A term insurance plan becomes necessary if you have dependents waiting at home. It is a type of life insurance that individuals can purchase for their own life. Under the policy, the individual selects a particular tenure and sum assured. The insurance company pays the deceased's family the chosen sum assured if the life insured passes away during the plan's term. It is a perfect plan wherein the family can cope with their financial loss thanks to this lump sum payout.
Benefits & Features of Term Insurance Plan
There’s no denying that term insurance policies come with many benefits and features, making them one of the most bought life insurance products.
|
Basis |
Features & Benefits |
|
Low Premium |
With a term insurance plan, you can have a substantial sum insured at a reasonable premium cost. In addition, you will pay a cheaper premium if you buy sooner. |
|
Tax Benefits |
Tax advantages are one of the main advantages of term insurance. Sections 80C and 10(10D) of the Income Tax Act of 1961 provide exemptions for the payment of premiums for term insurance policies as well as the proceeds received upon death. |
|
Financial Protection |
The insurer will give the policyholder's family a periodical payout or a lump sum of the predetermined sum assured amount in the event of the policyholder's passing. |
|
Add-ons |
By adding a number of optional riders to their current term insurance plan, the insured can increase the coverage benefits of the plan. The term insurance optional riders are useful, as they make it comprehensive coverage at a low premium. |
|
Critical Illness Coverage |
You will get a lump-sum payment upon diagnosis of any critical illness covered by your term insurance plan if it has optional critical illness coverage. |
How Does a Term Insurance Plan Works?
To make it easier for you to understand, we are providing you with the term insurance product cycle.
- Buy Term Insurance Plan: Let's say you are 35 years old and have a 1 crore term insurance policy for the next 50 years. You pay 25,000/- in premiums each year.
- Unfortunate Incident Takes Place: Your family will receive INR 1 crore if you pass away at any time in the following 50 years.
Eligibility Under Term Insurance Plan
Having a term insurance plan is good, but you must be eligible to buy one. We have listed down the eligibility criteria for term insurance in India.
|
Basis |
Eligibility |
|
Age |
`18 years to 65 years |
|
Term of the Policy |
3-5 years, depending on the life insurance company |
|
Pay-out options |
One-time payment, monthly payments, or annual payments |
|
Maximum Policy Limit |
There is no cap however it depends on the life insurance provider |
Best Term Insurance Plans in India in 2023
Here is a list of the best term insurance plans available in India from some of the best term insurance providers in the country based on key characteristics.
|
Name of the plan |
Claim Settlement Ratio (CSR 20-21) |
Sum Assured |
|
Max Life Smart Secure Plus Plan |
0.9935 |
25 Lakhs to 3.5 Cr |
|
Bajaj Allianz Smart Protect Goal |
0.9848 |
50 Lakhs to 10 Cr |
|
HDFC Life Click 2 Protect Life |
0.9801 |
50 Lakhs - Unlimited |
|
PNB MetLife Mera Term Plan Plus |
0.9817 |
25 Lakhs to 2 Cr |
|
Aditya Birla Life Shield Plan |
0.9804 |
50 Lakhs to Unlimited |
|
Tata AIA Life Insurance Sampoorna Raksha Supreme |
0.9802 |
50 Lakhs to No-Limit |
|
Kotak e-Term Plan |
0.985 |
25 Lakhs to No-Limit |
|
ICICI Pru iProtect Smart |
0.979 |
50 Lakhs - Unlimited |
|
SBI e-Shield Next |
0.9309 |
50 Lakhs - Unlimited |
|
Edelweiss Tokio Total Protect Plus |
0.9701 |
25 Lakhs to No-Limit |
*CSR data has been fetched from IRDAI Annual report 20-21
Disclaimer: We D2C Insurance Broking Private Limited (“RenewBuy”) does not endorse any specific insurance company or insurance product offered by any insurer and this list is just an illustration of the plan offered by different life insurance companies.
