Term Insurance Plans
  • Choose From Top Term Insurance Plans
  • Types & Exclusions of Term Insurance Plans
  • Term Insurance Plans by GOI
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Term Insurance

Term insurance is a type of life insurance plan, which offers financial protection to your family at a very reasonable cost. The objective of this insurance plan is to make sure that the financial needs of the policyholder's family are well-taken care of after his/her unfortunate demise. The sum assured is paid to the family incase of demise of the insured wihin a specified term period.

Importance of Term Insurance

Life, in general, is very unpredictable. You can never rest assured about what the next moment might have for you. That is why, it becomes important to make sure that at every step, our family and their needs are secured. And one of the best ways to do this is by investing in a term insurance policy. A term insurance is like a backup plan that will support your family if something unfortunate happens to you in future. It will provide much needed financial support to meet your family's daily expenses and fulfill their long-term goals (such as your child's education, marriage, etc.) as well. Also, with the help of riders (add-ons), you can cover disease and disability under a term insurance plan. It's one of the most affordable ways to protect the financial future of your family.

Buying a term insurance policy will prove to be beneficial for all of us since securing the future of our family is everyone's top priority. And especially if you fall in one of these below mentioned categories, then you must definitely consider investing in a term plan as you are more likely to benefit from it. Let's check out what these categories are-

who need term insurance

Compare Term Insurance Plans

Term insurance premiums vary across insurance companies significantly. As you can see from the table below, for a same person, the premium per month ranges from 500 to 1000 which is like a difference of 100%. Hence it is recommended that you compare policy features and premium from top insurance providers and purchase a plan that offers the best price.

Please note that the data for the premium amount in the table is calculated for a 30 year old non smoker male, for a coverage of Rs. 1 crore for a policy term of 20 years.

To help you make a more informed decision, we have prepared a list of the best term insurance plans in 2021. Refer to our Best Term Insurance Plans page and find out your ideal plan.

S.No Insurance Company Term Insurance Plan Premium per month (in Rs)
1LIC LIC Tech Term601*
2HDFCClick 2 Protect Life902
3SBI e-Shield596
4ICICI Prudential ICICI Pru iProtect Smart704
5Max Life Insurance Smart Term Plan721
6Bajaj AllianzSmart Protect Goal747
7Kotak MahindraKotak e-term Plan722*
8Aditya BirlaABSLI Digishield Plan658
9Tata AIAMaha Raksha Supreme Plan1,011
10India FirstLife e-term Plan503

*Excluding taxes

Source- Premium amounts have been calculated from the respective insurance providers' website.

Monthly Premium of Different Insurance Companies

From the above graph, it can be clearly noticed that the premium varies significantly across companies and plans. This is due to various factors like plan features, companies claim experience, etc.

Factors That Affect Term Insurance Premium

Below is a list of a few factors that have a direct impact on the term insurance premium. Let's check them out.

  1. Age

    The basic idea of term insurance is to offer financial coverage to the claimant in return for a premium amount, which is directly linked with the age of the policyholder. That means, the older you opt for a term plan, the higher premium you have to pay.

    To get a clear picture about how age affects the premium amount, refer to this age slider.

    As Age Grows Term Insurance Premium Also Increases
    Premium: Rs.900/month
    Age: 25

    *Note- Premium in the above image is calculated from ICICI Prudential's website, for a fixed sum assured of Rs. 1 crore and for a duration of 30 years.

  2. Gender

    According to surveys done in India, women have a life expectancy of 70.4 years, while men have a life expectancy of 67.8 years. This means, women live longer than men as per statistics. Fortunately, insurance companies work on risk-based pricing. Therefore, women have to pay a lower premium as compared to men.

  3. Coverage & Term

    The higher the coverage you choose, the higher premiums need to be paid. This applies to a longer policy period as well.

  4. Self & Family Health History

    If the policyholder has a history of health issues such as diabetes, high blood pressure, among others, then the insurance companies charge a higher premium amount. Moreover, the company may charge higher premiums if one has a family history of critical illness.

  5. Profession

    Your work profile is also one of the significant factors that determine your premium amount. For example, if a policyholder is employed in a high-risk work profile (for example mining, etc), there is a greater risk of injuries/illnesses. So, the insurance company will charge a high premium in return for the policy.

