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How to Select the Perfect Term Insurance Plan for Your Protection Needs?

dateKnowledge Centre Team dateMarch 26, 2021 views331 Views
How to Select the Perfect Term Insurance Plan for Your Protection Needs?

If you look for a perfect car which suits all your needs and wishes, it may not be easy to find. You may, however, figure out all you need in it and go to a garage to customize the vehicle. Similarly, if you are looking for a perfect term insurance plan for your needs, you will find it really confusing to select one out of all the options.

But that is only until you realise exactly what you need and whether you can customize a term plan accordingly. So, finding the perfect term plan suitable for all your needs is going to be a little challenging.

So, if you are to meet the ultimate fate before you can look after your family’s financial needs your family will need:

  • A large lump sum corpus to look after the current loans and future goals
  • A reliable income stream to take care of the living cost

Before hunting for the perfect term plan, you should assess your family’s financial needs. Preparing a financial net is extremely important; however, if you do not know how much money will be adequate to pay for the expenses of your family, it will create troubles for them later.

Identify Your Financial Safety Needs Before Buying a Term Plan

To understand yours and your family’s financial safety needs you need to think of all the risks which can lead to financial hardships for your family. Few examples could be:

  • Serious health emergency for any family member (more serious for primary breadwinner)
  • Accidental hospitalization for any family member (more serious for primary breadwinner)
  • Serious long-term disabilities for any family member (more serious for breadwinners)
  • The early demise of primary breadwinner or spouse
  • Property loss due to theft, accident, natural disaster, etc.
  • Loss of employment, business for breadwinners

So, you can see that there are plenty of hazards which, if affect any member of the family, would lead to financial distress for the family. Various insurance plans provide the safety you will need from these hazards. There are term insurance plans that cover critical illnesses when they are diagnosed.

Can a term life insurance provide a financial net in your absence?

Only the best term insurance plans would fulfil all the needs you have listed for financial safety. Life insurance plans in India offer defined benefit covers for the following hazards only:

  • Risk of death
  • Contracting a dreaded disease like cancer, heart or renal failure, etc.
  • Accidental disabilities

As you can see, the life cover will not protect you from the possibility of financial distress due to job loss. You need a different approach to look after that risk. However, you can consider online term plans like iSelect Star from Canara HSBC Oriental Bank of Commerce Life Insurance, to cover your family against other risks.

How can Canara HSBC Oriental Bank of Commerce Life Insurance help you?

Canara HSBC Oriental Bank of Commerce Life Insurance’s iSelect Star term plan is one of the most flexible online term plans available. The plan allows you to not only cover all the possible hazards which may push your family towards financial distress but also have the option to cover other needs.

With the iSelect Star term plan, you have:

  • Terminal Health Cover by Default: A large term cover and cover against dreaded illnesses by default. So, you need not worry about adding a cover against terminal diseases for an additional premium.
  • Accidental Death Benefit: Additional sum assured payable in a lump sum in case of death due to an accident
  • Premium Waiver Option: Premium for continuing life cover is waived off in case of permanent severe disability due to an accident
  • Accidental Disability Benefit: You can also add a benefit amount payable in case of such disability
  • Child Support Benefit: Additional benefit amount option for the benefit of the child, payable in a lump sum

Thus, you can add these benefits to cover the entire spectrum of financial safety needs for your family. Apart from these benefits, you can divide your life cum terminal illness benefit amount into:

  • The amount payable as a lump sum
  • The amount converted to a monthly income

Thus, you can not only fulfil the safety needs with the plan, but you can also help keep their life simpler.

iSelect Star term plan offers to pay the death benefit to your family as a regular income payout. Choosing the regular payout option may result in a long-term reliable income that will help the family meet their living cost.

A growing regular income payout will account for the inflation in household expenses for your family and help them maintain their lifestyles. You have the option to grow the regular income pay-out at either 5% or 10% per annum simple interest.

For example, if you want your family to start receiving an income of Rs. 50,000 a month growing at 10% per annum, the next year your family will receive Rs. 55,000 a month and the next year Rs. 60,000. The income will keep increasing throughout the tenure of payment.

You can identify the areas where your family will need assistance in your absence. If you look closely, you can understand that there are three important reasons your family needs money: regular income for household expenses, investments for future goals, like, higher education and marriage for children, a retirement fund for the spouse and money to pay-off any debts. A term insurance plan that allows you to align your financial goals according to evolving needs of life is one of the best term plans that you can find.

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term 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 70 years of age.

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.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

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, a term plan pays a part of the sum insured to treat your disease.

Term insurance 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 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 policy remains active until the expiration date.
  • Income Rider: The rider 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 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 a Term Insurance?

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