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Who Can Buy A Life Insurance Policy

dateKnowledge Centre Team dateFebruary 16, 2021 views153 Views
Who Can Buy A Life Insurance Policy

A life insurance policy stabilizes your financial plan in case of an unforeseen event. It adds an extra measure of security for the future of your loved ones. Return from life insurance can be used to pay debts, expenses, loans, etc. Life Insurance provides protection even when you are not there.

What Is A Life Insurance Policy?

A life insurance policy is a contract between an individual and an insurance company that provides financial protection to the policyholder. The insured person has to pay the insurance company a monthly premium (fees) for a particular number of years as specified in their life insurance policy.

Based on this arrangement, if under unexpected and unfortunate circumstances the policyholder passes away, or if the policy matures, the insurance provider would pay a lump sum amount to the person or his/her family. This amount is called the death benefit. It is completely tax-free; the person or the concerned nominee can choose what they want to do with it.

Types Of Life Insurance Policy

If you are looking for a life insurance policy, you must already be familiar with term insurance and whole life insurance. You should know there are several more options than just these two. Based on your needs and financial situation, you can choose from any of the following options.

Term life insurance

Term life insurance policy offers temporary coverage. The term life insurance is considered the most affordable life insurance policy. The term insurance lasts several years before it is expired. If the policyholder dies within the specified period, a death benefit is paid to the nominee or the family.

Term life insurance policy offers more pocket-friendly premium costs than any other life insurance policy. You can broaden the coverage, and convert it into a permanent life insurance policy before it expires without undergoing medical underwriting.

Whole life insurance

The whole life insurance policy, on the other hand, offers full coverage till 100 years of age, it does not expire. A whole life insurance policy has a death benefit and a cash value. It is what you can consider a tax-deferred savings account, an investment included in a policy. They contain a cash value that accumulates interest at a predetermined fixed rate.

Every month a certain amount from your premium goes into the cash value of the policy with a guaranteed rate of return. This cash value can be withdrawn or loaned. This component of whole life insurance also makes it more complex than term life insurance due to the taxes, interest, surrender fees, and other stipulations.

Endowment life insurance policy

Endowment life insurance policy offers the benefits of both insurance and savings. It ensures that the death benefit is payable even if the policyholder is still alive by the maturity date of the policy. And if the policyholder passes away during the terms of the insurance policy, the nominee receives the sum assured with the addition of bonus or participating profits.

Money-back Insurance policy

Money back policy provides a periodic return along with the benefit of life insurance cover. It gives you money during the term of insurance. A percentage of the sum assured is given back to the policyholder at regular intervals during the policy term. The remaining portion is payable at the end of the term of the policy. In case the policyholder dies before the end of the term, the nominee is paid the assured total regardless of the premium payments received by the policyholder.

Unit Linked Investment Plans

Unit Linked Investment Plans (ULIP) offer flexibility in investment in addition to life insurance. It is one of the most flexible life insurance policies available in the market. A percentage of premium is used to provide insurance, while the rest is invested in the capital markets. The policyholder is free to choose from a variety of funds investing in equities, debts, market funds, etc.

Child Insurance Policy

A child insurance policy is another way to secure your child’s future. It is a savings cum investment plan, designed to meet your child’s financial needs. It allows you to build a fund for your child’s future education and dreams. Most of these policies provide annual installments and could be withdrawn once your child has reached adulthood. In case of your passing during the policy term, an immediate pay-out is payable.

Retirement Plan

These retirement plans allow you a financially safe and happy retirement. Helping you to live independently, without any financial worries. It is designed in a way so as to generate a regular income for the policyholder after their retirement which is referred to as pension or annuity. In case the policyholder passes away during the policy term, the nominee will receive an immediate payout.

Who Needs a Life Insurance Plan in India?

A life insurance policy is a way to ensure your wellbeing and provide a safety blanket for your loved ones in case of an unfortunate event or emergency. Who should get a life insurance policy and when they should get it depends on multiple factors.

  • Parents with minor children: In case of the unfortunate death of a parent, the loss of income or care could create a financial crisis. Life insurance can ensure that kids will have the financial resources they might need. This insurance will also help fund your child’s education in the future.
  • Parents with special needs adult children: For children who require lifelong special care and will never be able to support themselves, life insurance will ensure their safety and financial needs in case their parents pass away. A life insurance policy will act as a special needs trust for them.
  • Young and single adults: Young and single adults do not need life insurance for the most part, but getting early life insurance will make sure that the premium stays low for when you need life insurance in the future. This is because the premium cost increases with increasing age due to the increased probability of diseases and deaths.
  • New Families: Newly married couples, starting new families together should get a life insurance policy to ensure that the people depending on them have financial aid to lean on in case of unfortunate passing. Children and spouses will have the payout to help them build a future.
  • People with a home loan: Homeowners know buying a home is not an easy task. Purchasing a home on a home loan means monthly EMIs. This expense puts a drain in your pocket. In case you pass away, your family might not be able to support themselves and give EMIs at the same time. To avoid such a crisis and sure their financial wellbeing it is important you get a life insurance policy.
  • Business owners: A business owner or business partner has many people depending on him/her. In case something happens to you, these people will be put in a delicate position. Therefore it is important that you have separate life insurance to cater to your business obligations.
  • Life insurance for parents: The only people who have consistently supported you both emotionally and psychically throughout are your parents. With aging, their financial wellbeing falls in your hand. It is a good idea to have life insurance for your parents. This will provide them with financial stability.

Benefits Of Life Insurance

A life insurance policy comes with many benefits and advantages:

  • Life risk cover to protect your loved ones.
  • Financial Security and death benefit in case of sudden death and passing.
  • Investment and value return to build wealth and finance for future expenses.
  • Tax deduction and benefits for a salaried person.
  • Savings for future emergencies and unforeseen circumstances.
  • Availability of policy loan in case of an emergency.
  • Secure and guaranteed income after retirement for a happy and secure life.
  • Secure your business and fulfill your business obligations.
  • Life stage planning to achieve and manage your financial goals and future expenses.

Who Is Eligible For Life Insurance?

Life insurance is evaluated on a case-by-case basis. Life insurance is not just for healthy and wealthy people. Several companies are offering multiple types of policies specific to several needs. You can get affordable insurance even if your previous applications have been denied.

Although generally, the younger and healthier you are, it is easier for you to qualify for life insurance. Increasing age and health conditions lead to difficulties regarding the qualification of life insurance. Certain lifestyles consisting of regular alcohol consumption and tobacco or risky hobbies like adventure sports and sky diving also make your application harder to qualify.

Canara HSBC Oriental Bank Of Commerce Life Insurance offers several life insurance policies to choose from. Here we help you plan and build a better and secure future for you and your loved ones. Compare different life insurance policies and choose what benefits you and caters to your needs the most. Canara HSBC Oriental Bank Of Commerce life Insurance is IRDA registered. With lakhs of policies sold and a customer base of crores, we are known for our credibility. We have a network of more than 20,000 branches and 40 branch offices.

Choose from our best plans, term Insurance Plan, Unit Linked Insurance Plan, or Health First Plan to enjoy amazing benefits. With advantages of multiple premium payment options, the return of mortality charge, and pocket-friendly premiums, Canara HSBC Oriental Bank Of Commerce Life Insurance helps you to be there for family and loved ones even when you are not here.

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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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