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What is the best age to purchase the term insurance plans?

dateKnowledge Centre Team dateJanuary 20, 2021 views220 Views
What is the best age to purchase the term insurance plans

The idea of getting a life insurance plan is quite daunting, primarily because it reminds one of the inevitabilities of death. One usually starts thinking about death and its aftermath, especially its impact on the family after a certain age or as one starts nearing death. But in this day and age, while mortality is on the rise, there are a myriad of accidents that could happen at any time. We have all seen the waves of destruction caused by the pandemic and the horrifying death toll it has caused - of all those people, how many do you think were breadwinners?

It is very important in this uncertain day and age to make sure that your family is provided for. The increasing rates of inflation have seen a rise in almost everything, which is why every family member needs an earning breadwinner who can offer some financial stability in their life.

To be prepared for anything, especially unprecedented death, it is always a good idea to insure your life at the earliest.

Why You Should Purchase a Term Insurance Plan Early?

First, getting a term insurance plan as early as possible ensures that you have to pay less for premiums - the earlier you start, the less you need to pay. For instance, a person who signs up for an insurance premium at the age of 20 will need to pay a much smaller amount than someone in the later stages in their life. The math is simple - the older you are, the closer you are to the average life expectancy, that is, your death, so the total amount due for the death benefit will be split over a smaller period. If you are younger, this will be divided over a longer duration, ensuring that you can pay smaller premiums and even live long enough to enjoy the benefits of saving up for most of your life.

But it is given that each person should pick a term insurance plan that fits their needs. Everyone comes from different economic backgrounds. Some people may be at a higher risk of losing their lives earlier because of the kind of profession they lead, the lifestyle they choose to have, such as alcoholics or chronic smokers. Ensure that before you finalize and sign up for any term insurance plan, you go through all the terms and conditions of each plan and the possible bonuses and benefits they will offer as compensation if you survive the plan’s duration.

Why Choose A Term Insurance Plan?

The best kind of insurance plan to go for in many ways is a simple term plan. They are easily understandable, even to those who are unfamiliar with the nuances of insurance policies. The basic idea of a term insurance plan is to regularly pay a premium, depending on what kind of term you choose, and get covered for a pre-decided period. The policyholder provides the bank with details of a nominee or nominees who will be given the sum assured at the policyholder’s death.

Advantages of a Term Insurance Plan

  • A Purchase, Not An Investment

    More than an investment, term life insurance can be considered an expenditure or a purchase instead of an investment. There are usually no surrender values - if the policy dictates that the family will not receive any benefits upon survival, the nominees or the policyholder will not get any payment from the insurer if they are alive. But this disadvantage is negligible since death is inevitable, and if you choose a 99-year plan, you are pretty much covered for the rest of your life.

  • High Flexibility, Less Loss

    These policies are also highly flexible - it is easier to opt-out of a term plan than a policy based on the cash value. In case you are not in a position to be able to pay your premium on time, the term plan will be terminated, and there will be no additional payment required on your part. In the case of a cash value policy, the failure to pay a premium will result in a significant loss for you, considering how the bank will be liable to make substantial deductions.

  • Low Premium Amount

    Another advantage is the low premium amount that term insurance plans usually have compared to cash value policies. This is possible because term insurance plans do not have a saving component - you are not investing specific amounts of money as though it is a savings deposit. This makes term insurance plans more affordable for those who cannot afford exorbitant premium payment rates like those found in term insurance policies.

  • Eligible for Tax Deductions

    Even though they are not cash-value insurance policies, term insurance plans still account for tax deductions. The premiums paid towards these plans, along with the accrued income, will both be eligible if you want to apply for a tax deduction.

  • Renewable/Convertible Plans

    The renewable plan will allow you to renew the policy as though it is an extension of the previous one. You can do so without a medical test, which is usually mandatory. The convertible plan will let you convert the term insurance plan into an endowment policy. You will be eligible for the same assured sum, but you will have to pay a higher premium amount.

  • Ideal for Low-Income Families

    Because of the low insurance premium amount and the tax deductions, a term insurance policy is ideal for someone from a low-income bracket, especially if you have many family members dependent on you. But remember that this is not a tool for saving up for your children in any way.

Canara HSBC Oriental Bank of Life Insurance Offers The Best Term Insurance Plans

Canara HSBC Oriental Bank of Commerce Life Insurance offers the best term insurance plans that have several advantages like whole life cover till the age of 99.

iSelect Star Term Plan

The Canara HSBC Oriental Bank of Commerce Life Insurance iSelect Star Term Plan offers the following advantages:

  • Affordable prices
  • Flexible - augment the plan according to your preferences:

You can customize the Canara HSBC Oriental Bank of Commerce Life Insurance offers term insurance plan in almost every way you can think of. They have three different plan options - Life, Life with Return of Premium, and Life Plus options. If you go for the life plan option, you have the choice of customizing your coverage to either ‘level’ or ‘increasing’. You can also add an accidental death benefit and a child support benefit. This way, you can ensure life while making sure your children can enjoy a stable back up plan, unlike ordinary term insurance plans. It also offers you the option to cover a loved one, especially a spouse. If your husband or wife is unemployed, you can choose to cover them and provide them with a good amount of savings to bounce back from.

The Life with Return of Premium option provides you with a full premium return if you live past the upper plan limit. The Life Plus plan offers additional benefits of customizability. In both these plans, you can opt for a lump sum return, which means you will get the sum-total of benefit upon the plan’s maturity. You can also go for a monthly income option, which will make sure that your family will be paid a fixed sum monthly - this is ideal if you are uncertain whether your family will effectively utilize the lump sum money they have been given or if your family is illiterate. You can also strike a perfect balance by going for a part lump sum & part monthly income option.

  • Offers a choice for a lifetime plan up to 60 years old
  • It offers a choice to go for a shorter period, like 5-10 years.
  • Return of Premium Benefit

The return premium benefit covers up for the biggest disadvantage of all term insurance plans - it backs up an investment. The total of all your premiums will be returned if you outlive the policy tenure.

  • Discount on premium for a higher assured sum/for female lives.
  • Additional inbuilt coverages for unprecedented events like accidental death benefit, child support benefit, or in case of a total and permanent disability.

The remaining details of the plan

This insurance plan can be purchased entirely online directly or from the company’s sales representative.

In conclusion, term insurance plans are better taken early in life so that you can insure yourself for your family at smaller amounts of premiums. This is a great option, especially when you are not at an age where you earn large amounts of money can avail its benefits later in life. Even on the chance that you survive past the end of the term, you can always convert it to a savings plan and reap your retirement benefits.

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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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