What is Term Insurance?

Term Insurance is a type of life insurance plan that secures your family in the unfortunate event of your death.. The word ‘term’ in Term Insurance refers to the time period for which the policy covers your beneficiaries. If your demise occurs within this term, your nominees / beneficiaries receive the Insured Amount as a lump sum payout, in the form of a monthly income or some combination of the two. The Insured Amount, the term and the payout method can be determined by you while buying your Term Insurance Policy. The cover amount should be such that your beneficiaries can financially maintain their lifestyle and pursue their life goals, even in your absence. . Premium amounts for Term Life Insurance are fairly affordable, especially when you consider the peace of mind it brings you as a provider and the financial protection it brings to your loved ones.

No one likes to talk about death and contemplate painful what-if scenarios. It’s a reality, nonetheless. It’s especially tragic and disruptive if the key breadwinner of the family passes. So, while you may not want to think about untimely death, you can certainly plan for such an eventuality. Here are some key benefits that make Term Insurance a wise financial decision:

• Protection Against Financial Uncertainty :Term Insurance is the most straightforward and cost-effective way of protecting your family from financial uncertainty, at least till the time they may be dependent on you as a provider. While nothing can mitigate the loss of a loved one, it can be comforting to know that your family’s monthly money needs, your children’s cost of education, big expenses like weddings, unexpected costs will be taken care of in your absence.
• Affordability : As it is a pure protection plan, the premium for the same remains lower compared to other insurance products. Also, the premium amount once chosen remains fixed throughout the policy term.
• Inflation-beating Value : The premium amount of Term Insurance stays constant through the tenure of the policy. What that means is that while the premium might seem substantial while buying the policy, it may start feeling miniscule 10 - 20 years hence - the premium stays the same, while everything else is affected by inflation. So our advice is to get term insurance as early in life as possible at low premiums. But also ensure that the sum insured is enough to face the test of time and inflation.
• Immune To Volatility : You may feel that there are many other alternatives to protect your family’s financial future in case of your untimely death. Many of these instruments are exposed to equity, markets and other sources of volatility and should best be regarded as ‘investments.’ In the case of your untimely demise, you wouldn’t want your aggrieved family to experience uncertainty with respect to the payout amount. That’s where Term Insurance is unbeatable - the sum assured at the time of policy purchase, is the sum received by the beneficiary, as the promised amount stays constant. No having to worry about prevalent market conditions, size of portfolios, liquidity, return on investment, etc. Just pure life cover that brings peace of mind.
• Payment of Debts : Debt is a source of worry, even while you are alive and earning. You would not want to pass on the worry of unpaid debt to your loved ones, in case of your untimely demise. Apart from the financial burden of it, your family may risk losing assets such as their home, vehicle and other valuables. A substantial term insurance would ensure that even in your absence, your dependents are empowered to clear your debt using the payout received.

With several insurance companies providing a wide array of term insurance plans, it becomes tricky to choose the right plan that will cater to the needs of you and your loved ones. There are multiple factors you need to consider before buying the term insurance. You may approach them as follows:

• Analysis of Needs and Requirements :

  You need to carefully assess your requirements before buying a term insurance plan. While assessing the requirements, do factor in inflation. Inflation reduces the value of money sharply over time. So, a sum assured amount may sound big considering today’s times but would feel negligible years later, thanks to inflation. Choosing a sum assured amount equivalent to 15-20 times your annual income will most likely keep your family on the right track! So, if your current annual income amounts to INR 6 lakh, look for a sum assured of INR 90 lakh-1.20 crore.

  Another way is to check your current expenses and add the yearly inflation rate of 5-6% to the same. Let’s assume you are 30 years old and will retire by 60. Most likely, your expenses will be 3 times your current one over the next 30 years. So, choosing the sum assured considering these points could help your dear ones beat the effects of inflation in your absence.

• Analyse the Best Premium Amount : Choose a term insurance plan with the lowest premium amount but not at the expense of a very low coverage amount. Else the purpose of having a term insurance plan will get defeated! So, a plan with a low premium yet having the cover you want for your family in your absence is recommended.
• High Claim Settlement Ratio : The Claim Settlement Ratio of a life insurance company should also matter while selecting a term insurance plan. The Claim Settlement Ratio denotes the percentage of claims settled by an insurer in proportion to the claims received by it in a financial year. A higher Claim Settlement Ratio indicates that the insurance company is more efficient in settling your term insurance claims. Here’s a list of top-most life insurance companies with the highest claim settlement ratio.

