Term Insurance

When it comes to assuring a pure life cover, nothing suits better than having the best term plan in India in place. Term insurance plan does not include any savings or profits component and, hence, are considered the most basic form of life insurance. Term insurance plan in India is comparatively inexpensive and affordable when compared to any other form of financial instrument. Opting for them enables policyholders to opt for an adequate amount of life cover in lieu of nominal premium charges.

Term Insurance

To know the right life insurance cover, please fill the details below and our policy experts will get in touch with you


What is Term Insurance?

Not many people are aware of the concept of term insurance in India or how the term insurance plan operates. Term insurance or term life insurance is actually a kind of life insurance that guarantees coverage to the insured for a certain specified period that may extend to 10, 20, 30 years or even more depending on the extent of cover the policyholder is looking for. If the insured dies during the policy period, then the insurance company is liable to hand over the sum assured to the nominee(s) as mentioned in the policy proposal. This is, however, subject to the condition that premiums have been paid regularly and the policy is in force.

The amount of sum assured or death benefits are predetermined while buying the term plan in India. Though many people choose a sum assured equal to 12-15 times their annual salary, the ideal way is to take into account lingering debts like home loans, nature of investments made, other sources of income, children’s education and marriage and the kind of lifestyle family members are used to. Including a term insurance plan in your investment portfolio implies that your loved ones are assured of death benefits either in a lump sum or as regular payments for a definite period.

Reasonably priced and straightforward, term insurance is the best and simplest kind of life insurance that continues to cover and protect your loved ones even when you are not there. Term insurance scores over other life insurance options and fiscal instruments as it is:-

  1. Hassle-free in contrast to other investment options
  2. Much cheaper than any life insurance policy
  3. Greater life cover at low premium rates
  4. Rider options available to enhance the utility of the best term insurance plan
  5. Flexibility to enhance the life cover during critical stages of the policyholder’s life
  6. Paying premiums equivalent to the coverage required.

List of Best Term Insurance Companies in India 2021

Below we have listed the most popular life insurance companies in India to buy the best term insurance plan according to your financial needs:-

  1. ICICI Prudential Life Insurance
  2. Kotak Life Insurance
  3. SBI Life Insurance
  4. Aditya Birla Sun Life Insurance
  5. Canara HSBC OBC Life Insurance
  6. HDFC Life Insurance
  7. Aegon Life Insuranc
  8. Max Life Insurance
  9. Aviva Life Insurance

List of Best Term Insurance Plans in India 2021

While buying term insurance, many people inquire about the best term insurance plan in India. It is important to seek information about the various kinds of term plan being sold by insurance companies in India, the nature and extent of benefits they provide and their corresponding premium charges. While term insurance plan in India is compared based on myriad attributes and features, many people prefer to contrast the plans based on their claim settlement ratio in the past.

Insurance PlansClaim Settlement RatioAnnual Premium Charges (Rs.)Sum Assured AmountMaturity Age (Max. Years)
Max Life Online Term plan plus99.22%19,599Min: Rs. 50 Lakhs
Max: No Upper Limit
Tata AIA Sampoorna Raksha Term Plan99.06%14,101Min: Rs. 50 Lakhs
Max: No Upper Limit
HDFC Life Click 2 Protect Plus Term Plan99.04%11,318Min: Rs. 25 Lakhs
Max: No Upper Limit
Aegon Life iTerm Insurance Plan98.01%10,252Min: Rs. 25 Lakhs
Max: No Upper Limit
SBI Life e Shield Plan95.03%11,778Min: Rs. 35 Lakhs
Max: No Upper Limit

Note – The claim Settlement Ratio mentioned against the Term Plan of HDFC and SBI is for FY 2018-19, while the data for other plans pertains to FY 2019-20.

Why Should You Buy Term Insurance Plan?

Term insurance plan in India bought early incur low premium charges. Moreover, the term plan does not include any waiting period clause which means that one is covered from the day of paying the first premium amount. Life’s uncertainties may manifest themselves as chronic disorders or sudden accidents leading to permanent disability or death. It is important to secure cover that helps your loved ones face the hurdles of life with essential financial support. If you have started working, it is important that you consider the idea to create additional financial support apart from your daily savings for your dependents. Buying a term plan is the best way to allocate a small part of your earnings towards availing prolonged monetary protection to family members dependent on your income.