  6. Lifestyle

    The way you live your life affects the term insurance premium. For example, if you are a regular smoker/drinker, you have to pay a higher premium. Infact as per PolicyX.com Term Insurance Price Index, the average male smoker pays 57% higher than a non-smoker while a female smoker pays 57% higher than a non-smoker.

Benefits of Term Insurance Plan

Term insurance plans offer a variety of benefits to the policyholders. Let's have a look at those benefits-

Financial Protection

Financial Protection

In case of your unfortunate demise, your family will receive the sum assured, which will help them to fulfill their financial requirements. You can also opt for a monthly income benefit so that instead of lump-sum amount, your family will get a monthly payout.

Higher Sum Assured with Low Premium

Higher Sum Assured with Low Premium

Term insurance plans are available at a very nominal cost. It may be as low as some hundreds or thousands per month. As compared to that, the sum assured can be in lakhs and crores (depending on the customization of policy options).

Lifetime Cover

Lifetime Cover

Generally, term insurance plans offer coverage until 65 years. However, there are a few life insurance companies, which provide coverage for 100 years as well. So, if you buy a term plan at an early age, you and your family can enjoy its benefits for a long time.

Multiple Death Benefit Payout Options

Multiple Death Benefit Payout Options

A term insurance plan lets you choose your death benefit payout as per your needs and requirements. One can choose from Lump-sum payment, Monthly Income, Lump-sum + Monthly Income, and Increasing Monthly Income.

Tax saving

Tax saving

Yes, this is an additional benefit of investing in a term insurance plan. On buying the same, you are liable to get tax benefits under section 80C and 10(10D) of the Income Tax Act, 1961

Additional Riders

Additional Riders

To enhance the overall protection, you can add several riders to your term insurance plan. 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 Rider- This rider covers many illnesses that are deadly in nature. The insurance company provides coverage against all the hospitalization expenses in the form of a lump-sum payment.
  • Accidental Death Rider- This rider provides coverage against accidental death. When you opt for this rider, your insurance company will offer the sum assured along with the rider benefit to your nominee.
  • Accidental Disability Rider- This rider provides coverage against any partial or permanent disability arising due to an accident. Under this type of rider, full sum assured amount is offered to the policyholder in case of total disability and partial disability gives partial sum assured.
  • Terminal Illness Rider- With this rider, the policyholder gets early access to some or complete sum assured amount in case (s)he is diagnosed with an incurable illness
  • Premium Waiver Rider- As per this rider, all the future premiums are waived off if the policyholder is disabled, critically ill, or dead.

Exclusions

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 under a term insurance plan-

  • Consumption of drugs/liquor.
  • Complication due to pregnancy/childbirth.
  • Act of criminal nature.
  • Suicide (within 1 year of issuance of the policy).
  • War or involved in a hazardous activity.

Types of term insurance plans

There are various types of term insurance plans available in the market, all of which are designed to suit different needs of the customers. Given below is a list of the common types of term insurance plans:-

  1. Level Term Plan

    It is the simplest plan of the lot. Under this, there is no change in the sum assured and the nominee will reap the benefits once the insured is dead. For example, if someone buys a cover of Rs.1 crore, it will remain constant throughout the policy term. This type of plan is offered by almost every insurance company and is available in Pan India.

  2. Term Return of Premium plan (TROP):

    TROP is a term plan that comes with an option of 'Return of Premium'. The best part of the TROP plan is that it assures maturity benefits. The policy turns out to be beneficial if the insured survives the term of the policy. This type of term plan is best-suited for those who want their paid premiums back at the end of policy term.

  3. Increasing Term Insurance Plan

    Under this type, the sum assured will increase annually by a certain percentage pre-specified by the insurer and the premium will remain the same. This plan is launched keeping in mind the growing rate of inflation. For example, Mr. Ankur buys an increasing term insurance plan for 20 years that offers a 5% rate of increase in the sum assured. With every year, the sum assured will increase by 5%

  4. Decreasing Term Insurance Plan

    It is a renewable term insurance plan. Under this, the sum assured is decreased every year by a pre-specified percentage. This plan is usually issued by banks to recover the loan and clear all the debts. For example, Mr. Ankur buys a decreasing term insurance plan for 20 years that offers a 5% rate of decrease in the sum assured. At the end of each year, the sum assured reduces by 5%.