Note : The Claim Settlement Ratio is obtained through the websites of insurers and the Insurance Regulatory Authority of India (IRDAI).

Most Suitable Policy Terms : Life Insurance companies offer term insurance with a minimum policy term of 5 years upto 99 years of your age. You need to choose a plan that gives you a flexibility to extend your policy term if needed. It is important to focus on the policy term as your premium amount also depends on it. Choosing your policy term will depend on your age and the time you need to be covered. Assuming your current age is 30 years and you will work till you’re 60 years, the most suitable policy term will be of 30 years i.e. till you turn 60 years. Looking at the current life expectancy rate, one can choose to cover himself for a higher age.

Flexible Premium Payment Terms : Choosing the right premium payment term is as important as choosing the right premium amount. In fact, the premium payment term can decide the premium amount you need to pay. Term insurance plans come with single, regular and limited premium payment term options.

• Single premium plan is defined by the name itself - you need to pay the premium only once during the policy term.
• Regular plan will have the premium payment term the same as its policy term.
• Limited option - you will need to pay the premium for a particular period which is shorter than the policy term, but the cover will continue till the policy term.

Addition of Suitable Riders: Adding suitable riders to your base term plan will make it more comprehensive by providing additional benefits. Some popular riders offered these days are critical illness rider, accidental death rider, accidental disability rider, terminal illness rider and waiver of premiums. Each has their own benefits. Some of these riders come with an additional but small premium amount. So, the premium amount payable for a rider will add to that of a base plan.

Earlier we discussed factors to be considered while choosing a term insurance plan. Now let’s explore plans which do well on the said parameters. Here’s a list using which you can check, compare and choose best term insurance plans:

Important Notes

• The premium amount mentioned against all plans is for a non-smoker male aged 30 years wanting a life cover of INR 1 crore for 35 years. It will vary based on your age, desired life cover, policy term, etc.
• Premiums mentioned above are exclusive of Goods and Services Tax (GST)
• All these plans come with Single, Regular and Limited Pay options and premium payment frequencies of Annual, Half-yearly and Monthly.

Earlier in the write-up, we discussed why one should buy Term Insurance. Here we present more features and benefits that make a Term Policy even more compelling:

Long-term Life Protection - Term insurance plans help your family stay protected for a longer period with some plans providing coverage up to 99 years of age.

Multiple Payout Options - Term insurance plans offer multiple payout options which individuals can choose according to their convenience. These options are Lump sum payment, Monthly Income, Lump sum + Monthly income and Increasing Monthly Income.

No Limit on the Maximum Sum Assured - While most life insurance companies mention the minimum sum assured amount, there’s no cap on the maximum amount for term insurance plans. The maximum sum assured depends on the board-approved underwriting norms. So, the maximum amount may depend on your current age, income, health profile, the policy term etc.

No Limit on the Maximum Sum Assured - While most life insurance companies mention the minimum sum assured amount, there’s no cap on the maximum amount for term insurance plans. The maximum sum assured depends on the board-approved underwriting norms. So, the maximum amount may depend on your current age, income, health profile, the policy term etc.

Availability of Riders - You can enhance your overall protection by choosing from a wide range of rider options with your term insurance plan according to your needs. Some of the popular rider options are Critical Illness Rider, Waiver of Premium Rider, Accidental Death Benefit Rider, Accidental Total and Permanent Disability Rider, Income Benefit Rider, etc.

Tax Benefits - Individuals can also avail tax benefits on the premium paid towards the policy and the receipt of insurance payouts under Section 80C and Section 10(10D) of the Income Tax Act, 1961, respectively. Tax benefits also apply to rider premium payments under Section 80D.

Grace Period -In case you fail to pay the premium on time, you can pay the same during the grace period of 30 days. However, the grace period remains 15 days for people choosing a monthly mode of premium payment.

Free Look Period - Term Insurance plans also provide a free look period of 15 or 30 days within which a policyholder can return the policy if he/she is dissatisfied with its terms and conditions.

Term insurance plans come with several cover options such as Level cover, Increasing cover, Decreasing cover and Return of Premium cover. You can choose your cover depending on your life goals and necessities to take care of your financial needs and reaching these goals.

Level Term Plan

With this type of term insurance plan, the sum assured will remain constant throughout the policy term. The nominee will receive the chosen sum assured in case of the policyholder’s demise.