The multiple benefits associated with the early purchase of the best term insurance plan explain why one should buy term insurance. Some of them include:-

Higher Premium With Growing Age – The risk of diseases rises with growing age. Growing old is synonymous with critical disorders while sedentary habits contribute to lifestyle problems. Since the probability of diseases is low in young people, insurance companies charge lower premiums compared to middle-aged and old customers who opt to buy term plan during the later stages of their lives. Selecting or buying term insurance early relieves customers from the risk of having to pay higher premium rates down the line.

Providing Much-Needed Protection to Your Dependents – Irrespective of gender or age, the sudden death of an earning member results in loss of income for the family, thus, causing unforeseen financial strain. Moreover, your family will have to bear the brunt of paying off any loan that you may have taken when alive. Investments made for a specific period bear profit only after a certain period. The mar of paying off for daily expenses including children’s education can prove to be back-breaking in the long run. Having a term insurance plan in India in place means that your dependents are handed over the amount of sum assured by your insurer, thus, relieving them from day-to-day monetary constraints. You may either opt for a lump sum payment of death benefits or in regular monthly instalments over a span of few years depending on the requirements and financial acumen of your loved ones.

A Stress-Free Future – Your career trajectory has a lot to do with the financial goals you have in mind. Many people take loans to get married, have children, buy a house or pay for a car. These are major milestones in one’s life that necessitate a sufficient amount of money and continued savings to ensure timely repayment of debt stemming from loans. However, unfortunate events like death or disability can undo all your aims as your loved ones realize that they are not left with enough money to meet daily expenses, leave alone reimbursement of the liabilities incurred by you.

Opting for term life insurance that would take care of the financial needs of your dependents even in your absence ensures that family expenses and loans are taken care of. Also, term insurance comes with an added benefit that you can increase or decrease the amount of coverage depending on your needs. You may opt for a level term plan, term return of premium (TROP) insurance, increasing term insurance or decreasing term insurance depending on your requirement. Increasing and decreasing term insurance allow you to augment or lessen your coverage levels at important stages of life like marriage, children and complete relief from loans.

Tax Saving Measure – Saving money can also help you to grow your earnings. This explains why we plan our investments in a way so that we may save on paying taxes. A buying term plan can be an excellent tax-saving measure. Under Section 80C of the Income Tax Act 1961, premiums paid towards term insurance are deductible from income to the tune of Rs. 150,000. Apart, the sum assured handed over to your nominees in the event of your death is exempt from tax under Section 10(10)D of the Income Tax Act. However, the latter tax benefit is subject to the condition that the annual premiums paid towards term insurance must be less than 10 per cent of the amount of sum assured.

Since the term plan is the simplest kind of life insurance one can buy, early purchase of the same is advised. Many people tend to postpone the decision of buying term insurance as they consider it as an unnecessary expenditure as opposed to a necessary financial instrument. Online shopping habits are becoming increasingly pervasive and the same holds true for those looking to buy online term insurance. To ensure prolonged cover and security, it is important that you must buy term insurance today.

What are the Benefits of Buying Term Insurance Plan?

Bad news never had good timing, and this can be rightly said about death. The uncertainties of life prompt us to create a kind of cover that would continue to secure our loved ones against any kind of financial constraint stemming from the loss of income due to sudden death. While many people continue to pile up on their savings and investments in the hope of establishing a sound fiscal future for their families, there are others who pursue the idea of buying the best term insurance plan in India.

Some people wrongly assume that term life insurance is an unnecessary expense. Very few realize how paying for a term plan can go a long way in mitigating the financial risks associated with a family member’s death or disability. The key benefits of having the best term insurance policy in India include:-

Simplicity is the Hallmark of a Term Plan – Unlike most financial instruments, where people have to determine the savings and investment components and the complexities that go into earning returns at the end of the investment term, term plans buyers do not have to worry about the market movements governing the quantum of returns. Term insurance is associated with pure risk cover. This means that in return for regular premium payments, the life of the policyholder is financially secured throughout the entire policy period.

Higher Life Cover at Low Premiums – Compared to most investment options or monetary plans, a term plan is relatively inexpensive. The foremost benefit of buying any term plan insurance is that it is cheap. The premium charges get reduced further if bought online. Term plan proves to be cheaper if bought early. This explains why today’s youth is advised to start looking for an adequate term policy, that suits their needs and budgetary requirements after they get a job.

