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Term Insurance

What is Term Insurance Plan?

Term Insurance plans are the pure life insurance plans providing basic protection to safeguard your family financially against the untimely death of yours. The Term Life Insurance plan is a form of a life insurance cover, it provides coverage for a specific period of time, and if the insured dies during the term of the policy, then the nominee receives a comprehensive lump sum amount, called as the sum assured, in the event of unfortunate death of the life insured. Term insurance plans offer an opportunity to get the financial protection for your family at an exceptionally affordable cost.

Term Life Insurance Plans are cheaper as compared to other life insurance plans because such plans only intend to provide a death benefit and are pure insurance plans. Online term plan or online term insurance plans allow additional discount on premium by the insurer. The insurance companies charge only mortality cost apart from the nominal administrative charges. There is no element of saving or investment present in this plan which makes the premium cost low.

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Best Term Insurance Plans in India

Life Insurance Companies Term Plans Entry Age (Min-Max) Maturity Age (Max) Min Sum Assured Policy Term(Min-Max) Claim Settlement Ratio
Bajaj Allianz Life Insurance Co. Bajaj Life eTouch 18-65 years 75 years 50 Lacs 10-40 years 91.30%
Max Life Insurance Co. Max Life OTP Plus 18-60 years 75 years 25 Lacs 10-40 years 96.23%
HDFC Life Insurance Co. HDFC Click2Protect Plus 18-65 years 75 years 25 Lacs 10-40 years 95.02%
PNB MetLife Insurance Co. Metlife Mera Term Plan 18-65 years 75 years 10 Lacs 10-40 years 92.90%
Edelweiss Tokio Life Insurance Co. Edelweiss Tokio My Life 18-60 years 80 years 25 Lacs 10 years-upto age 80 85.10%
Aegon Life Aegon Life iTerm Plan 18-65 years 80 years 25 Lacs 5 years-upto age 80 95.30%
Future Generali Life Insurance Co. Flexi online Term Plan 18-55 years 75 years 50 Lacs 10-57 years 83.16%
IDBI Federal Life Insurance Co. IDBI iSurance Online Term Insurance Plan 18-50 years 75 years 50 Lacs 18-25 years 84.79%
Birla Sunlife Insurance Co. BSLI Protect @ ease 18-55 years 80 years 50 Lacs 5-30 years 88.45%
Aviva Life Insurance Co. Aviva i-life Secure 18-50 years 70 years 50 Lacs 10-25 years 82%
Aviva Life Insurance Co. Aviva i-life Plan 18-55 years 70 years 25 Lacs 10-35 years 82%
ICICI Prudential Life Insurance Co. ICICI Pru iProtect Smart 18-65 years 75 years Subj to min premium 5-40 years 96.20%
Aegon Life Insurance Co. Aegon Life iReturn 18-65 years 80 years 30 Lacs 5-20 years 95.30%

Why should I Buy Term Insurance?

Secure Your Family Financially

It is imperative to buy a term plan if you are the chief wage earner in your family. No matter how much you have saved or invested over the years, sudden eventualities, such as death or critical illness, always tend to affect your family financially apart from the huge emotional loss.

Affordable Buy

Term Plans provide life cover at the minimum cost. The premiums are so affordable which makes the term plan a must buy to secure your family’s financial interest in your absence.

Pay Off Your Debts

Term plan proceeds help your family to repay any debts like car loan, housing loan, etc. in the event of your untimely death and reduces the burden of financial trauma when there is an emotional loss to bear.

Provide Regular Income

Some term plans in the industry offer an option to distribute the policy proceeds partially as a lump sum pay out and the remaining in the form of monthly income to the family in your absence. This will help the family to meet their regular expenses and enable them financial independence.

Meet Financial Objectives

In the event of your untimely death, term insurance benefits allow your family to accomplish and continue financial goals like child basic education, higher education, child’ marriage, financial aid for your spouse and dependent parents.

What kinds of Term Insurance Plans can I opt from?

Choose the right Term Insurance Plan and provide your family a financial backup from any unforeseen or unfortunate events like death. Term Insurance plans are of following kinds to fit your specific needs.

1. Pure Term Plan

Pure Term Life Insurance Plans offer fixed life cover to you at a fixed cost or premium amount which is leveled throughout the policy term. In the event of untimely death, the nominee/nominee’s are financially indemnified by the sum assured opted for and the policy ceases there after. Pure Term Plans do not offer maturity benefits.

2. TROP Plan

Term Plans with “Return of Premium” (TROP) offers the benefit of paying back all the paid premiums in the event of you surviving the policy term. TROP plans to address the concerns of those buyers who want some benefit at the maturity as well apart from the death benefit. TROP pays the death claim amount to the nominees in the event of an unfortunate death of the insured. So, TROP plans offer both maturity benefit and death benefit (whichever occurs first).

3. Term Plan with Income Benefits

Such term life insurance plans offer income benefits to take care of the regular expenses of your family in your absence. These plans offer sum part of the sum assured to be taken at the time of death as lumpsum benefits and the remaining as monthly income benefits for a specified period of time to the nominees as per the plan specifications.