Increasing Term Insurance Plan

Upon choosing increasing term insurance, the sum assured amount increases every year during the policy term, while the premium amount remains constant. So, this type of plan factors in inflation the best way and helps you meet crucial milestones of your life easily.

Decreasing Term Insurance Plan

In this plan, the sum assured decreases every year throughout the policy term, while the premium amount remains constant. This plan is suitable if you believe that your responsibilities will decrease with time. The plan provides you a cover with a compaatively low premium amount than a basic term plan.

Term Return of Premium (TROP) Plan

On choosing this plan, the policyholder will receive all the premiums paid during the policy term if he/she survives until the end of the policy term. The payment will happen at maturity. However, the premium for such plans can be higher than that of a pure term plan.

Before choosing a term insurance plan, it is essential to understand factors that can affect your premium amount. Let’s go through some of these factors:

Age of Policyholder

It is wise to buy a term insurance plan when you are young as the premium amount can be much lower at that time. The longer you delay, the greater the premium you will need to pay.

Gender of the Policyholder

Insurance companies tend to offer a lower premium amount to female policyholders compared to their male counterparts.

Family Medical History

Insurance companies also assess the medical history of your family to see if any member, including you, has a history of life-threatening diseases (cancer, heart-related problems, etc.). If that remains the case, you will need to pay a higher premium amount compared to individuals with a clean medical history.

Employment Type or Profession

The nature of your profession also determines the premium amount of a term insurance plan. An individual working in a high-risk job profile (mining, adventure sports, transport, etc.) will need to pay a higher premium than someone having a regular 9-to-5 desk job.

Smoking or Drinking Lifestyle Habits

Individuals with smoking or drinking habits in their day-to-day lives will need to pay a higher premium amount. The reason being they are more likely to fall ill due to such lifestyle habits, forcing insurance companies to raise their premium amount.

Place of Residence

Your place of residence (the city where you are living) also affects the premium amount. If you live in a location prone to natural calamities such as earthquakes, floods, etc, your premium amount will be higher as opposed to someone living in low risk zones.

Term Insurance Plan Premium Calculator and its Benefits

Insurance companies provide an amazing tool with which you can calculate your premium amount according to the desired sum assured (coverage amount). This tool is known as Term Insurance Plan Premium Calculator. Just fill in the following details into the calculator, which will then flash the premium on your screen. Have a look!

1. Age of the policyholde
2. Gender of the policyholder
3. The desired sum assured amount
4. The time till you want the coverage

Helps Save Time

The process of premium calculation is fast and hassle-free as you can see the premium within a few seconds of pressing the ‘Calculate’ button. You don’t need to do any manual calculations to find the affordable premium amount. All it takes is a few details that you read above.

You can compare different term insurance plans based on their premium amount and your affordability. With an estimate of the premium amount, you could choose a suitable insurance plan as it is crucial to invest in the right insurance policy to avoid any future financial troubles.

To compare and choose a suitable Term Plan, it is important to understand the below mentioned factors.

Term Insurance Premium Payment Options

Term insurance plans come with different premium payment options - Regular Payment, Limited Payment and Single Payment. Individuals can choose from these different options according to their requirements. You can know more about these options below.

1. Regular Payment Option

   You can pay the premium via different modes - Monthly, quarterly, half-yearly or yearly - using this option. A policyholder can choose the premium payment mode according to his/her convenience.

2. Limited Payment Option

   As the name suggests, this premium payment option allows policyholders to pay the premium for a limited period while enjoying the benefits of term insurance for a longer time. If you don’t want to pay premiums for a long period, this option can be useful for you. Like regular, you can pay the premium at any of the monthly, quarterly, half-yearly and annual intervals.

3. Single Payment Option

   With this option, policyholders can pay the overall premium amount towards their term insurance plans in a single installment. So, the one-time lump sum premium payment is likely to be substantially high. Choosing this option will depend firmly on one’s affordability for such an amount. But the bottom line is - how much will it give to your dependents in your absence? Check that and decide accordingly.

As you know term insurance provides the coverage amount in case of a policyholder’s unfortunate demise. At the time of choosing the policy, term insurance providers offer different types of payout options - Lump sum payment, Monthly Income, Lump sum + Monthly Income and Increasing Monthly Income.

Policyholders can choose from these options according to their requirements. It is important to understand each of them so that you can make the right call while signing the dotted lines. We are discussing the same below. Please check!

