Term insurance is a type of life insurance, which offers financial coverage to your nominee in case of your death, within the period term. It makes sure that your family is well-taken care of after your demise. With the help of riders (add-ons), you can cover disease and disability under term insurance as well. It's one of the best ways to protect the financial future of your family cheaply.
A term life insurance policy is a contract between the insurer and the policyholder that ensures the financial needs of the policyholder's family are taken care of in the event of his death. However, the coverage of the term insurance is limited to the life of the insured within the term of the policy.
With the frequency of accidents and diseases increasing per day, your plan of living a long life may seem far fetched. That means, if you die, your family should have a financial backup to take care of their needs. That's why investment experts in the industry suggest investing in a term insurance plan and that too at a young age. Term insurance will help your family to live a stable life even after your demise. It will provide much needed financial support to meet their daily expenses and fulfill their long-term goals (such as your child's education, marriage, etc.) as well.
Let's understand the importance of Term Insurance through this example:
Varun and Manik were very close family friends working in the same company as IT professionals. Somehow, Varun decided to invest in Term Insurance with a life cover of Rs.1 Crore (with monthly payout benefit option) and even suggested Manik do the same. Manik didn't like the idea and thought it was a waste of money, as there are no maturity benefits, and invested in a traditional life cover policy.
After 3 years, they were traveling to Jaipur by road and met with an accident. Both of them died on the spot. Though both the families were in grief, Varun's family was a bit relieved as they had the financial support of the term insurance. With Varun's term insurance plan, his family got the monthly payment for the next 10 years. Manik's family, on the other hand, only had a traditional life cover of Rs. 5 Lakhs and had to figure out a way to meet their expenses.
The motive of this example- though human life is priceless and the grief of losing someone close can't be described in words, having a financial backup with a term insurance policy can at least offer support to meet all financial expenses.
Term Insurance Plans
Entry Age (years)
Minimum Sum Assured (Rs.)
Claim Settlement Ratio 2018-19*
Subject to minimum premium
Mera Term Plan
Smart Protect Goal
*We have also prepared a list of the top 20 term insurance plans in India 2021 in detail.
At PolicyX.com, we provide a customized portfolio as per your needs and requirements. We have a dedicated team to assist you with all your queries. From documentation to filing claims, they are always on their toes to serve you in the best possible way.
The term insurance offers 4 types of death benefit payout options to choose from. They are as follows:
Insurance companies allow you to avail of add-ons (riders) with your term insurance policy on paying an extra premium. A brief explanation of such riders is given below-
Critical illness riders cover many illnesses that are deadly in nature. You can buy this rider if you are prone to any such illness. Before taking the rider, you can always check the additional cost and decide accordingly.
If this rider is taken, then accidental death is covered. The insurance company will offer the sum assured along with the rider benefit to the nominee of the policyholder.
With this rider, you will get complete cashless treatment at the time of any illness/surgery.
As per this rider, all the future premiums are waived off if the policyholder is disabled, critically ill, or dead.
Life is uncertain, and no one can predict what the future holds for us. Therefore, at every step, we need to ensure that our family and their needs are secured. People falling under the below categories should consider investing in term insurance-
Buying term insurance online saves a lot of time and energy for the customer. Other key advantages are listed below-
Buying policies online grants lower premium rates as there are no middlemen involved in the whole process. Many other overhead costs like office costs, distribution channels, etc. are saved as well.
Compare & Choose
Online buying helps the potential buyers to evaluate the pros and cons of each plan and select the one that makes them happy.
Easy to purchase
You don't have to travel distances to buy term insurance. Just get a stable net connection and a device to buy from the comfort of your home.
One of the advantages of buying term insurance online is transparency. The potential buyer can check out the features and other TnCs of the plans in a detailed manner by simply logging into an insurer's website.
As soon as you enter the required details and make the payment, you will get the policy document in your inbox.
The Central Government of India offers certain term insurance schemes, through which policyholders can safeguard their dependents financially. Let's have a look at them.
The Pradhan Mantri Jeevan Jyoti Bima Yojana is a life insurance policy that can be renewed on an annual basis by policyholders.
The Aam Aadmi Bima Yojana was formed as a merger of two social security schemes, namely the Aam Aadmi Bima Yojana and the Janashree Bima Yojana, which previously existed.
