Life is uncertain and the risk of untimely death is quite relevant. If the bread-winner of the family dies suddenly, the family loses its source of income. In that case, the family faces a major financial crisis. The savings which the family has might not prove to be sufficient to meet all their financial needs of this is where financial security is sought. A term life insurance policy promises this financial security and helps the family deal with the financial loss if the bread-winner dies prematurely.
What is a term insurance plan?
A term insurance policy is a life insurance plan which can be taken by an individual on his or her own life. A specific tenure and sum assured are chosen under the policy. If the life insured dies during the term of the plan, the sum assured selected is paid by the insurance company to the deceased’s family. This lump sum benefit helps the family deal with their financial loss.
Term insurance plans have the following key benefits which you should know to understand the plan better –
Term insurance plans come in different variants and each variant promises something new. Here are the commonly found variants of term plans –
Level term plans are those in which the sum assured remains uniform throughout the term of the policy. In case of death, the chosen sum assured is paid. Level term plans are the simplest term insurance plans available in the market.
Under increasing term insurance plans, the chosen sum assured increases every year by a fixed amount. In case of death, the sum assured which is available in the year of death is paid. For instance, in a term insurance plan, the sum assured increases by 5% every year. If you buy a policy with a cover of INR 10 lakhs, in the second year the coverage would become INR 10.5 lakhs. In the third year, the sum assured would be INR 11 lakhs, in fourth year INR 11.5 lakhs and so on. If the insured dies in the fourth policy year, INR 11.5 lakhs would be paid in the claim even though the chosen sum assured was INR 10 lakhs.
Completely opposite of increasing term plans are decreasing term insurance plans. Under these plans, the sum assured reduces every year. Decreasing term insurance plans are usually offered as loan redemption plans wherein the decrease in the sum assured usually equals the reducing balance of the outstanding loan. In case of death, the reduced sum assured available in the year of death is paid. The objective of decreasing term plans is to pay off the outstanding balance of the loan if the borrower dies before repayment.
Also called the return of premium plans or TROP, these plans are different from other types of term insurance plans as they have a maturity benefit. If the insured dies during the term of the policy, the sum assured is paid. If, however, the insured survives the term of the plan, the premiums paid are refunded back. Since the premiums are paid back on maturity, the plan is called the return of premium term insurance plan. This plan is suitable for individuals looking for financial security as well as a benefit on policy maturity.
Another variant of a term insurance plan is a group term insurance plan. Group plans are bought by recognized groups for their members. These groups can be employer-employee groups, banks and their account holders, clubs and their members, trade unions and their members, etc. Group term plans are offered for one year. All the members are covered under a single master policy. If during the year, any member dies, the corresponding sum assured is paid to the family of the member. Coverage for other members, however, continues. After every year, the plan has to be renewed. Premiums can be paid by the group, its members or by the group and its members in a specified ratio.
As mentioned earlier, riders are available with term insurance plans. Riders are additional coverage benefits which you can take by paying additional premiums. Riders are optional in nature and each rider you choose would entail an additional premium. Riders have an independent sum assured which is, usually, equal to the sum assured of the base policy. However, there might be limits on the coverage amount of riders. If the sum assured of the base policy is higher than the maximum rider sum assured, the rider sum assured would be limited to the maximum limit while the base plan’s sum assured would be higher. For instance, suppose a rider’s maximum sum assured is INR 10 lakhs. If you choose a sum assured of INR 25 lakhs in your term insurance policy, the rider sum assured would be limited to INR 10 lakhs while the base policy’s sum assured would be INR 25 lakhs.
Term plans offer multiple riders and you can choose as many riders that you want. However, the total rider premium should not exceed the premium of the base policy. In some cases, the rider premium is not allowed to exceed 30% of the premium of the base policy while in other cases the total rider premium is allowed to be up to 100% of the premium of the base policy.
The common riders which are available under term insurance plans are as follows –
Under this rider, accidental deaths are covered. If the insured dies in an accident, the rider sum assured is paid along with the sum assured of the base policy. Thus, in accidental deaths, you get an enhanced death benefit due to the rider.
This rider is similar to an accidental death rider but has an added coverage for accidental disablements too. If the insured dies in an accident or suffers from permanent total or partial disablement, the rider pays an additional benefit. In case of accidental death and disablement, 100% of the rider sum assured is paid. However, in the case of permanent partial disablement, a percentage of the sum assured is paid depending on the severity of the disablement suffered. Moreover, in the case of disablement, the benefit might be paid in weekly or monthly instalments and future premiums might also be waived off.
This is a very popular rider which covers named critical illnesses. If the insured is diagnosed with any of the covered critical illness, the rider sum insured is paid in one lump sum.