1. Lump Sum Payment

   With this option, nominees chosen by policyholders will get a lump sum payment from the insurance company. Suppose the sum assured is INR 50 lakh and the policyholder dies during the policy term, the nominee will get INR 50 lakh as a lump sum amount.

2. Monthly Income Payment

   Upon choosing this option, the nominee will get the sum assured in equal monthly installments over a specific period. In case the sum assured is INR 60 lakh, the nominee will get INR 50,000 per month over 10 years.

3. Lump Sum Plus Monthly Income

   This term insurance payout option will provide a part of the coverage amount in a lump sum and the remaining part in equal monthly installments.

4. Increasing Monthly Income Option

   As the name suggests, the nominee will receive the total sum assured in installments that will increase every year. This increase in the percentage is mainly to deal with inflation. Suppose you are getting a monthly installment of INR 10,000 per month. With this option, your installment will increase by a definite percentage in the next year and so on.

Term insurance plans also offer a wide range of rider options to maximize your overall protection as told above. These riders help individuals get extra benefits by paying an additional premium. This premium amount of the rider depends on different factors such as coverage amount, policyholder's age, policy term, premium payment term, etc. However, the total rider premium cannot exceed the premium of the base term plan.

We are discussing some Term Plan Riders below so that you can understand them better.

1. Accidental Death Benefit Rider

   On choosing this rider option, the insurance company will pay the nominee an additional sum assured over and above the base sum assured of the policy if the policyholder dies due to an accident.

2. Accidental Disability Rider

   If a policyholder suffers from a permanent or partial disability due to an accident, the term insurance will pay the sum assured against the rider. This sum assured can either come as a lump sum amount or a monthly income for a specific period. This period can be 2, 5 or 10 years.

3. Critical Illness Rider

   If a policyholder is diagnosed with any of the specified life-threatening diseases (critical illnesses) under the plan, the insurer will provide the sum assured against the rider. Some of the critical illnesses are heart attack, cancer, stroke, kidney failure, etc.

4. Waiver of Premium Rider

   This rider allows policyholders to avail the benefits under the term plan even if they are unable to pay the future premiums due to an unfortunate event (critical illness, disability or death). Premium waiver rider options are offered on - death or total & permanent disability, and Critical Illness.

5. Terminal Illness Rider

   If a policyholder is diagnosed with a terminal illness, the insured or nominee gets the sum assured without waiting any further. The sum assured can be utilized in managing treatment expenses.

6. Income Benefit Rider

   As you can see from the name, this rider option allows the policyholder’s family to receive the sum assured as a monthly income for a fixed tenure instead of a lump sum amount, in case of his/her death.

You may face genuine issues paying the premium of your term plan later. In such a case, you can surrender the policy, which will then attain the paid-up status. That means a reduction of the sum assured upon your death during the policy term. The reduced sum assured is calculated by the following formula -

Paid-up Sum Assured = Sum Assured x Number of Premiums Paid/Number of Premiums Payable under the policy

However, you can surrender a term plan only when it acquires a surrender value, which happens once you pay the premium without fail for at least 2-3 years. In case of no surrender value, the policy will lapse if you stop paying the premium. As a result, no death benefits shall be payable to your nominee.

Understanding the claim process of term insurance plans is as important as knowing the amount payable at the time of claim. To get a claim, the family members/nominee/beneficiary should inform the insurance company about the policyholder’s death as soon as possible. This can be done via phone call and email. The concerned people can also visit the office of the insurance company to intimate it about your death.

After informing the insurer, the nominee will need to fill the claim form and submit it to the insurer along with the required documents. The insurance company will assess them thoroughly before approving your claim. Once approved, you will get the payout as per the chosen option at the time of policy commencement. Check below the list of required documents to get a claim for a term insurance plan in India.

Documents Required in Case of a Natural Death

1. Policy Document in original
2. KYC Documents of the Beneficiary/Nominee/Family Member
3. Duly Filled Claim Form/Application Form
4. Policyholder’s death certificate
5. Medical Practitioner's Report/Autopsy Report
6. Claimant's Statement Document
7. Bank account details of the claimant

Documents Required in Case of an Unnatural Death

1. Claim Intimation Form
2. KYC of the Beneficiary/Nominee/Family Member
3. First Information Report (FIR) in case of an accident
4. Policy Document in original
5. Post Mortem Report/ Chemical Analysis Report (Viscera)
6. Physician's Statement
7. Medical/Hospital Records
8. Settlement Option Form
9. Cremation Certificate
10. Driving License of the Policyholder (in case of a car accident)
11. Bank account details of the claimant

Have a look at the Term Insurance Plan Eligibility Criteria put in by most life insurers in India.