Below is a list of a few factors that have a direct impact on the term insurance premium. Let's check them out.
Mayank (30 years old) is planning to buy a term insurance plan with a coverage of Rs.1 crore (till 65 years of age).
Annual Premium (Rs.)*
**Last Updated on 11-02-2021
*This premium is provided by ICICI Prudential.
As per the above table, it is safe to say that Mayank should consider buying a term plan at 30 years of age as he would have to shell out less premium. If he buys term insurance at the age of 35/40 years, he will have to pay an extra premium.
Varun, a 30-year-old MBA professional, is the sole breadwinner of the family. He lives with his parents, wife, and one kid (aged 7 years). His monthly expenses are Rs.50000, including an EMI of a car loan of Rs.12 lakhs.
Knowing his family's financial condition, he decided to look into term insurance. Below are a few points that Varun kept in mind while buying the right term insurance.
After you decide to purchase term insurance, the next question that comes to your mind is- how much coverage is sufficient for you? Luckily, the below-listed pointers can assist you with the same. Let's take a look-
PolicyX.com has designed a simple process to buy term insurance online. Here are the steps-
In case of the demise of the policyholder, the nominee should inform the insurance company and share the required documents with them. Documents will vary in different scenarios and are bifurcated below for your reference.
Case 1: Natural Death
Case 2: Accidental Death
Case 3: Death Due to Sickness
Case 4: If Nominee Also Dies Along with Insured
In such cases, the legal heir of the claimant becomes the beneficiary. The legal heir can get the benefits only after attaining the age of 18. But his/her guardian must immediately inform the insurance company. The age criteria may depend completely on the provisions of the insurance companies or IRDA.
Case 5: If the Nominee Dies Before the Policyholder
When a nominee dies before the policyholder, it's the responsibility of the policyholder to nominate other beneficiaries. This can be done either online or by informing the customer care.
Note: Once the insurance provider accepts the claim, it will release the pay-out. If the claim is rejected, the reasons for the same will be communicated to the claimant.
While a few life insurance policies have exclusions for a specific cause of death, coronavirus is covered in all the existing/new life insurance policies. However, it is advisable to pay attention to the guidelines of life insurance and add-on plans, whose benefit is paid if the claim is approved by the insurance company.
For all the new applications of term insurance during COVID times, insurance companies calculate the premium of the policy based on medical history and the health of the customers. Hence, the pandemic may have an impact on the term insurance premium and the acceptance of the policy as well.
If the buyer's application is in process and (s)he gets diagnosed with COVID-19, then the company might reject or hold the policy. The buyer should make sure that (s)he is sharing all the information with the insurer whether it is related to COVID or not. This will prove to be useful at the time of filing a claim.
Listed below is a convenient process to file a term insurance claim due to COVID-19.
Note: The claim process varies from insurer to insurer. You must check with your provider about the same.
Just like every other thing in the market, term insurance comes with a (*) sign- exclusions. Let's view it.
Death due to the following reasons are not covered-
1. What is the minimum age and income to buy term insurance?
To invest in a term insurance plan, the minimum age should be 18 years and the minimum income should be 2 Lakhs.
2. What is the difference between term insurance and life insurance?
Life insurance includes maturity benefits, whereas term insurance offers no such benefits.
3. How much tax will I save by buying term insurance?
Under Section 80C of the Income Tax Act, 1961, you can avail deductions up to Rs. 1.5 lakhs.
4. I occasionally smoke with my friends. Do I need to disclose this information while buying term insurance?
If you have smoked in the past 12 months, you have to disclose it to your insurance provider. If you don't disclose it right away and reveal it later, you may be charged with a high premium or your provider may cancel your policy (denying any benefits).
5. I have diabetes. Can I get myself insured under term insurance?
If your diabetes is in control (with regular treatment and a healthy lifestyle), you will be eligible to buy term insurance. However, if you have additional risks like hypertension, heart illness etc, your application can be rejected.
6. Whom shall I contact if my claim is rejected?
Even after submitting all the documents and adhering to the policy document, if the claim is rejected, you need to get in touch with the Ombudsman. (S)he will tell you the reason(s) for rejection.
