All one needs to know about life insurance policies

2024-08-02

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It takes years to build a good life with your family and provide them with the lifestyle they always wanted. You have so many dreams and aspirations for loved ones- buying a house, children’s education, getting them married, and so many other plans. A single catastrophic event such as a loved one’s death can shatter all dreams and bring great emotional turmoil for them. And if it is the sole earning member of the family, there is additional financial stress. Don’t you worry about how your family will fulfill all basic monetary needs and maintain a good lifestyle if you are not here?

These pandemic times have reinstated the importance of healthcare and expenses that a family incurs when a loved one is hospitalized. Many families have lost their loved ones. When a sole earning member of the family passes away, it hits the family differently. Hence more and more people opt for various health and life insurance policies to protect them.

In FY 2019 alone, private insurers earned premiums to the value of over 1,700 billion rupees. According to a 2020 report, the gross premiums collected by life insurance companies are over five trillion Indian rupees. It is interesting to note that as of 2019, India accounts for about 2% of the world’s total life insurance premiums.

In unforeseen circumstances, having a life insurance policy can support the family greatly and provide the much needed financial cushion. Here is a guide to life insurance policies in India and what you must know about them.

Types of Life Insurance Policies

Term Life Insurance Plan
A term insurance plan is the simplest life insurance policy that provides death risk cover. This means that the nominee gets death benefit cover in the unfortunate situation that the insured person passes away during the policy period. This policy is known for a high sum assured at a low premium. Depending on the policy terms, the policy payout will be a lump-sum amount or monthly payouts. This helps the nominee utilize the money to pay off huge amounts such as loans, monthly expenses, children’s education, or marriage expenses.

Life insurance policies offered by Canara HSBC Life Insurance have additional features such as long-term financial security, cover for a spouse, accidental death coverage, increased coverage with age, family financial coverage, and tax benefits.
Saving Plans
Saving plans are the best bet if you want to go for investment and insurance. There are following types of saving plans available in India:

1. Endowment Plans

Endowment plans are generally taken for longer periods, such as 10-35 years. If the life-assured outlives the policy term in this type of savings plan, then the insurance company offers them the maturity benefit. If the policyholder’s demise occurs during the policy period, the nominees will receive the entire sum assured.

If you are looking for long-term financial planning and also an opportunity to earn returns on maturity, endowment plans are the way to go.

2. Money-Back Plans

Money-back plans are similar to endowment plans. However, the difference is that they pay the sum assured at periodic intervals rather than as a lump-sum amount. This policy is best if you have short-term financial goals, such as a child’s education or a foreign tour.

Unit Linked Insurance Plans (ULIPs)
ULIP plans are the most popular insurance plus investment plans. It provides you with a great amount of flexibility and is similar to mutual funds. The premium amount is used as insurance, and a part of it is invested in the market in equities, market funds, bonds, etc. The main advantage of ULIPs is complete transparency.

Canara HSBC Life Insurance offers ULIPs that are designed to suit different financial goals. They have plans in which you can modify the sum assured during the policy term.

What must you keep in mind while taking a Life Insurance Policy?

Investment
A life insurance policy must be an important part of your investment portfolio. If you do not prefer investing your money in high-risk schemes or options, a life insurance policy is the best option for you. It helps you invest in a lump sum or as regular payments to save a significant amount of money and earn maturity benefits.
Earlier The Better
It is wise enough to buy a life insurance policy as early as you can. As your age increases, the premium amount also increases. Also, if you develop any diseases or health conditions, it is tougher to get a policy.
Do not lie
Your entire life insurance policy claim can be rejected if the company comes to know that you have hidden any facts. Imagine what a huge blow it will be for your family! They will not be able to make a claim when they need financial help the most.

If you have any medical conditions or smoke, or an alcoholic, make sure you tell your insurance company about it. Although you might have to pay a higher premium, it will provide you with good financial coverage considering your smoking and alcoholic status. Always disclose all information while taking a life insurance policy.

Many insurance companies like Canara HSBC Life Insurance have provisions in their life insurance policies to accommodate smokers and people who consume alcohol regularly.
Don’t rely on the employer’s insurance alone
Many employers take life insurance policies for their employees. However, it is advisable not to rely only on those policies. It is always better to have insurance policies taken separately for yourself. If you quit or get laid off or the company you work for goes bankrupt suddenly, you will be left with no insurance policy for your needs. Having your insurance policy ensures that it will stay with you irrespective of whether you switch jobs or quit working.
Life insurance riders
Insurance companies provide additional benefits such as critical illness benefits, death by accident, income benefit, partial or permanent disability benefit, etc. These perks can give you additional coverage over and above your policy. Don’t forget to discuss this with your insurance advisor so that you get maximum benefits!
Understand all policy documents
When you buy a life insurance policy, spend some time reading through the policy documents carefully. This will help you understand what you are covered for and what is not covered in your policy. If you have any questions, speak to your insurance advisor.
Informing your family that you bought a life insurance plan
One of the most difficult conversations to have with your family is telling them you have bought a term life insurance policy. However, they must know about it so that they are prepared in case of any emergencies. Ensure you keep the policy papers and details in a safe location and let your family members know about it. This will save time and effort when needed.
Consider your retirement goals
A retirement plan is on everyone’s bucket list. It is the best chance to spend time with loved ones when you are free from any worry of work, business, and other matters. A life insurance plan ensures that you have a steady income source even after you are not working anymore. It helps you enjoy special moments with family and loved ones. Make sure your life insurance policy considers retirement goals too!
Don’t forget to pay premiums
This one is a no-brainer! Ensure setting reminders and pay your insurance policy premiums on time. Most insurance companies will send you reminders by email or call when the due date for your premium is near. If you miss paying premiums, your insurance company may cancel your life insurance policy.
A lapsed policy can be revived
If a policy gets lapsed, you need not get disappointed. It is possible to revive a lapsed insurance policy. However, this depends on the policy type, insurance policy provider, and the terms and conditions mentioned agreed upon. You will be required to pay the missed premium and interest amount to revive the policy. Speak to your insurance company regarding this, and they will facilitate the process.

To sum it up

Getting a life insurance policy is the most important decision you will take for your family and dependents. Do your research and read up about the benefits of various policies available. Speak to people who have already availed of life insurance policies. Write down all your queries and get them clarified with your insurance advisor.

Canara HSBC Life Insurance is one of the most reliable insurance companies in this industry. They have a strong presence in the market and are a trustworthy brand. They can customize your insurance plans as per your needs and financial requirements. Contact them today to speak to their insurance experts.

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