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5 Ways a Term Plan Will be the Saviour for Your Family in Your Absence

dateKnowledge Centre Team dateDecember 22, 2020 views165 Views
5 Ways a Term Plan Will be the Saviour for Your Family in Your Absence

Let's face it, life is unpredictable. While no one likes to think about death, it's important to have a plan in place to protect your family if the unthinkable should occur.

Amidst the fast pace of life and rising uncertainties, every family needs financial protection from the contingencies. The emotional impact of losing a loved one may subside over the years but the financial impact of losing a breadwinner can leave generations in distress.

In case of an unfortunate event, life continues, and so do life’s regular expenses. A typical family consisting of one adult and two minors will need somewhere between Rs. 30,000 to 1 lakhs a month to meet all their needs. Ideal term insurance should not just provide money to the family but help them in meeting their needs.

Here are five ways term insurance will help your family in your absence from their lives:

1. Pay off the Debts

It is useful financially and mentally to stay debt-free when your income sources are limited. For a family dependent on the limited life insurance proceeds paying off the debt is a priority.

The lump-sum money from the term insurance policy can help the family see off the debt and avoid downsizing their set lifestyle.

While it may sound like common sense to pay off the debt, there is a simpler financial reason to it. Almost all the debt including the home loan which is usually heavily subsidized has a higher rate of interest than available investments.

Thus, if you depend on the income from investments in safe instruments, it is wise to reduce your regular cost by paying off expensive debt.

2. Protect Future Financial Goals

A sudden end of life for the family's breadwinner means that the investments in the upcoming financial goals remain incomplete. Thus, the family will need financial support to fill the gap and meet their financial goals, especially the important ones.

The lump-sum benefit from a term insurance plan can help your loved ones fill the gap and meet important goals like child’s education.

3. Maintaining their Lifestyles

The best term insurance plans like iSelect Star Term Plan from Canara HSBC OBC Life can help the family meet their regular needs. Commonly, the family receives term insurance benefit in a huge lump sum instalment.

The result of such large financial payment is that your dependents suddenly face the burden of using this money for:

  • Their regular household and lifestyle expenses
  • Meeting their future financial goals, including children’s education, marriage and retirement pension for a spouse
  • Pay off all the loans and clear the mortgage if any

While investing for the future and paying off debts are simple with lump sum amounts, investing the money to generate a consistent income is not.

The best term insurance plans allow you to divide the sum assured in a way to provide your family for their financial needs and goals. While you can leave one part to be paid in a lump sum, the other part can be paid as a regular income.

4. Protect Your Family’s Financial Status

You have built assets like a home, household goods and vehicles for your family. With a term insurance plan by your side, you can ensure that a load of these borrowings will not cause any hardship to your loved ones after you.

The primary purpose of a term insurance plan is to safeguard your family’s financial status. Thus, if you purchase adequate term cover your family’s financial assets will not suffer due to your early demise.

The ideal term cover should be large enough to provide for the liabilities, important financial goals and regular income for the family. This way they will not have to use existing investments to survive and meet their financial needs.

5. To Stay Prepared for Uncertainties

Uncertainties in life can leave a lasting financial impact on families. Term plan is an important part of your contingency plan and will help your family sail through life if they end up losing you early on.

Your spouse is the most important and responsible person in the house if anything happens to you. Thus, ensuring her life along with yours and providing her with adequate insurance covers will ensure that your family can tide over uncertainties even after you.

The best term insurance plans will let you cover your homemaker spouse as well under the same policy. You should also add the health and disability cover with the life cover for your better half to ensure a holistic contingency plan.

Things To Consider While Buying a Term Plan Online Term Plan

This should be one of the key things to consider in today’s environment. Buying a term plan online should be as simple as any other transaction on the net. You can consider and choose from various options and make an informed decision.

Chatbots and company representatives also help you tailor a plan suitable for you. Now you can even manage your multiple life insurance policies online with an e insurance account.

Your nominees can also use the e-insurance account to file claims with single window claim submission for all ongoing policies.

Quick Settlement of Claims

In case the need arises, you should look at how quickly the claim settlement is made by the companies so that your loved ones don’t have to run from pillar to post.

Who should buy Term Insurance Plans?

We seldom talk about the harsh realities of life like - death, disability, disease. We cannot possibly overcome with certainty but we can certainly reduce its impact by being prepared for it. Term insurance can save you and your family from the financial hardships brought upon by these three and similar disastrous conditions.

Hence, the moment you have financial dependents you should buy a term insurance policy.

Parents

The term policy will act as financial support for the children so that they can meet their life goals even after you. Thus, helping them catch the opportunities just like they would have under normal circumstances.

Young Individuals

Young professionals who do have many financial liabilities can benefit from lower premiums of term insurance plans.

Newly Married Couples

This is possibly the best way to keep the vows with a term insurance plan, you can secure the financial future of your spouse, giving her/ him a truly long-lasting gift.

The loss of life can never be compensated enough. However, a term insurance plan can help to tide over the financial requirements of a family and help them to be independent and self-sufficient.

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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 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?
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