How to Select the Best Term Insurance Plan?
With so many options to choose from, how would someone select the best term insurance plan? Different factors play small roles that might affect our decision-making, such as:
- Your Needs: The most important thing is to understand your needs. Once you know what you want from the term insurance plan, things will get more clear.
- Cover Amount: Calculate an appropriate cover amount based on your age, financial obligations, future needs of your family, present debts, and possible inflation.
- Select a Policy Term: You can select a policy term from insurers, depending on your age, choose the term. Consider a policy term of about 40 years, for instance, if you are in your early 20s.
- Select Easy Payout Option: Choose a payout option that you can afford to pay because it will determine how much the premium will be.
- Add a Rider: Choose add-on riders carefully to achieve your goals in the event of disability, loss of employment, life-threatening illnesses, etc. for better financial protection.
Term Insurance Premium
Consider the coverage that would suit both your personal obligations and financial goals when purchasing a term plan. The term insurance premium you will pay for the selected level of coverage is determined based on your:
|
Basis |
Meaning |
|
Age & Gender |
The calculation of your premium varies on the basis of your age & gender. |
|
Policy Term & Cover |
Both of these factors will change the amount of premium. If you are opting for higher coverage, you will have to more premium. |
|
Lifestyle |
Some of us have smoking & drinking habits that become a part of our lifestyle. These factors can significantly change the amount of premium. |
|
Occupation |
If the nature of your job is hazardous/ dangerous, your premium will be more. |
|
Medical History |
Some the diseases like Diabetes, Thyroid, etc are related to genes, so medical history becomes a key factor when determining the premium. |
Documentation Needed to Purchase a Term Policy
Some of the important documents needed to buy a term insurance policy is listed below:
- Identity Proof
- Age Proof
- Address Proof
- Proof of Income
- Medical Reports
- Recent Photographs
Term Insurance Plan Renewal
You will be required to pay the premium payments to your insurance provider in accordance with the premium payment schedule. Insurance companies typically give policy buyers a 15 or 30 days grace period during which they can pay the premium amount without incurring any additional interest fees. However, your policy will expire if the due premium amount is not paid before the grace period expires.
You must pay all outstanding premiums beginning on the date of the first unpaid premium and the applicable interest rate to reinstate a lapsed policy. Additionally, if your policy has been inactive for some time, your insurer may need you to have a medical exam to demonstrate your insurability.
Term Insurance Claim Process
The family members, beneficiaries, or nominees must notify the insurance company as soon as possible in the event of the policyholder's untimely death. Delays will only make the claim settlement process more challenging.
Step 1: Fill and Submit the claim form.
Step 2: Attach all the relevant documents
Step 3: Once the request for claim settlement is received at the insurer's branch or Claims cell, the claim will be properly registered.
Step 4: Documents will be verified by the life insurance company
Step 5: If everything is in order and your claim is approved by the insurer, the reward will be paid out.
Best Term Insurance Plans in India FAQs
Section 80D provides tax benefits to policyholders who have a term insurance plan. If the policyholder has a term insurance policy with health riders, he or she can deduct the premiums on those riders under Section 80D.
Yes, you can buy a term insurance policy for your spouse and pay the premiums. You will be the policyholder in this situation, and your spouse will be the life assured.
Yes, you would still need to declare yourself as a tobacco user.
Yes, you can claim term insurance from two companies as long as you have fully revealed the previous policy to the other insurer from whom you have obtained the second policy.
While the minimum age for purchasing a term plan is 18 years old, the maximum age varies according on the insurer, term plan selections, and other criteria.
Disclaimer - The information published in this article is for the reader′s reference only. The content of this information is to provide an overview of your life insurance needs and should not be relied upon for personal, medical, legal, or financial decisions; you should consult an appropriate professional for specific advice. The Company makes no representations about the suitability, reliability, timeliness, and accuracy of the information, services, or any other items mentioned on this subject for any purpose whatsoever.