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What to expect from a term insurance policy in India?

A life insurance policy is an essential part of an individual's financial planning, especially, if he/she has dependents. However, studies show that an alarmingly large portion of India's population is not covered with an adequate insurance cover. Further, most Indians look at life insurance as a waste of money.

Consequently, term insurance is often avoided for having no investment component. Individuals end up picking endowment policies to cover unexpected death and fail to leave behind enough funds to meet their financial responsibilities.

What to expect from a term insurance policy in India?

Why do you need a term insurance plan?

If you have a family that relies on you for financial needs, the importance of term insurance cannot be stressed enough.

In financial planning, it is ideal to look at insurance as a cover against uncertainties and investments as means to create wealth, thus keeping the two separate.

As a thumb rule, you are allowed to purchase an insurance cover of minimum sum assured of Rs 25 lakh, and through a term insurance plan, you can seek a large cover for a small annual premium when compared to endowment policies or other investment linked insurance policies.

A large cover will help your family fund any ongoing loan re-payments, child's education and other financial responsibilities that they will be left with after your demise.

While you cannot save your family from the emotional suffering that comes with unforeseen circumstances, you could lighten their financial burden with a term insurance plan.

What makes Canara HSBC OBC's "iSelect+ Term Plan" a good fit for you?

The Indian insurance market has a plethora of online term insurance policies to choose from. While making a choice, you could consider Canara HSBC Oriental Bank of Commerce Life Insurance Company's highly flexible term plan called the iSelect+ Term Plan that allows you to customize the insurance plan as per your needs and requirements. Besides death, it also covers permanent disability or terminal illness.

Here are some of the features that make "iSelect+" Term Plan favourable:

1. Choose from options on coverage

As per your needs, you can customize your insurance plan to cover life (death and terminal illness), return of premium (if you outlive the policy term) and avail an extended cover for your whole life (till you turn 99 years old).

There are very few online term insurance policies like Aegon Religare's iTerm Plan, HDFC's Click 2 Protect 3D Plus or PNB Met Life's Mera Term Plan, that come with the 'whole of life' option. However, these policies come with less than the minimum sum assured of Rs 25 lakh provided by Canara HSBC OBC.

While HDFC's Click 2 Protect 3D Plus and PNB's Mera Term Plan offer Rs 10 lakh each.

2. Optional built-in covers

Under iselect+ plan, you can augment your term insurance to include additional inbuilt coverage like Accidental Death Benefit, Child Support Benefit, Accidental Total and Permanent Disability Benefit.

Almost every other term policy online comes with critical illness and permanent disability benefits. In fact, Aegon Religare also provides women specific critical illness benefit. However, the "Child Support Benefit" is unique to the Canara HSBC OBC's iSelect+ Plan and cannot seen in any similar term policies currently in the market.

It enables you to secure your child's future goals in case of death or on diagnosis of terminal illness.

What to expect from a term insurance policy in India?

3. Option to add spouse

You can add your spouse to the same policy with a discount on the premium rate pertaining to Death / Terminal Illness benefit for the spouse.

The spousal cover is also available in term plans offered by Aditya Birla Sun Life (DigiShield), Bajaj Allianz (iSecure), Edelweiss Tokio (Zindagi Plus) and PNB MetLife (Mera Term Plan) but Canara HSBC OBC's plan provides the option to allow earning spouse to choose sum assured as well.

Under the iSelect+ plan, the spouse also has an option to increase insurance cover in the future.

4. Multiple premium payment options

Under the iSelect+ plan, one can make a single bullet payment for the entire term or pay premium for a limited period (5, 7, 10, 15, 20 or 25 years) or pay only during working years, besides paying throughout the policy term.

Apart from Canara HSBC OBC, such level of flexibility in premium payment on term policies (with similar benefits) is only provided by HDFC Life.

Life Insurer Canara HSBC OBC Aditya Birla Sun Life HDFC Life PNB MetLife
Plan Name iSelect+ DigiShield Click 2 Protect 3D Plus Mera Term Plan
Premium Payment options Single Premium, Limited Premium for 5/7/10/15/20/25 years and Regular Premium SP, LP 5/7, RP SP, LP 5-39, RP RP

5. Multiple payout options

Benefits can be opted to be received as lump-sum, monthly income or part lump-sum part monthly income. Customers can also choose to receive benefits in fixed, increasing or decreasing level to meet the family's monthly expenditure requirements.

What to expect from a term insurance policy in India?

6. Option to increase life cover

With changes in lifestyles, salary and financial needs, iSelect + term plan allows you to augment your term insurance plan to provide larger cover, a provision that cannot be availed in an LIC term plan (eterm).

An individual can increase his/her cover after marriage (by 50% of sum assured), child birth (25% of SA) and purchase of house (25% of SA).

The insurance cover will increase by 5% every policy year, up to an overall increase in the sum assured to 100% of the original sum assured.

7. Discounts

Premium discount is available for higher sum assured, women and existing customers of Canara HSBC OBC Life Insurance.

8. Tax benefits

You can seek tax benefit under Income Tax section 80C on premiums paid and benefits received from the term insurance.

Conclusion

A term insurance policy like Canara HSBC OBC's iSelect + Term Plan provides a large cover (minimum sum assured of Rs 25 lakh) for up to 80 years of age (age at maturity of policy) while being customizable to fit your changing lifestyle and needs. It can be purchased online and guarantees a financially secure future for your family, even in your absence.

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