Assured Death Benefits – According to any term insurance proposal, the insurer promises to pay the nominee(s) of the policyholder a sum assured in the event of the latter’s death during the policy period. The amount of sum assured, also called death benefits, is predetermined while buying the policy. The nominee may be handed over the money in a lump sum or as monthly payments or a combination of both depending on the terms and conditions included in the policy.

Term Insurance Rider Options – Term insurance in India, in itself, may prove to be a sufficient financial cover for most people. However, some prefer to enhance the nature and extent of financial cover by opting for riders that can be availed by paying an amount over and above the basic premium amount. These riders promise an additional amount on death or disability due to accident or waiver of premiums due to critical illness or dismemberment in an accident. Some insurers also have the option of Income Benefit rider, which assures income creation even after the policyholder’s death. With this rider in place, the nominee(s) of the insured continues to get an additional amount per year for the next five to ten years in addition to the promised amount of sum assured.

Dual Income Tax Benefits – Many people without realize the actual significance of buying term plan pay for them only to avail of tax benefits. Term life policies, in addition to keeping a family secure on a financial footing, ensure dual tax benefits too. While the premiums paid towards the policy are deducted from the income earned under Section 80C of the Income Tax Act 1961, the death benefits received by the dependents are exempt from tax under Section 10(10D).

Major Features of Buying Best Term Insurance Plan in India

Simply said that term insurance is nothing short of a cover that makes up for the financial loss in the face of life’s uncertainties. As life continues to mauled by myriad risk factors including death, disability, and disease, it becomes important to buy a term plan that serves as the purest form of life insurance. Listed following are major features of term life insurance plan in India that elucidate on why term insurance continues to be the most effective and sought-after insurance product in the country.

Affordability – The affordability of term plan is its most attractive feature. More so, because term insurance promises a guaranteed life cover in lieu of nominal premium payments. Unlike most other life insurance products, term plan acts as a pure risk cover in which the insurance company is liable to pay the sum assured, also called death benefits, to the nominee(s) in the event of the policyholder’s death during the term of the policy. Since the nominee(s) of the policyholders can only lay claim to the death benefits promised, the premium charges are much lower, thus, making this plan affordable.

Ease of Buying the Term Plan – Unlike market-linked products whose returns depend on market movements, term plan promise only death benefits. Buying term insurance plan is comparatively easier than any other kind of life insurance product or monetary instrument. There is no savings or investment component in term insurance. The entire amount of premium goes towards payment of mortality charges in addition to the administrative costs for policy issuance. The simplicity of this plan explains its ease of buying as customers do not have to align this policy with their financial objectives. Instead, people buy this policy to protect and preserve the financial future of their loved ones.

Also, the web has made it possible for insurance companies to upload details of their products on their respective sites while tying up with online insurance aggregators who sell their products on their portals. Buying online insurance is cheaper as opposed to offline insurance purchase as the former is bereft of expenses on agents’ commissions or other operational expenses. This explains why online term plans are nearly 10-20 per cent cheaper than their offline counterparts. Also, the online version is a paperless process and, hence, completely hassle-free in nature, thus, ensuring ease of buying for interested customers.

Varied Payout Options – Most private insurance companies in India promise lump-sum death benefits in a claim to the loved ones of their policyholders. However, ensuring a lump sum amount after death is not enough. You need to be sure that your nominee(s) or dependent(s) have the necessary financial acumen to deal with such a huge amount of sum assured. Keeping this in mind, many insurers now offer the option of allowing staggered claim payout which means that only a part of the sum assured is paid in a lump sum while the rest of the amount is paid in equal instalments over a period. While the partial lump-sum payment enables the nominee(s) to pay off any lingering debt or loans that had been taken by the insured, the staggering payouts ensure that the daily expenses of the dependents are met till they do not gain enough financial independence on their own. The policyholder has to take the option to take a staggered payout while buying the policy.

Premium Paying Flexibility – Insurance companies offer their customers the flexibility to pay premiums to be it yearly, half-yearly, quarterly or monthly. And there are others too that require their customers to pay premiums only once during the policy period or allow the benefits of making limited premium payments. Premium paying flexibility allows the policyholders to choose the payment options based on their budgetary needs and convenience of paying towards the policy.

Return of Premiums Option – Many people are apprehensive of buying term plan as they assure only death benefits in case the policyholder dies during the policy period. This has led to many insurance companies selling new-age term insurance plan in India that allow the option for policyholders to claim maturity benefits in case they survive the policy period. These plans also called term return of premium (TROP) policies that allow policyholders to claim back the entire amount they had paid as premiums towards the term plan. These plans, however, cost more than the vanilla term plan as the former offer maturity benefits in addition to death benefits. The payout at maturity is different across different term plans sold by insurers in India.

