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What are the Best Life Insurance Plans for Senior Citizens?

dateKnowledge Centre Team dateApril 22, 2021 views131 Views
What are the Best Life Insurance Plans for Senior Citizens?

With old age come a vast number of changes to one’s lifestyle. This change is especially seen with an individual’s source of income once the age of retirement rolls around. This can be a challenging time for these people as they are no longer in expectation of a monthly salary, and their health may start to decline as well.

Many individuals belonging to the older generation also fear for their families and spouses during this time. In addition to this, the drawbacks with existing life insurance plans for the older generation is that the plans require high premiums as well as having several restrictions and a long list of terms and conditions.

Best Types of Life Insurance Plan for Senior Citizens

The most common plans that are beneficial to senior citizens are whole life insurance plans. Some even opt for universal life insurance plans. Here are 3 varieties of plan that a senior citizen may consider buying to create a financial cushion:

a. Term Life Insurance

This type of life insurance involves providing coverage for a stipulated period. This period ends once the duration of the policy ends. These plans are more affordable for the average person in comparison to whole life policies. Several features of the plan can be altered, like premium payment amount, sum assured as well as tenure of the plan. The coverage may also change as one advance in age.



b. Whole Life Policies

The benefit of investing in a whole life policy is that one can invest in it at any age. It is also a comprehensive or all-inclusive policy that one buys for the remainder of their lives. Therefore, the policy period does not end until the death of the insured.

After which, the fund value is payable to the insured’s nominees. The price of these policies is higher because it involves both a savings component and provides coverage as well. It offers permanent protection that no other policy offers.

c. Tax Saving Plans

One of the characteristic features of the Invest 4G plan is that it offers certain tax exemptions. This is because the insured will be eligible for tax benefits under Section 80C and Section 10.

Therefore, this plan can contribute a great deal to the insured even after they are unable to receive a monthly income. From the maturity benefits to the periodical withdrawals, senior citizens can retain the lifestyle they choose to have well into their retirement.

5 Benefits of Senior Citizen Life Insurance Policies

At present, Canara HSBC Oriental Bank of Commerce Life Insurance offers an array of life insurance plan for senior citizens. One such plan is Invest 4G, which greatly contributes to one’s financial independence later in life while being affordable. The plan aligns with the above factors as it offers a reasonable 5 year lock in period. In addition to having flexible terms, it also offers the following benefits:

1. Maturity Benefits: The assured sum or fund value that is promised to the insured receives a 4% to 8% investment return. The assured sum involves the payment of 10% of the premium paid.

2. Death Benefit: In the event of the insured’s death after the lock-in period, the family can choose to receive a lump-sum payment or wait for the maturity period to end to receive the payment of fund value.

3. Loyalty Additions: These additions apply to the insured after 5 years. The individuals that pay their premiums on a timely basis are eligible for assured loyalty addition.

4. Withdrawals: One is capable of making partial withdrawals after 6 years from the commencement of the policy or if the life assured completes 18 years (whichever comes at the latest)

  • Systematic Withdrawals: These withdrawals allow the insured to receive a certain payment, as per the percentage of the fund value, at regular intervals.
  • Milestone Withdrawals: After surpassing the 5th and 10th year of the initiation of the policy, the insured receives a payment of 20% of the fund value.

5. Reduced Premium: After the premium payments made during the lock-in period, one can opt to pay a lower premium. However, this is subject to certain conditions.

Although every individual faces inevitable mishaps from time to time, the senior population is more susceptible to this. Therefore, having a backup whole life cover plan can prove extremely useful during these times.

4 Factors to Consider before Buying a Life Insurance Plan

The factors one has to consider before investing in life insurance can vary from person to person. However, before opting for any life insurance, one must consider the following factors:

1. Age

Age is one of the more significant factors in investing in a life insurance scheme. If you opt for a insurance plan later in your life, you will have to pay a higher premium. However, if you plan to buy a life insurance plan early, you will enjoy a lot of benefits and one of them is lower premiums. As with age, chances of diseases also increase. Hence, your life insurance premium will depend on your age when you are buying a life insurance plan.