1. An individual must be a citizen of India. However, some insurance companies also offer term insurance to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs).
2. The minimum and maximum age at the time of entering into the policy is 18 and 60, respectively. However, that tends to change from one insurer to another depending on the type of policy.

An individual should submit the following documents to complete the term insurance application.

• Passport-sized photos
• Address Proof (Passport, Ration Card, Utility Bills. etc.)
• Photo ID Card
• Proof of Age ( Aadhar, Passport, Driving Licence, etc.)
• Income Proof (Bank Statement, Salary Slips, etc.)

Before choosing a term insurance plan, it is also crucial to know what’s not covered under the same. We are showing the situations below where you will not get any coverage.

1. Death due to suicide, self-inflicted injury, self-abuse, attempted suicide
2. Death due to Mental/Psychological Imbalance/Abnormality/Disorder
3. Any pre-existing illness or health condition within 48 months before the policy issuance date
4. HIV/AIDS/STDs/Venereal Diseases
5. Driving without a valid license or under the influence of alcohol/Intoxication
6. Substance Abuse and Narcotics
7. Pregnancy and Childbirth
8. Participation in Adventure sports
9. War, invasion, civil war, mutiny, revolution, strike, etc.
10. Criminal and Delinquent Behaviour
11. Cosmetic Surgery
12. Dental Treatment
13. Congenital Defects and Genetic Disease
14. Casualties due to participation in extreme sports illegal and defence activities

It is evident that Term Insurance is one of the best ways to ensure your family’s financial stability when you are not around to do so. But what’s the best way to identify and buy the best Term Life Policy? Here’s why WishPolicy fits the bill:

Partnership with 20+ Top Insurance Players - By bringing you the widest range of policies from top insurance companies, WishPolicy ensures that you do not miss out on the policy that might be right for you! We are tied up with 20+ top insurance companies that boast of a high claim settlement ratio and a wide selection of customized term insurance plans, etc.

Tech that Enables Peace Of Mind - WishPolicy’s advanced algorithms are designed to factor in the needs and concerns of our customers. The quotes that you receive are not only relevant, but empower you to make a fair comparison with full transparency. We bring you the cutting-edge of insurtech, not to choose for you, but enable you to choose what’s best for you.

Neutral Advice - Our team of Policy Experts not only are extremely knowledgeable about Insurance, but have the best interest of our customers at heart. WishPolicy therefore prides itself on providing unbiased advice every step of the way.

24X7 Support - As soon as you apply, we start planning the perfect term plan for you based on your needs. We use our market expertise to find the custom-fit plan that offers you the desired sum assured at least premium and for an optimized time. From application to the issuance of the policy, we offer our uninterrupted support to secure the future of your loved ones. Think of us as your go-to insurance companions.

Claim Assistance Services - We don’t stop at the issuance of the right term plan! In case your loved ones claim upon your unfortunate demise, we stand with them in this challenging time by assisting with the claims process and following up with the insurance partner.

Paperless Process - Our paperless process ensures hassle-free issuance of the term plan and quick disbursal of the claim amount.

Trusted by Millions - WishPolicy is the insurance division of Wishfin (MyWish Marketplaces), one of India’s largest and most trusted financial marketplaces. With almost 40 Million Satisfied Customers across India, you can ‘Rest Insured’ with WishPolicy.

IRDA Certified -WishPolicy is IRDA Certified as an Insurance Aggregator and meets the most stringent of India’s Insurance Regulations. Please refer to the bottom of the page for our IRDA code. WishPolicy also adheres to the highest standards of security and privacy for complete peace of mind.

Applying for a term insurance plan at Wishpolicy is super easy! Just follow these simple steps:

1. Go to www.wishpolicy.com
2. Click on ‘Term Insurance’
3. Fill in details such as your Name, Mobile Number, Date of Birth, Email ID and gender
4. Also mention whether you are a smoker or a non-smoker
5. Based on these details, custom quotes will appear on your screen
6. Once you confirm your choice, we’ll contact you and process your application
7. Upon successful approval, you will get an email and SMS notifications confirming the same

You will get the policy document through email and in-person a few days from the approval of the term insurance application. The policy document will have details of the plan, such as sum assured, the premium amount payable, information regarding rider/s, if chosen, etc.

So, what are you waiting for? Apply for Term Insurance on Wishpolicy today & secure the future of your loved ones!