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Here’s What You Need to Know About a Long-Term Insurance Policy

Here’s What You Need to Know About a Long-Term Insurance Policy

While one can more accurately prepare for future expenses, it is much harder and trickier to prepare for future emergencies. Unfortunate circumstances come in many forms, and if not adequately prepared for, can leave an individual or a family under dire financial pressures. That is why a highly recommended financial suggestion is to always secure your future with a trusted, long-term life insurance policy.

That being said, the fact of the matter is that life insurance comes in many forms and via a wide range of products on the market. In order to truly determine which life insurance policy is the perfect one for your needs, it is important to know about its benefits in the long run. Overall, an ideal life insurance policy is one that apart from ample coverage, also provides ample scope for wealth creation.

This is made possible by the means of United Linked Insurance Plans, or ULIPs for short. A ULIP is an insurance product that doubles as an excellent market-linked investment instrument as well. According to your choice of ULIP, you can either pay your premiums on a monthly or annual basis. While some amount of your premium is contributed towards providing you with insurance coverage, the other part of the amount is invested in your investment fund of choice.

These dual benefits make ULIP the prime insurance product of choice for individuals who believe in investing for the long haul. Moreover, since the returns from a ULIP are market-linked, it is more prudent to invest in them for a longer period of time. Apart from this, there are a few more considerations that make ULIP a worthy long-term insurance option.

Lock-in Period

ULIP typically come with a lock-in period of 5 years, during which the policyholder is not allowed any withdrawals or payouts. This serves a very specific purpose, allowing the investment to grow at a higher rate and provide higher returns. It also helps the policyholder in inculcating a disciplined approach to investing.

Particularly, with the power of compounding, investment in the best ULIP can result in substantial returns when compared to not investing the amount at all. Over a long period of time, these returns can even help you achieve financial goals such as purchasing a home or a car. All of this with the added benefit of having a reliable life insurance cover.

Flexibility

When signing up for the long term, it is important to have an investment that can keep up with your ever-changing goals and needs. That is where the flexibility of ULIP comes in handy. In general, the best ULIP offer a variety of fund options to choose from, such as equity, debt and balanced funds. Based on your risk appetite as an investor, you can take your pick and invest accordingly with the added option of moving your money between these different funds as you see fit. As time progresses, you can change your investment strategy and your ULIP will be able to support you either way.

Moreover, ULIP also work as a long term option due to the flexibility they offer with respect to your life insurance cover. You can customise your ulip and your ideal sum assured at the start of your policy, and with some ULIPs, you even have the option of increasing your sum assured at important milestones in your life.

Tax Benefits

Apart from this, ULIP also offer a variety of tax deduction benefits. The primary of these is that the premiums contributed to a ULIP are allowed for deduction within Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961. Moreover, under Section 10 (10D), the death benefit or maturity amount from a ULIP is tax-free. ULIPs also have the distinction of being the only market-linked investment tool that is exempted from Long Term Capital Gains, or LTCG taxes. With tax benefits such as these, your ULIP can greatly contribute to your long term savings.

The key to maximising the benefits of a long-term insurance policy in general, and a ULIP in particular, is to find the right, reliable insurer that can offer the best plans customised for your needs. With Canara HSBC Oriental Bank of Commerce, you can avail a variety of the best ULIP based on your financial needs and risk appetite. These include ULIPs such as the Invest 4G Plan, Titanium Plus Plan, the Smart Future Plan, and the Smart Goals Plan.

Particularly, the Invest 4G ULIP from Canara HSBC Oriental Bank of Commerce is a popular ULIP scheme among investors with options ranging from 7 different funds as well as 4 portfolio strategies. You can also make the most of several additional benefits such as wealth boosters and loyalty additions.

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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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