How To Secure Your Family With Life Insurance

2024-08-02

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An average urban Indian has little or nothing to fall back upon in the event of a financial emergency. On a scale of 1 to 100, the protection quotient of Indians is a mere 35.

Low insurance penetration and little or no awareness among the general public only aggravates their prehensions. More than half of the Indian population feel that they would be left vulnerable financially if the earning member of the family should meet with an unfortunate incident.

36% are of the view that in case a family member was diagnosed with a critical illness such as cancer or heart disease among others, their life savings would be exhausted in a few months itself. To top it off, 80% are not even aware of the sky-rocketing costs of treatment of most of these illnesses. The situation is further complicated by the fact that one-fifth of those surveyed opine that they are completely on their own with little or no support from anyone.

This speaks to the dire need for life insurance in the lives of the Indian working class. The benefits of purchasing life insurance are plentiful and can make a world of difference in the life of the everyday Indian.

Purchasing life insurance as soon as you start earning is not only cheaper, but gives you an early bird advantage by securing the financial future of your prospective family. They need not be dependent on anyone for their day to day needs and can maintain their standard of living, even in your absence. It is also a useful tool in financial planning for the long term. It can fund your child’s education and pay off any debts such as a mortgage, two-wheeler loan or credit card debt. Not only is the premium amount eligible for tax deduction as per Section 80C, the death or maturity proceeds also qualify for tax saving under Section 10(10D).

However, even with all the benefits outlined above, it is important to carefully choose a life insurance policy, rather than buying one in haste. Since it is a long term investment, it pays to spend some time to analyse what suits your needs. Here’s how you can secure your family with life insurance:

Determine the amount of life cover required: As a rule of thumb, the amount of coverage offered by a plan should be equal to your current annual income multiplied by 15 or 20, if you are less than 40 years of age. Your sum assured should be 10 to 15 times your annual income, if you are past 40 years of age. This is to ensure that, in your absence, your family is financially independent and can maintain their standard of living as well as take care of immediate needs. You should also factor in any existing medical conditions, debts that you are paying or future needs such as your children’s education, when purchasing life insurance. The policy should be in tune with your requirements and provide adequate protection.
Compare different policies before zeroing in: Researching different plans available in the market and the benefits that they offer is vital before you zero in on a life insurance policy. Premium rates differ depending on the cover chosen, policy period, features and benefits offered and whether you have a lifestyle that includes smoking or drinking. Online policies might be less costly as compared to buying one offline. Most insurance companies have detailed disclosures on their websites providing all the information to help you make an informed choice.
Claim Settlement Ratio: One of the things to consider before buying life insurance, is to check the claim settlement ratio of the insurance provider you’re about to settle for. The claim settlement ratio is nothing but the total number of claims settled against the aggregate claims filed against a company in a year. The higher this ratio, the lesser are your chances of a claim being rejected. The Insurance Regulatory Authority of India releases the annual ratios of claim settlement for all insurance providers.
Premium Frequency: Certain term insurance policies and providers offer policyholders the benefit of flexible premium payment options. Would you prefer to pay your policy premium as a lump sum or in a yearly, quarterly or monthly manner? Depending on your financial preferences and budget, you can decide what frequency seems more affordable and convenient for you.
Riders:Most insurance companies offer a choice of additional riders in the form of accidental death benefit, child support riders and critical illness riders, among others. These help to provide additional protection over and above the policy opted for. Make sure to enquire about these before purchasing life insurance.

So that’s how you can secure your family with life insurance. Ensure you take into account all the aforementioned points to arrive at the right policy as per your needs.

One term plan that you can consider is the iSelect Smart360 Term Plan from Canara HSBC. You can benefit from inbuilt riders and flexible premium payment options. You can even increase or decrease your coverage, in line with your financial situation. To sum up, life insurance can be a boon for a working-class Indian family; with the iSelect Smart360 Term Plan, you too can secure your family today.

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