7. Can I add a rider to my existing term insurance plan?
Yes, you can easily purchase rider(s) from your insurance providers at nominal costs.
8. Are your agents qualified enough to handle my queries?
Yes, PolicyX.com is IRDA certified (WBA 17/14) and our agents go through the best training at hand to serve you better. To know more, please speak to our customer care team on 1800-4200-269.
9. Will my premium amount change during the policy tenure?
No, it will remain the same.
10. I'm unable to find my policy document. How can I get its duplicate copy?
You have to submit an application along with indemnity bonds and fees to get a duplicate copy of your policy.
11. Can an NRI buy term insurance?
Yes, insurance companies offer term insurance plans, which are specially designed to fulfil the needs of NRIs.
12. If I die due to a natural calamity/disaster, will my family/nominee receive the sum assured?
No. Deaths under 'Act Of God' are not covered by term insurance policies.
13. If I die outside the Indian territory, will it be taken into consideration?
Yes. Once the policy is in effect, your death (irrespective of the place) will be taken into consideration.
14. Can I switch my term policy from one provider to another?
No, that's not possible.
15. Why should I choose limited pay rather than a regular pay term plan?
Yes, you will be given 15 days (generally called a free-look period) to cancel your policy without penalties.
16. Why should I buy Limited Pay vs Regular Pay Term plans
If you choose a limited pay term plan, you are only liable to pay for a certain period (5-10 years) and the policy benefits will continue for the entire term. You can save up to 50% of premiums by going for a limited pay term plan. Also, a limited pay term plan frees you to pay premiums for a longer period.
17. Can I change the duration of life cover after the policy is issued to me?
The duration of life cover cannot be changed once the policy is issued. It is set at the inception of the policy.
18. Why are premium rates higher for smokers than non-smokers?
Smokers are at a higher risk of getting ill as compared to non-smokers. That's why insurance companies charge higher premiums from them.
19. Do I need to declare myself as a tobacco user if I smoke occasionally?
You must declare yourself as a tobacco user if you have smoked in the last 12 months. The premium of your policy will be decided accordingly.
20. Will I be able to avail of a death benefit in case of natural deaths?
Yes, term insurance plans offer a death benefit in case of both natural or accidental deaths.
21. Can I increase my sum assured during the policy tenure?
Yes, some term plans allow you to increase the sum assured during different life stages. However, this depends on the plan's TnCs.
22. I want to port my term insurance policy from one insurer to another. Can I do that?
No, under the current guidelines issued by IRDAI, one can't port his/her term policy.
23. What if my policy has lapsed?
If you aren't able to pay the due premiums within the grace period, the policy will lapse and all benefits will be ceased. If you want to revive your policy, you need to pay all the arrears to the insurance company.
Note: Some insurance companies may even ask for medical reports for the revival of the policy.
24. What is the free look period and will I get a complete premium back if I cancel my policy?
Under the free-look period, you get 15 days to cancel the policy if you aren't satisfied with it. And you will get a refund of the premium paid (after deducting the necessary charges).
25. Can I avail of a loan under a term insurance policy?
You can't avail of loans against your term insurance policy as there are no maturity benefits associated with it.
26. I have lost my policy document. How can I get the duplicate policy?
You need to submit an application to your insurance company for a duplicate policy. After the submission of necessary documents and fees, the company will issue the same.
27. What happens if I discontinue paying the premiums?
In case you discontinue paying premiums of your policy, then the policy will lapse automatically. However, as per the IRDAI, every insurance company offers a grace period of 15/30 days. A policyholder has the option to pay his/her due premiums within that period.
28. Is it possible to add a rider to an existing policy?
Some insurance companies allow riders to be added only at the inception of the policy. However, few insurance companies may allow them to be added only at the policy anniversary.
29. How much time will it take to settle any claim?
The procedure of settling claims varies from insurer to insurer. Once all the documentation is completed as per the company's norms, the company may settle the claim within 30 days (may vary as per your chosen insurer).
30. What if the claim is rejected?
In case the term insurance claim is rejected, the nominee can re-apply for it. A written application needs to be submitted for the same. The nominee can even go to the consumer court if the company doesn't respond to the application.
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Page Last updated on 11-02-2021