  5. Group Term Insurance Plan

    It offers coverage to a group of employees under a single policy. Usually these plans are purchased by companies for thier employees.

  6. Joint Life Term Insurance Plan

    Here, you can cover yourself and your spouse under the same plan. In the unfortunate event of anyone's death, the surviving partner will receive the death benefit as per the plan's TnCs.

Term Life Insurance Plans By The Government Of India

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.

  1. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

    The Pradhan Mantri Jeevan Jyoti Bima Yojana is a life insurance policy that can be renewed on an annual basis by policyholders.

    Key Features:

    • This policy offers a life cover of Rs. 2 lakhs.
    • The premium charged for this plan is Rs. 330 per annum.
    • Individuals between 18 years and 50 years can purchase this policy.
    • Tax benefits can be availed as per the prevailing tax laws
  2. Aam Aadmi Bima Yojana

    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.

    Key Features:

    • To subscribe to this scheme, members need to be between 18 years and 59 years.
    • The initial premium that will be charged for this scheme is Rs. 200, out of which 50% of the premium amount will be subsidized from the Social Security Fund.
    • This scheme also provides accidental death/disability benefits and a scholarship benefit.
    • This scheme is available to people who belong to rural landless household (RLH) and are from below poverty line (BPL) family.
  3. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

    Pradhan Mantri Suraksha Bima Yojana was announced by the Government of India in the 2015 budget.

    Key Features:

    • People within the age group of 18-70 years having individual bank accounts whether single or joint account status, are eligible for this policy.
    • The policy offers coverage worth Rs.2 Lakh against accidental death and full disability and Rs. 1 lakh for partial disability.
    • The term of the policy is one year and can be renewed annually.
    • A premium amount of Rs. 12 per annum is deducted from the policyholder's bank account through ‘auto-debit' facility in one installment.

How to Choose a Right Term Insurance Plan?

Selecting a term insurance plan that suits your needs perfectly is not an easy task. There are various factors which you must consider when choosing a plan for yourself and your family. To make the process a little easy for you, we've listed down the steps which will help you in choosing the right term insurance plan:

  1. Assess your financial needs:

    The first and the foremost step while choosing a term cover is to assess your coverage needs. One of the most important factors which you must keep in mind while determining your financial requirements is to opt for coverage that will be able to meet the financial requirements of your family in future.

  2. Select a coverage amount:

    One of the most important parts of a term insurance plan is the coverage amount which you opt for while taking the plan. This is because the amount that you select today is what your family will receive in future as a death benefit in case of your demise. That is why, it is extremely important that you must decide a coverage amount carefully. There are a few factors that you must consider while determining the right coverage amount for yourself. Given below is a list of those factors:

    • Annual Income: If we listen to the industry experts, the thumb rule for choosing a term cover must be 15-20 times of your annual income. For example, if your annual income is Rs.5 lakhs, your choice of minimum cover should be Rs.75 lakhs-1 crore.
    • Lifestyle: Your lifestyle also plays an important role while deciding your term insurance cover. For example, if you work in a high-risk environment or live a non-healthy life, the risk of your health deteriorating is higher. Therefore, you should go for a higher cover.
    • Responsibility: If you are the only breadwinner, then your death could cause serious financial crunches in your family. Thus, to provide your family with ample funds, make sure to opt for a high sum assured.
    • Liabilities: If there is a loan hovering over your head, your immediate demise can put a lot of heat on your family. Therefore, it's better to buy a term plan with ample coverage for your family's financial safety.
  3. Check the tenure period:

    The next step after selecting the coverage amount is deciding the tenure period of the plan. This decision should be solely based upon the age upto which you want the life insurance cover. Most people recommend buying coverage upto the retirement age or 65 years of age

  4. Select a trusted Insurance Provider:

    Before taking a plan, it is important to make sure that the insurance provider you select has a good financial background and reputation in the market. Claim settlement ratio (CSR) is the most useful parameter in this regard. It shows the percentage of claims settled by the insurance company in a given specific year against the number of claims filed by the policyholders. It is always advisable to select an insurance company that has a high claim settlement ratio.

