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Why term insurance should be a part of your financial planning

Why term insurance should be a part of your financial planning

why term insurance should be a part of your financial planning

The past decade has seen an increase in the disposable income of Indians coupled with consumerism. As a result, there has been a shift in the way an average Indian family spends money. Financial goals have changed and people are spending as much as 25 to 60% on their aspirational needs as opposed to 10 to 20% in 2009.

This rise in lifestyle inflation demands meticulous financial planning that can reduce overspending, generate wealth as well as help you save enough for important milestones such as the education of your children and your retirement. One of the foremost priorities on your financial checklist should be buying a term plan as soon as you start earning.

It helps keep your family financially secure even in your absence with a concrete safety net to meet their expenses and sustain their current lifestyle. Let us take a look at some of the other reasons why term insurance should be a part of your financial roadmap:

1. Affordable premiums: A term plan is a pure insurance plan with no element of investment. It is the cheapest form of life insurance available. This means you can buy a cover for a higher sum assured that offers more protection to your dependants and eliminates future risk and you can do so at nominal rates. The earlier you purchase a term policy, the lower would be the premium that you end up paying. Only 1% of the yearly income of an individual on an average is spent on purchasing term insurance for the rest of his or her life.

2. Financial security: If you are the only earning member of your family, your absence could leave your family financially vulnerable, especially if you had taken additional liabilities such as a loan or mortgage when alive. A term plan provides you the assurance that your loved ones will be financially secure and free to pursue their goals and dreams.

3. Riders: You can personalize the policy to suit your family requirements by adding riders to cover any other risks that you perceive. Riders such as critical illness benefits, accidental death benefits, partial or total disability benefits, cost a nominal amount and provide an enhanced amount of coverage when added to an existing term plan.

4. Tax benefits: Most salaried individuals try to invest in options that give higher returns as well as help them save tax. This forms an important part of their financial planning. Not only can you enjoy a tax deduction of up to ₹1.5 lakh on premium payment towards term policy maintenance as per Section 80C, but the amount paid to your beneficiaries as death benefit also qualifies for exemption under Section 10(10D). Further, opting for a health-related rider (for eg: critical illness rider) can help you qualify for additional deductions under Section 80D of the Income Tax Act.

5. Customizable: You can tailor your term insurance plan to your unique needs and goals and those of your family. You can opt for three different types of coverage: (a) level, (b) increasing coverage, (c) decreasing coverage, as per your needs. You can choose from different payout options: (a) lump sum payout (b) part lump sum, part monthly income payout or (c) monthly income payout. You can also choose to cover your spouse under the same plan. All these benefits and more are available, if you opt for the iSelect Star Term Plan from Canara HSBC Oriental Bank of Commerce.

Remember to declare any health conditions, lifestyle diseases and habits openly when you buy a term policy to ensure your claim is not rejected. Financial planning for the future is incomplete without a pure life cover that reduces risk, helps you be prepared for future uncertainties and is also cost-effective.

The iSelect Star Term Plan from Canara HSBC Oriental Bank of Commerce Life Insurancec comes with an optimum amount of coverage at extremely affordable rates. It also offers different premium payment options to choose from as per your requirements as well as a return of premium benefit if you outlive the policy period. So secure the future of your loved ones by opting for a term insurance policy that is tailor made to your needs and available at nominal rates.

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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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