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How Does Canara's Online Term Plan Work

How Does Canara's Online Term Plan Work

Online Term Insurance

Canara HSBC OBC Life’s online term plan, iSelect Star is one of the term plans which offer comprehensive coverage and numerous benefits. It is important for you to understand how these benefits will come to impact yours or your family’s life.

Thus, if you know how the plan works before buying, you can make better choices with the plan and make it work for your future needs.

The Two Parts to the Term Insurance

Any life insurance contract (investment), including the online term plan, has two phases of activities:

  • Policy Purchase
  • Claim Events

The policy purchase phase starts with your first application for the policy and continues until the claim event on the policy. Although, going by the process we go through the ‘policy purchase’ phase first, and only then claim events. But, to ensure that the policy works as per your needs you should understand the claim events first.

The claim events define the moment of truth for your life insurance investment. So, it’s important that you understand what defines a claim event for the insurance plan you are getting into.

More importantly, claim events are your needs. Thus, understanding your needs first will enable you to make better purchase decisions.

Identifying Your Claim Needs

With iSelect Star term plan, you can expect to meet the following claim needs:

  • Untimely Demise
  • Diagnosis of Life-threatening illness
  • Accidental Disability
  • Life cover for spouse

You can also call these as the primary needs you’d want your insurance plan to meet. In all the four events your family will need two kinds of financial support:

  • A large sum to look after treatment expenses, home modification, etc.
  • A regular income to run the household expenses

Also, if you are an early investor you may want these benefits (sum assured) to grow as your family and income grows. iSelect Star term plan gives you two options to increase your benefit amounts as per your growth:

  • Life Stage Growth: Choose a level sum assured in the beginning, then you can increase the cover at three important life events – marriage, 1st childbirth, 2nd childbirth.

  • Example: You buy i-Select Star term cover at the age of 30 while still a bachelor, with a sum assured of Rs. 1 Crore. Three years later you get married. Now, if you want to increase your life cover, you can simply increase the cover in your existing plan instead of buying a new one.
    With i-Select Star you can increase your S.A. by up to 50% on marriage. So, your new life cover after marriage will be Rs. 1.5 crore. Similarly, you can again increase the cover by 25% each on childbirth for up to two children.
  • Increasing Cover: The sum assured keeps on growing at a fixed rate every year until it doubles. The growth is based on simple interest.

Why Regular income?

Providing a source of regular income to your family takes away a large burden of investing money from over their heads. It also, ensures that they don’t worry about their immediate basic needs and can focus on bigger life goals.

In short, fix their survival to help them thrive.

Additional Needs & Benefits in the iSelect Star Plan

While all the three basic needs are part of i-Select Star term plan, there are additional benefits you can use:

  • Leave a legacy in case of natural death
  • Receive all the paid premiums at maturity (survival benefit)
  • Receive all paid premiums as survival benefit and leave a legacy on natural death
  • Receive child support benefit

Selecting the Benefits in iSelect Star Term Plan

Now that you have identified most of your needs, let’s see how you can go on selecting these. Before we go ahead, it important to note that you need to select most of the benefits at the time of purchase. Your choices at the time of buying will define your future options.

Step 1: Selecting the Death Benefit & Check Premium Cost

  • Death benefit should be 10 to 15 times of your annual take-home income
  • The shorter the premium payment term (PPT) the higher your annual premiums will be. So, make sure it stays within your budget
  • You can also select a single premium option. But it may reduce the number of benefits you can add to your policy

Step 2: Select the Type of Cover You Want

  • You can choose a level sum assured. You will have the option to increase the sum assured at an extra premium at specific events in your life – marriage and childbirth
  • Choose an increasing cover. The policy sum assured will keep growing at 5% simple interest every year. It can grow until it doubles or till a claim occurs.
  • Chose a decreasing cover. The S.A. will stay the same till the age of 60. Once you attain 60 years of age the S.A. of the policy decreases at 5% simple interest until it remains 50% of the original S.A.

If you choose a decreasing cover option in this step, you will not have the option to add other insurance covers in the next step.

Step 3: Add More Insurance Covers

In this step you have four options:

  • Accidental Death: Your family can receive an additional sum assured in case of death in accident
  • Accidental Disability Sum Assured: Your family will receive a sum assured in case of permanent disabilities due to an accident. Also, your remaining premium on the policy are waived off and the other covers including death benefit continue as usual.
  • Accidental Disability only Premium Waiver: You can leave the added sum assured out and only opt for a premium waiver.
  • Child Support Benefit: Child support benefit is an additional sum assured you can add to your plan. Your family can receive this benefit with death, or a critical illness claim.

Step 4: Add a Cover for Spouse

  • You can add your homemaker spouse as well under the same plan
  • Choose a sum assured for the spouse (Maximum S.A. for a homemaker is Rs. 25 lakhs)

Step 5: Select a Claim Pay Out Mode

  • You can select either lump sum, monthly income or a mix of both at this stage
  • As we had discovered that the family will need both lump sum and regular income, it’s better to divide the benefit amount between both

Regular Income Pay-out Options:

  • Family can receive a fixed regular income. For example, Rs. 50,000 per month
  • Family can receive a growing monthly income. For example, Rs. 45,000 per month for the first year, Rs. 47,000 in the next and so on

Tenure for the regular income: Regular income from the plan will continue for a limited period only. Here you have two choices:

  • 120 months
  • 40 years or till the end of policy term, whichever ends first

Is it Possible to Know the Income Amount?

Yes, it is very much possible to calculate the income amount beforehand. Here’s how you can:

If you chose a level (fixed) income option.

  • The income will stay the same throughout the payment tenure
  • The income factor is 10.09 per 1000 S.A.

Example: If you have chosen to turn 50% of your Rs. 1 crore life insurance into regular income. Your SA for regular income would be Rs. 50 lakhs. The monthly income from this sum assured would be Rs. 50,450 (=50 Lakh x 10.09 1000)

If you choose a 5% growing income

  • The income will grow by 5% simple interest every year
  • The income factor is 8.34 per 1000 S.A.

Example: If you want a growing income on Rs. 50 lakhs S.A. as in the previous example. Your family’s monthly income would be Rs. 41,700 for the first year, and Rs. 43,785 in the next and will keep growing by Rs. 2085 (5% of Rs. 41,700) every year.

If you choose a 10% growing income

  • The income will grow by 10% simple interest every year
  • The income factor is 7.11 per 1000 S.A.

Example: If you want a growing income on Rs. 50 lakhs S.A. as in the previous example. Your family’s monthly income would be Rs. 35,555 for the first year, and Rs. 39,105 in the next and will keep growing by Rs. 3555 (10% of Rs. 35,555) every year.

Choosing Return of Premium Option

If you want to receive all the premiums you have paid for the life cover at the time of maturity, you can choose the return of premium option. There are two options available with return of premium benefit:

  • Only return of premium: The insurer will return all the paid premiums and policy terminates at the expiry of the policy tenure
  • Return of Premium with Whole Life Cover: Here you will not only get the premiums back at the age of 60, but your life cover will also continue till the age of 99, or your demise. You will not need to pay any premiums after the age of 60.

Choosing Whole Life Cover

Whole life cover option may sound attractive, as the claim pay-out is certain even in case of natural death in old age. However, with whole life option, the additional riders are not available with the plan. Also, you do not get the regular income pay-out option for claims after the age of 60. The insurer will pay only a lump sum amount to the family.

Speak to an insurance specialist now!

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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