4. Increasing / Decreasing Term Plan

Such term plans offer income benefits to take care of the regular expenses of your family in your absence. These plans offer sum part of the sum assured to be taken at the time of death as lumpsum benefits and the remaining as monthly income benefits for a specified period of time to the nominees as per the plan specifications.

The Decreasing Term Plan is taken generally with the mortgage products. The sum assured under this term plan decreases every year in collaboration with the decreasing debt amount at the specified rate over the policy term. Such plans enable your family members to repay the remaining debt amount in case of your untimely death during the policy tenure.

5. Renewable & Convertible Term Plan

This kind of term plans can be converted to any other savings plan. This combines the benefits of a term plan with a savings plan. Here, initially you buy a term plan which is renewable as per the policy terms to cover your insurance needs during the initial years of work and when you are single without any dependents. Later such plan can be converted into a saving-cum-insurance plan to take care of your latest insurance needs. Your premium will alter at the time of conversion. Such plans are renewed after a specific time period to offer the continuous coverage.

What are the Benefits of Buying a Term Insurance?

Death Benefit

Term Insurance provides financial protection for your family in your absence by indemnifying the nominee with a lump sum amount or Sum Assured.

Maturity Benefit

Term Life Insurance Plans do not offer maturity benefits. Only Term Plans with “Return of Premium” (TROP) offers the maturity benefit which is the return of all paid premiums at the maturity in case the insured survives the policy term.

Rider Benefit

With your Term Life Insurance Plan you may opt for additional coverage or riders like Accidental Death Benefit, Disability rider, Income benefit Rider, Critical Illness rider, etc. to give you added protection along with your base policy. The eligibility and grant of riders may vary from insurer to insurer.

Tax Benefit

Premium paid towards the Term Insurance Policy avail tax benefits under section 80 C and the proceeds of the insurance policy is tax free as per section 10 (10) D of the Income Tax Act, 1961 ,subject to the terms & conditions laid in the Act.

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How is my Term Plan Premium Calculated?

The Premium for your Term Insurance policy is calculated, basis the following factors:

Current Age

Age plays the most imperative role in deciding your premiums. For younger life, premiums are low where as for older life premiums are high. The insurance companies underwrite the case basis the risk involved in the customer’s life as per the age. So, its prudent to buy life insurance at an early stage.

Life Cover

The higher life cover or sum assured will have a higher cost or premium amount to cover the risk by the insurer. Also, some insurers offer you discounts on premium for choosing the higher life cover.

Smoking/Drinking Habit

Intake of cigarettes, tobacco, alcohol and other nicotine products will attract more premiums as such products are injurious to health and elevates the risk of an individual’s life. So insurers cover high risk lives by charging more premiums or may decline the proposal as well.

Present Health Status

Your health status also determines the amount of premium to be paid by you towards your life insurance policy. In case you possess diabetes, high blood pressure, non standard BMI, or suffering from some severe disease will attract a higher amount of premium as compared to other healthy lives of your age.

Gender

As per statistics, the females tend to live more than males. The life expectancy of females is higher. So, the mortality component of the premium amount is higher for men as compared to women applying for a term insurance policy.

Occupation

Your occupation also plays a key role in determining the term plan premium amount. Risky occupation like people working in the mining industry, oil and gas, fisheries or any other dangerous profession increases the premium amounts for your policy.

What are Some Smart Buyings Tips?

Start Early: Term Life insurance premium most importantly depends on the age at which you are buying the plan. Starting early can save a lot on the premium amount throughout the policy term. It’s prudent to get an online term insurance at the earliest to protect the financial interest of your loved ones.

Assess your Life Cover Accurately: It is imperative to assess the life cover or Sum Assured, based on the number of dependants you have, how much money you require meeting your financial goals which are pending like building a house, child’s education, child’s marriage and how much debt/liabilities you need to pay.

Check for Claim Settlement Ratio: Many insurers offer a variety of innovative term insurance plans. The entire purpose of taking the policy gets defeated if the insurer does not settle the claim in the event of your unfortunate demise. So check on the claim settlement ratio of the insurer, you are seeking insurance from. Best Term Insurance Plans in India if coupled with highest Claim Settlement Ratio, it will be the right deal for the customer.

Keep Inflation in Mind: Its imperative to take a cover keeping inflation in mind. A cover of Rs 30 – 40 Lakhs in a term plan may not be of the same value down the years say 20 years later. So it’s prudent to keep in mind that how inflation will affect your financial needs later in the future.

Buy Online: Internet has made buying so easy. Online term plan is much cheaper as there is no intermediary cost like agent’s commission in between. It is hassle free to buy with a few clicks which allow quick policy issuance. Compare best term plan in India online and choose the best fit as per your need and requirement. Online term policy is easy to buy and the policy issuance is also quick.

Opt Requisite Riders: Riders offer additional coverage to your policy. It is prudent to opt for only requisite riders as opting for too many riders will elevate the premium amount which may be not required otherwise. Best Term Insurance Plans in India offer additional riders like Accidental death benefit Rider, Critical Illness Rider, Disability Cover, etc.