    For your convenience, we've listed below the claim settlement ratio of all 24 Life Insurance Companies in India as per the IRDAI report of 2019-20.

    S.No Insurance Company Claim Settlement Ratio 2019-20 (in %)
    1LIC96.69
    2HDFC99.07
    3SBI Life Insurance94.52
    4ICICI Prudential97.84
    5Max Life Insurance99.22
    6Bajaj Allianz98.02
    7Kotak Mahindra96.38
    8Aditya Birla97.54
    9Tata AIA99.06
    10India First96.65
    11PNB Met life97.18
    12Canara HSBC OBC98.12
    13Reliance Nippon98.12
    14Exide Life Insurance98.15
    15Bharti AXA97.35
    16Star Union96.96
    17Future Generali India95.28
    18Shriram General Insurance Life Insurance91.61
    19IDBI Federal96.47
    20Pramerica Life Insurance98.42
    21Aviva Life Insurance97.53
    22Aegon Life Insurance98.01
    23Sahara Life Insurance89.45
    24Edelweiss Tokio83.44
  5. Check for add on benefits or riders:

    As we've already discussed in the previous section that there are a variety of riders and add on benefits available within the term insurance plan, it is suggested that you should check for such riders and opt for the ones that suit your needs the best.

  6. Choose a payment option

    There are three broad types of premium paying options available within the term plan- Limited pay, Regular pay and Single pay. Each of these options has its own advantages and drawbacks and that is why, it is important that you must carefully select a payment option while taking a term insurance plan. To help you make an informed decision, we've discussed below the types of premium payment options-

    • Regular premium payment option: Under this payment option, the policyholder is required to make periodic payment of the premium amount in monthly, quarterly, half yearly or yearly mode. Usually, the majority of people prefer taking a regular payment option as paying premium at fixed intervals becomes more convenient and affordable in the long run. This payment option is best for the people employed under fixed salaries.
    • Limited Payment option: As the name suggests, a limited payment option allows the policyholder to pay the premium for their entire policy term in a limited period of time, such as 5 or 10 years. This means that the policyholder can pay the premium within a short time period and enjoy the insurance benefits for a long time. If you're a business person and have chances of witnessing a sudden increase in your income, then this payment option can work the best for you. Also, you can opt for this option if you don't prefer paying premiums for a longer period of time.
    • Single Payment options: With a single premium payment option, the policyholder is required to make a one-time complete payment of the entire premium amount of the plan. Generally, this payment method is very less chosen since many people find it a financial hardship to pay the entire premium in one go. Also, it is often suggested by the financial advisors that the single premium payment option costs policyholders much more than other payment modes as inflation changes the value of money in the longer run.
  7. Select a payout option

    While signing up for the policy, you'll be required to choose a payout option. It is important that you must select a payout option carefully because this is how death benefit will be paid out to your family in future. Generally, there are 4 types of death benefit payout options available. We've given a brief description about these types in the section given below:

    • Lump-sum Payment: Under this option, the claimant's family will receive the lump sum amount. For example, if the policyholder has chosen a sum assured of Rs. 1 crore, then the lump sum amount of Rs. 1 crore will be paid to the claimant.
    • Monthly Income: With this option, the beneficiary will receive the total sum assured in monthly installments. For example, if the sum assured is Rs. 1.2 crores, then the family of the policyholder will receive Rs.1 lakh/month for 10 years.
    • Lump-sum + Monthly Income: With this option, the beneficiary will receive 50%-70% of the assured amount (in a lump-sum) just after the death of the insured, and the rest of the amount is paid through monthly installments. Suppose the policyholder has chosen a sum assured of Rs. 1 crore and has opted for 50%-50% of lump-sum and monthly installments. On his death, the family of the policyholder will receive Rs.50 lakhs and the remaining amount will be paid in monthly installments.
    • Increasing Monthly Income: Under this option, the beneficiary will get the total sum assured in increasing monthly installments. The installments increase @10-20% (yearly) to help the dependents fight inflation. For example: If the policyholder's family gets Rs.1,00,000/month, and the increasing percentage is 10%, then from the next year, the family will receive Rs.1,10,000/month.
  8. Compare premiums and buy online

    There are a variety of term insurance plans available in the market nowadays. Selecting the best plan for yourself out of this wide variety of options often becomes a bit puzzling for the customers. That is why, it is best to compare the plans first and then select the one which suits your needs perfectly. For easy and quick comparison of insurance plans, visit our Term Insurance Calculator page.

