice
  • Insurance plans: Life, health, accidental insurance, and saving plans among others
  • Knowledge of how to use insurance: Buying an insurance policy is only half the job. You should make sure your family knows how to use the policies in case they need to handle it after you.

List of Emergencies

When you are planning for emergencies, the first thing to define is how you know it’s an emergency and you need to use the contingency plan. In other words, you need to define the emergency for your contingency plan.

All of these incidents can either cause the family to lose access to a regular income or experience sudden financial burden.

Life insurance for emergencies

What Will Your Family Need in Emergencies?

You can also take this question as - what should your contingency plan provide at the time of emergency? Although it’s clear that the plan is purely to provide financial assistance, there are a few nuances.

Your family will need 1) A regular income to run the household expenses and 2) A large lump sum to take care of liabilities and future goals, in case of any emergency.

Loss of employment, being a temporary setback, needs a much smaller pool of funds, usually three to six months of your income. However, others need much more funds, which only a good insurance plan can provide.

Using Term Insurance in Your Contingency Plan

Apart from unemployment, and Mediclaim, good online term insurance will help you take care of all the other emergencies listed above. Online term plans like Canara HSBC OBC life’s iSelect Star, can offer everything we have outlined for a great contingency plan.

Here’s a list of things this term insurance plan can offer towards your contingency plan:

  • Cover for accidental death
  • Financial support and premium waiver in case of permanent disability because of an accident
  • Support in the case of contracting a life-threatening illness
  • Child support option to ensure the safety of the child’s financial goals separately from life cover and other benefits
  • You can also include your homemaker spouse in the same policy with an additional sum assured

Not only these, but the best online term plan should also, keep up with your growing life cover needs. Canara HSBC OBC Life Insurance’s iSelect Star term plan allows you two ways to increase cover without having to buy a new policy every time:

1. Increase the cover at critical moments in life such as marriage and childbirth

2. Automatically growing cover at 5% every year

The first option works best for early adopters, and the second option works best for an existing family whose life cover needs are growing.

Will Your Term Plan Help the Family in the Time of Need?

While all the benefits and features are great, but if your family faces difficulty in receiving those at the time of claim its all only glitter without substance. That is why you need to look for a term plan with claim guarantee conditions.

Claim guarantee conditions will ensure that once your policy qualifies them, your family can receive claim settlement faster. Canara HSBC OBC Life Insurance can settle term insurance claim within a day, for the policies which qualify the claim guarantee conditions.

When it comes to claim settlement, online term insurance plans have a better track record. Almost all insurers promise to settle the claim within 30 days after your policy has completed three years with all premiums paid.

Is Your Contingency Plan Fool-Proof?

Term insurance is anyway a part of your contingency plan. Online term insurance plans which offer these features can help you strengthen your contingency plan further. Also, do not forget to educate your spouse and children on how to use these policies and savings in case of an emergency.

That will make your contingency plan completely fool-proof.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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