Learn about the advantages of buying a life insurance plan at an early age.

2. Medical Conditions

If one is suffering from pre-existing problems with their health, one should keep in mind the lock-in period. In case the disease acts up and requires one to avail medical assistance before the lock-in period, then they will not be able to pay for said medical bills through the insurance. Although one can discontinue the policy before the first five years, they will be liable to pay surrender charges.

3. Period of Waiting

This involves the time before which one can access the funds invested in the life insurance. The number of years can vary. This time is also known as the lock period. One should choose a plan that does not have a long lock in period so that one can avail the benefits of the plan as soon as possible.

4. Premium

The premium for most life insurance plans catering to the older population is inflated given the deterioration in health that is commonly seen. The premiums possess a gross investment return of 4% and 8%, which will be reflected after the maturity period of 15 years or in the event of the insured’s death (in the form of a lump sum).

Life insurance for senior citizens can prove beneficial to one’s family as well. The reason is that the funds invested in a life insurance plan can become the inheritance that one leaves their family. The insurance plan funds can also act as a source of a guaranteed regular income. Thus, allowing one to be independent even after they no longer receive a monthly salary. Upon the event of one’s death, their spouse, if alive, receives the payment. Therefore, the insurance will act as a pension fund that you can rely on later in life.

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Frequently Asked Questions (FAQs) for Life Insurance

The premium is one of the most important factors to consider before buying a policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the premium calculator available in the 'Tools and Calculator' section of www.canarahsbclife.com.

Life insurance plans come with several riders which increase the efficiency of the policy for the buyer. For instance, if you have a history of terminal illness in your family it would be advisable to opt for terminal illness rider with your term insurance. Riders or add-ons help in customising the standard policy benefits for the requirement of different families. The iSelect term insurance plan comes with a built-in cover for terminal illness, and option for protection against accidental death or disability. You can also opt to cover your spouse's life under the same policy by paying an additional premium.

Insurance companies calculate the premiums based on several factors such as age, gender and occupation.

Age:It is one of the biggest factors that influence life insurance premiums. Premiums tend to be low when the life insured is younger as the chances of contracting diseases is low. Young people also opt for policies with longer tenures and pay premiums for a longer duration, which makes the policy cheaper for young people.

Gender:The insurance premium for women is generally lower when it comes to life insurance plans. Women live longer and pose a lesser risk of a claim leading to lower premiums for them.

Lifestyle habits:The premiums for people who smoke or drink is always higher due to higher health risks.

Policy term:Policy terms are also taken into consideration by insurers while deciding the premium amount. Policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the policy also determines how much you will have to pay for the plan. People who buy life insurance policies online have to pay lower premiums as compared to offline policies.

Occupation:The nature of your work is an important factor that influences the premium amount. Certain occupations like shipping and mining are considered more dangerous as compared to jobs in services industries. The insurance premium rises with the risk profile.

Processing life insurance claim is a transparent and smooth process with Canara HSBC Oriental Bank of Commerce Life Insurance.

In case of the death of the life insured, the nominee will have to intimate the company by filling a Death Claim Form and sending it to the nearest branch office.

Once the form is received, the claim is registered by the insurer.

After the registration of the claim, the company will send the claims pack along with the related forms such as physicianâ s statement form and employer certificate that need to be filled.

Along with the duly filled forms a few documents such as original [policy document, death certificate, copy of bank passbook, hospital or treatment records, photo identification and address proof have to be provided.

The claim is processed on the submission of relevant documents. Once the documents are verified, the claim amount is released post all due diligence.

Household expenses rise with age. The cost of children's education increases along with other lifestyle expenses. The iSelect term plan offers an option to increase the cover according to the life stage. If opted, the insurance cover increases by 25% at every 5-year terminal till the 20th policy year.

Even though a life insurance policy is bought to protect your family in your absence. There are chances of the claim being rejected due to several factors.

False information: If the policyholder provides false information or conceals important information while buying the policy, the insurer has the right to reject the claim after his/her death.

Type of death: Deaths due to suicide in first policy year, intoxication or pre-existing disease is not covered under life insurance.