Healthy Habits Awarded With Discounted Premiums – Opting for a higher sum assured does not imply more premiums. In fact, many insurance companies in the country charge lower premiums for higher amounts of life cover promised. Also, customers with smoking and drinking habits are required to pay greater amounts of premiums as the risk associated with their lives are more. This implies that insurers prefer to award their non-smoking and non-drinking customers by charging them with lower premium rates. Most working women do not realize that their untimely deaths can cause a financial dent in the lives of those dependent on their incomes. To promote the idea of buying term insurance policy among working women, many insurance companies charge fewer premiums from women inclined to pay for term plans to ensure a secure life cover for their loved ones.

How to Choose Best Term Insurance Plan in India

With so many insurance companies in India selling myriad kinds of term plans, it is difficult to pinpoint that one particular kind of term insurance policy in India that would fit in perfectly with our needs and budgetary constraints. Different families in the country have different financial coverage needs. Depending on the extent and nature of responsibilities, burden of debt and current financial condition, one may choose between level term plans, increasing or decreasing term life insurance, term return of premium (TROP) policies, and monthly income term plan insurance.

Premium charges also matter as the insurance company is liable to pay death benefits to the nominee(s) of their customers subject to the conditions that premiums have been paid regularly throughout the entire policy period and the policyholder had died during the term mentioned in the policy document.

The best term insurance plan in India need not be the one that your peers rave about but the one that you have bought after a careful analysis of your loved ones’ financial requirements in your absence. However, looking at the following tips may enable you to understand how to choose and buy from some of the top term insurance plans that make up for the loss of income in case of your sudden and unfortunate death. These include:-

Evaluate Your Dependents Family Members Long-Term Financial Needs

Assess your family’s need for financial coverage in the long run. While calculating the amount of sum assured, keep in mind your loved ones’ future needs, unpaid loans and debts, children’s education and marriage and the amount your family would need to run its daily expenses. Term plan in India are cheap in nature and, hence, opting for a higher coverage amount must not be a problem. For those who find it difficult to estimate the sum assured with the aforementioned methods, the thumb rule says to either determine the amount equal to 12-15 times your annual expenses or arrive at the amount equivalent to 8-10 times your yearly income.

FAQs on Term Insurance

What are the documents required while buying term insurance plans?

For buying a term insurance plan you need to submit KYC documents like Address Proof, Identity Proof, duly filled Proposal Form, Recent coloured photograph and income proof.

Do term insurance plans also offer joint policies for spouses?

Yes, joint policies for spouse’s facility is available under term insurance plans

Do I need to buy term insurance even if I am not married?

Yes, it is recommended to avail a term insurance plan even if you are not married.

Can I buy the best term insurance plan in India for my spouse and children?

You may buy the best term insurance plans in India in your name to secure the financial future of your dependent(s). However, if you want the life of your spouse to be covered, you would have to procure a separate term insurance policy in his or her name. Simply said, one term policy can cover only one life at a time.

Can I switch from one term insurance company to the other considering that the other may include additional benefits not available in the former?

The answer is NO. Unlike health insurance policies that are renewable at the expiry of the policy period, thus, allowing you to opt for a different insurance company, policyholders cannot switch their term plans from one term insurance company to the other. However, if you are keen to avail a separate term insurance policy with a greater quantum of assured benefits, you may consider surrendering your current policy and pay for a new one. However, surrendering your best term insurance policy in India is never advisable considering the uncertainty of life in today’s scenarios.

Will, my nominee(s) still receive the claim amount in case I die within one year of buying the best term insurance policy?

Insurance companies do settle the claim in favour of the insured’s nominee(s) or dependents in case of death within a year of buying the best term insurance plan. However, a lot depends on the terms and conditions of the insurer you had opted for. While buying any term plan, it is important for the policyholder to read the terms and conditions published in the policy document thoroughly to prevent any scope of ambiguity later.

How long does an insurance company take to settle a term insurance policy?

In most cases, the insurance company does not take more than 15 days to settle a term insurance policy. However, a lot depends on the terms and conditions of your current insurance company. Though the claim settlement procedures may vary between insurance companies, in most cases it is a hassle-free process.