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Increasing Sum Assured in a Term Plan: Your Weapon Against Inflation

dateKnowledge Centre Team dateMarch 15, 2021 views231 Views
Increasing Sum Assured in a Term Plan: Your Weapon Against Inflation

Life insurance is quintessential as it plays a significant role to provide for contingencies in one’s life. We buy life insurance plan for mostly two reasons – passing away prematurely while leaving a dependant family and for retiring without adequate means of funds. Analyzing the risks and determining the available means for mitigating them will help you in planning for your finances. It means thinking ahead to the life of one’s family when it is deprived of a regular monthly income. Ask yourself before you buy a life insurance: How long will your family need a financial support and in what amount? Term insurance plans are financial tools that ensure the security of your loved ones.

In order to buy the best term plan, we take an array of factors into consideration such as monthly income, outgoings, liabilities, and financial goals. And while choosing a term plan, you should go for an optimal level of sum assured to suit your requirements.

Let us discuss in detail about increasing term insurance plan and how it can help you protect your dreams against inflation.

What is an Increasing Term Insurance Plan?

An increasing term insurance plan is a term plan in which the sum assured chosen at the time of buying the plan increases by a specified amount with each passing year. This feature is designed to keep inflation in account. As we grow old, our responsibilities also increase. The cover that you may have chosen on plan commencement may not be adequate for you later, as income, expenditures and consequently liabilities grow over time. You should buy a comprehensive term insurance plan that offers features you can benefit from. iSelect Star Term Plan by Canara HSBC Oriental Bank of Commerce Life Insurance has the option of increasing sum assured.

How Increasing Sum Assured in a Term Plan can help you?

The feature of increasing sum assured allows you to increase your term insurance cover at regular frequencies. It will help you in managing the increasing expenses of your loved ones, which may also keep changing.

Listed below are the benefits of increasing your sum assured in a term plan:

  • Effective against inflation

    Inflation is the rate of increase in prices of goods and services over a given period of time. The rate of inflation keeps on increasing, and hence, it is essential to consider it while buying any financial instrument. Simply put, if you choose an increasing sum assured in a term plan, you can easily manage the extra expenses without breaking a sweat.

  • Aligns with changing life stages

    Bought a term insurance cover when you were a bachelor? And now that you are married, you are planning to protect your partner’s financial goals? With iSelect Star term plan, you can add your spouse to the same policy. With changing life stages, your needs and requirements will also change. Hence, an increasing sum assured term plan will help you stay on the right track to manage your finances.

  • Affordable premiums

    Even if you choose an increasing sum assured option in a term plan, the premiums will be low and affordable. The premiums will remain constant and will not burn a hole in your pocket. That means, even if you choose to increase the sum assured during the policy tenure, the premium amount will not increase.

Final Thoughts

If you are young and you don’t think you need to increase your sum assured right now, you can do that later as well. You are not required to go through the entire documentation process to increase the sum assured of your existing term plan. Buy a term life insurance plan today and be prepared for every twist in life.

Know more about iSelect Star Term Plan.

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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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