Premium payment: The payment of premiums on time is of utmost important to avail the benefits of life insurance. Life insurance policy may lapse on the failure to pay the premiums

Nominee details: An insurance company can put the claim on hold if the nominee details have not been filled or not been updated by the policyholder.

Suicide: If the life insured commits suicide within 12 months of buying the policy, the insurance companies generally pay 80% of the total premiums paid.

Buying life insurance online is not only safe but a better option. Online life insurance policies have lower premiums and the individual is not required to visit the insurer's branch or a bank. Online insurance policies also offer higher benefits. Customers should, however, buy online policies only from credible insurers and should check for SSL certificate on the website to ensure that the website is legitimate.

The cost of life insurance policies varies depending on factors like age, gender and occupation. The average cost of life insurance plans, especially term plans, is very low compared to the amount of coverage offered.

An individual is allowed to have multiple life insurance policies. People opt for more than one policy to increase the cover or avoid claim rejection. In case of multiple policies, even if the claim is rejected by one insurer, the beneficiaries may receive the benefit from a different insurer.

Life insurance policies are of different types. In the case of unit-linked or endowment policies the policyholder receives the maturity benefit at the end of the policy term. However, in the case of term insurance plans, there are no maturity benefits. The death benefit is only paid out after the death of the life insured.

When you buy life insurance, the insurance company asks for the nominee details. Only the person named as the nominee in the policy can cash out a life insurance policy in case of death of life insured.

A life insurance policy is generally taken for a specified period. After the policy duration of a term plan gets over, the policy simply terminates and ceases to exist. However, in the case of unit-linked plans or endowment, you can use the policy as a tool for retirement planning and the accumulated corpus is used by the insurer to pay you monthly amounts for your entire life.

If a policyholder purchases a term plan for 25 years and dies during the policy term. The family receives the death benefit. In the case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment options are chosen the policy works as a source of regular income.

It is a popular misconception that life insurance is only for accidental deaths. A term life insurance plan like iSelect also covers terminal disease along with death. A terminal illness cover is important as health insurance pays only for the cost of treatment and hospitalization, but a terminal illness cover pays you a lump-sum amount which takes care of other expenses. On the other hand, unit-linked policies such as Invest 4G cover death and also provide decent returns for other financial goals such as buying a house of child's education.

It is ideal to buy life insurance in your early 20s because it’s is the time when people have just started with their professional life and so there are lesser responsibilities and financial liabilities to take care of. Also, if you buy life insurance at this age, you will be paying relatively lower insurance premiums since it’s a due fact that mortality rate in case of young people is low. And that is why insurance companies offer lesser premium rates to younger people as they think that they are most likely to be fit and healthier with less chances of filing a claim in future.

Once you have cancelled your life insurance policy, you will instantly lose your life insurance cover. Afterwards, your insurance company will get in touch with you and ask for valid reasons regarding the cancellation of your policy. In case you cancel your life insurance policy within the grace period, i.e. 15 to 30 days, depending on your insurer, then insurance company will reimburse the premium amount paid by you. But, no refunds will be paid to you if the policy is cancelled after the grace period.

Yes, you can take life insurance under Married Women’s Property (MWP) Act, 1984 only if you are a married man and a resident of India. Buying a life insurance plan under MWP Act would be helpful in saving your family’s financial well-being when you are not around. As per this policy, only wife and children would be eligible to receive the death benefits. You can also buy a policy if you are a widower or a divorcee. However, in that case, you can give your child’s name as your beneficiary. It is very simple to buy a life plan under MWP Act. All you need to do is to fill up an MWP addendum while purchasing an insurance policy.

Yes, there are different payment options for you to pay premiums. Here’re some of them

    1. Regular premium payment option – This premium payment option allows you to pay premiums equal to your policy term either monthly, quarterly, half yearly or annually.

    2. Single payment option – Through this premium payment option, you can pay the lump-sum amount in one single payment.

    3. Limited payment option -In this premium payment option, you can pay premiums for a specific period of time less than policy term either monthly, quarterly, half yearly or annually, but benefits of insurance can be enjoyed for a longer period of time.

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