Read the Terms Carefully: You may get excited to buy the cheapest plan offering a bundle of benefits, but don’t forget to read between the lines. Study the terms and conditions of the policy contract carefully before buying to avoid any issues later. Your insurer also provides you with a free look period of 10 to 15 days where in case you are not satisfied with the plan you have opted, you may get it cancelled and get your premium amount back. Online Term Plan or Online Term Insurance should be bought by thoroughly reading the fine print.

Is there any Add-on Cover/Rider with Term Plan?

Riders are additional benefits attached to your base policy which will offer you boosted benefits apart from your base policy. Various insurer’s provide multiple riders which can be taken with the main policy as per the policy conditions. Additional benefits come with the extra costs.

1. Accidental Death Benefit Rider

Accidental death benefit rider gives extra financial benefits to your nominees in case you die an accidental death. There is an accidental death Sum Assured which is paid to your nominee apart from the base Sum Assured of the policy.

2. Term Rider

An additional death benefit is paid to your nominee apart from the base policy payout. The appointed beneficiary/ nominee can receive term rider sum assured if you have taken this rider to your base policy.

3. Critical Illness Rider

There are severe illnesses which disable an individual temporarily or permanently resulting in loss of earnings. The treatment cost of such illnesses is massive due to medical cost inflation. To take care of the medical cost involved in such illnesses like Heart Attack, Cancer, Paralysis, Coronary artery bypass surgery, Major organ transplant and much more, a critical illness rider can be opted.

4. Waiver of Premium Rider

As the name suggests the future premiums are waived off in the events like death or disability of the insured or policyholder as per the policy contract. The policy continues to survive till the end with the waiver of future premiums.

5. Income Benefit Rider

Life Insurance benefits are usually given to the nominees as a one-time lump sum, income benefit rider allows you the choice of distributing policy benefits in installments as a family income to the nominees. This rider allows you to regulate the dispersal plan of policy proceeds that suits best for your family in your absence.

6. Disability Rider

Disability rider replaces your income for the specified tenure in the event of permanent or temporary total or partial disability due to an accident. The payout varies with the kind of disability occurred and also basis the insurers rider conditions. Usually the total disability, payout is full sum assured where as in the case of partial disability, the payout is the partial sum assured.

(Note:The rider benefit, conditions and eligibility criteria may vary from insurer to insurer.)

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What is Not included in my Term Insurance Plan?

Your Term Insurance Plan may not pay for the following:

Suicide clause: Insurance companies are not liable to pay the policy proceeds, if the insured commits suicide within the first year of the commencement of the policy. The suicide clause is lengthened up to two years also by some insurers.

Aviation Clause: This clause states that the policy benefits are paid out only in the event where the life insured is killed in a commercial plane crash while travelling. But if the life insured dies as a passenger in a private plane insurance company will not entertain the claim.

Dangerous Adventure Sports: This exclusion says that in the event the death of the life insured happens due to the involvement in certain dangerous adventure activities like auto racing, rock climbing, hang-gliding, etc., the payment of the policy proceeds will not be paid. Some insurer’s cover death arising out of such activities at a very high premium rates.

Act of war exclusion: This exclusion provides that the insurer will not pay, if the cause of death is a result of war.

(Exclusions may differ from one insurer to another and plan to plan.)

Do’s and Dont’s in a Term Plan

Read the do’s and dont’s related to your Term Plan.

Do’s Dont’s
Assess the need of buying a term insurance plan and calculate the right Sum Assured as per your core requirements and expectations Make payment in the name of your agent advisor rather it has to be done in the insurer’s name
Compare Term Plans online to find the best term insurance plan in India Leave any column blank in the proposal form
Fill the proposal form yourself.Mention complete and correct details on online term policy or offline term policy Conceal the facts, as it could lead to disputes during the time of claim settlement
Retain a copy of your duly filled proposal form for your own records Buy a Term plan without comparing
Read the terms & conditions of the policy thoroughly before making payment. Ask your agent to fill the proposal form

Term Plan Glossary:

Claim: The insured event where the insurance company will pay the policy proceeds under the contract.

Insurer: The Insurance Company is known as the insurer.

Insured: The individual whose life is being insured under the life insurance contract.

Insurability: It means all conditions that are related to the health and life expectancy of an insured.

Insurable Interest: This means that there should be some financial loss to the policyholder who is taking an insurance policy on the insured. Without insurable interest an insurance contract holds invalid.

Moral Hazard: Wrong intention or facts to seek the life insurance plan which affects the decision of the prudent underwriter or insurance company.

Misrepresentation: Statements or facts of any kind that does not represent the correct intent which affects the insurance policy contract.

Nominee: The beneficiary or a family person entitled to be the recipient to get the policy proceeds declared by the insured.

Premium: The policyholder agrees to pay a cost for seeking life cover from the insurance company as consideration for buying the insurance policy.

Policy Term: The specified number of years for which the policyholder is insured with the insurance company.

Riders: The additional benefits linked with the base policy taken by paying extra premium by the policyholder.

Sum Assured: The life cover which the person has taken under his life policy which is payable in the insured event.

TROP: Term Plan with return of premiums basically returns all the paid premiums to the insured if he/she survives the policy term.