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How does a life insurance protect your family?

Practically saying, life insurance policy is meant for protecting your loved ones in your absence. And if you are the one responsible for the financial security of your spouse, children, or parents, buying a life insurance is a smart way to help make sure they are financially secure in the future. Here are just a few of the ways in which a life insurance can help you protect the ones you love:

Financial security Coverage for expenses Cash value component
First and foremost, life insurance is a guarantee for peace of mind that your family will have some financial backup in case of a misfortune. The death benefit received from the policy can be useful to fulfill basic needs of the family. The insurance money can also help cover the costs incurred during the unfortunate event, which often amounts up to thousands. In addition, it can pay for every day household and kitchen expenses of the family, among other things. A cash value life insurance policy, like the whole life cover under iSelect Star Term Plan helps build up a cash value. You can borrow against it to pay for things like a down payment on a home loan, school tuition fees etc.
Pay off liabilities Medical costs coverage
The lump sum received as a death benefit can help provide assistance with things like mortgage payments, dues and loans, in addition to paying for your child’s higher education, marriage etc. Ultimately it could allow your family to maintain their current standard of living without an income loss. If in case you were to pass away from a health-related issue, which racked up a substantial amount of medical bills and payments, your life insurance policy could be of great help in paying off those expenses. This would ensure your family doesn’t exhaust their savings and have enough to provide for themselves.

How can you ensure your family gets the policy benefit?

To protect your family with a life insurance, you would want to make sure you are naming the appropriate beneficiaries at the time of filling your policy document. Typically, a beneficiary is the person you would want to receive the policy benefit. Most people prefer adding their spouse or children, but several others might also choose to name their extended family, grandchildren or friends as the nominees. Ideally, you should think about who will be responsible for your debts, mortgage or hospital expenses when choosing a beneficiary.

You can add more than one beneficiary too and Canara HSBC Oriental Bank of Commerce even lets you decide how much of the death benefit goes to each of the selected beneficiary. Moreover, you can also modify your beneficiaries after you buy the policy. However, it may come with a few conditions.

How to calculate the amount your family will need?

Now that you know how life insurance can provide financial protection to your loved ones, it’s time you calculate an estimate of the coverage you need for your family. The easiest way to calculate a sufficient life cover for you and your family is to multiply your annual income or family’s expenses by 10. So for instance, if your annual income is Rs.10 lakhs, you should opt for Rs.1 Crore cover.

The other method of calculating life cover for your needs is called the ‘human-life-value’ method. Here, you need to consider the value of all your future income, exclusive of your personal expenses, EMIs and life insurance premiums and taxes, till the age you retire, typically 60.

Take this example, considering you are a 35-year-old male with an annual salary of Rs.10 lakhs. You have to make arrangements to provide finances for your family for up to 25 years (retirement at 60 years). Assuming your annual expenses, all inclusive are 2.5 lakhs, your family will face a shortfall of Rs.7.5 lakhs. Now, if this shortfall is calculated for 25 years at an expected rate of 8.5% per annum (factoring in inflation at 6%), then the ideal cover for you should be Rs.1.4 crore.

Our best plans to protect you and your family

TERM Insurance PLAN

Top Benefits

Whole life cover option available

Increase your life cover with changing life stages

Return of premium & in-built protection options

Multiple premium payment options

Avail tax benefits on premiums paid as per tax laws


Top Benefits

Flexibility to switch funds

Option for partial withdrawals

8 Investment funds and 4 portfolio management strategies

Loyalty additions and wealth booster

Pos Easy Bima Plan

Top Benefits

Hassle free

Get double life cover in case of accidental death

Choice of flexible premium payment and policy term

Avail tax benefit on premium paid

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