Term Insurance Plans for Coronavirus

Given the cases of coronavirus increasing worldwide, everyone is concerned about having insurance that provides coverage against death due to covid. Well, there's good news for all such people. Nowadays, all the existing/new life insurance policies provide coverage against deaths resulting due to coronavirus. 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.

How To Compare & Buy Term Insurance From PolicyX.com?

PolicyX.com has designed a simple process to buy term insurance online. Here are the steps-

Step 1

Scroll-up to the top-right corner of this page and find 'Compare Term Insurance Plans Online'.

Step 2

Enter the required details and click on 'Continue'.

Step 3

Submit your income, city, and click on the 'Proceed' tab.

Step 4

The next page will show various term plans offered by different insurance providers. You can check out the features and benefits of each of them.

Step 5

Buy a suitable plan by clicking the 'Buy' tab.

Step 6

Make the payment and you will receive the soft copy of your policy on your registered email id.

What All Documents Are Required To Buy A Term Insurance Plan?

Salary slips or income tax returns from the last 3 years.

Form 16 (salaried professionals) and Form 16 A (self-employed).

Passport size photo

Identity proof such as Aadhar card

Others requested by the company

How To Get A Successful Claim In Term Insurance?

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

  • Policy document in original.
  • Claim form issued by the insurance company.
  • Application from the claimant.
  • Any other documents required by the insurance company.

Case 2: Accidental Death

  • Post Morterm report of the accident.
  • FIR report of the police.
  • Policy document in original.
  • Claim form issued by the insurance company.
  • Statement of attending doctor or certificate of medical attendance.
  • Any other documents required by the insurance company.

Case 3: Death Due to Sickness

  • Original discharge summary from the hospital.
  • Supporting medical reports.
  • Policy document in original.
  • Claim form issued by the insurance company.
  • Application from the claimant.
  • Any other documents required by the insurance company.

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.

Term Insurance Claim
Active Cases India : 3353765*              Cured / Discharged : 21596512*              Confirmed Deaths India : 278719* coronavirus term insurance plans

FAQ's

To invest in a term insurance plan, the minimum age should be 18 years and the minimum income should be 2 Lakhs.

No. Deaths under 'Act Of God' are not covered by term insurance policies.

Under Section 80C of the Income Tax Act, 1961, you can avail deductions up to Rs. 1.5 lakhs.

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).

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.

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.

Smokers are at a higher risk of getting ill as compared to non-smokers. That's why insurance companies charge higher premiums from them.

Yes, insurance companies offer term insurance plans, which are specially designed to fulfil the needs of NRIs.

Yes. Once the policy is in effect, death of the policyholder (irrespective of the place) will be taken into consideration and the coverage amount will be given.

No, the duration of life cover cannot be changed once the policy is issued. It is set at the inception of the policy.

Yes, some term plans allow you to increase the sum assured during different life stages. However, this depends on the plan's TnCs.

No, under the current guidelines issued by IRDAI, one can't port his/her term 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.

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.

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).

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.

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).

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.

Naval Goel

Reviewed By: Naval Goel

Naval Goel is the CEO & founder of PolicyX.com. Naval has an expertise in the insurance sector and has professional experience of more than a decade in the Industry and has worked in companies like AIG, New York doing valuation of insurance subsidiaries. He is also an Associate Member of the Indian Institute of Insurance, Pune. He has been authorized by IRDAI to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.

Find Out What PolicyX.com Customers Says

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May 12, 2021

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Delhi

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May 12, 2021

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May 10, 2021

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Bengaluru

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April 29, 2021

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April 29, 2021

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Dehradun

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Last updated on 18-05-2021

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