This rider pays an additional benefit if the insured dies during the term of the plan. This death can be accidental or natural.
This rider is suitable if the insured is different from the policyholder who pays the premiums. Under this rider, if the premium paying policyholder dies during the term of the policy, the premiums payable for the policy are waived off. The insurance company pays the premium on behalf of the policyholder and the policy continues undisturbed.
This rider is like the critical illness rider but where the critical illness rider names specific illnesses, this rider does not. If the insured is diagnosed with any type of terminal illness, the rider pays the sum assured so that the insured can deal with the financial implications of his/her illness.
A term insurance policy is a necessity for every individual who wants to provide financial security to his/her family. You should, therefore, buy a term plan if –
A term insurance policy is a must for every individual who wants to protect his/her family from a financial crisis in his/her absence. The policy promises a high coverage at very low premiums enabling you to opt for an optimal level of coverage. This optimal coverage ensures that your family is well-taken care of financially in case of your absence. No other investment plan promises financial security which term insurance promises and thus, term insurance is a must-buy for everyone.
When you want to buy the best term insurance policy for yourself, there are some things which you should consider to choose the best plan. These things are as follows –
To choose the best term insurance plan you should always compare the available plans before buying. Comparing lets you choose the best plan which offers inclusive coverage benefits and charges low premiums. To compare term insurance plans you can choose Turtlemint. Turtlemint is an online platform which is tied-up with leading life insurance companies offering the best term plans in the market. You can compare and buy a suitable term insurance policy from Turtlemint in a few easy steps which are as follows-
Since term insurance plans are so essential and beneficial, all life insurance companies offer them. Among dozens of term insurance plans available in the market, here are some of the top policies which you can consider for your coverage needs –
This is a term insurance plan which doubles up as a whole life plan as the plan allows you to avail coverage up to 100 years. The salient features of the plan are as follows –
Eligibility criteria of TATA AIA Life Insurance Sampoorna Raksha Plan
18 years to 70 years
Term of the plan
10 years to (100 – entry age)
INR 50 lakhs onwards
This policy allows coverage up to 99 years of age ensuring that you are insured for a longer period. The key features of the plan are as follows –
Eligibility criteria of ICICI Pru iProtect Smart Plan
18 years to 65 years
Term of the plan
5 years to (99 – entry age)
Minimum – INR 2400
Maximum – no limit
Depends on the premium, age and other factors
This is a term insurance plan which allows different types of coverage options so that you can choose the coverage that you want. The key features of the policy are as follows –
Eligibility criteria of HDFC Life Click 2 Protect 3D
18 years to 65 years
Term of the plan
1 month to (100 – entry age)
INR 10,000 onwards
This is a flexible term plan which has the following key features and benefits –
Eligibility criteria of Bharti AXA Life Flexi Term Plan
18 years to 65 years
Term of the plan
10 years to (85 – entry age)
INR 10 lakhs onwards
This is a very popular plan offered by AEGON Life Insurance Company which offers a host of benefits to policyholders. The key benefits of the plan are as follows –
Eligibility criteria of AEGON Life iTerm Insurance Plan
18 years to 65 years
Term of the plan
5years to 82 years
INR 25 lakhs onwards
Term insurance plans can be bought through the company’s offices or from a life insurance agent. However, under both these options, you would have to buy the plan offline and would not be able to compare the different plans available in the market. Thus, a better alternative to buy term insurance is to buy it online through Turtlemint. On Turtlemint’s platform you can compare the best term insurance plans offered by leading life insurance companies. To buy, the steps are as follows –
To buy a term insurance plan, the following documents would have to be submitted –
In case of death of the insured, there occurs a claim in term insurance plans. To make a claim, the following steps should be taken –
If, on the other hand, you have bought a return of premium policy, you would have to fill up a claim discharge form to receive the maturity claim. This form should be submitted with your bank details and the policy bond and the company would refund your premiums directly to your bank account.
You can also make your term insurance claims through Turtlemint. Turtlemint helps its existing customers in their claim process. So, if you have bought the policy from Turtlemint, inform the company of your claim and the company would do the needful to get your claim settled. To inform, call the company’s toll-free number 1800 266 0101 or send a mail to email@example.com.
For your death claims to be settled, the following documents would have to be submitted along with the claim form –
A term insurance policy is a must for protecting yourself and your family against unforeseen misfortunes. So, understand the nitty-gritty of the plan and invest in one for financial security.
Turltmint help you buy the best term insurance plan online. Life insureance beniefits are given out to pepole at the most stressful times of their lives, so we helps make the proccess easier.
Conclussion: The Best Term Insurance Plans – A plain vanilla plan or a plan with riders or one with lump sum or income benifits?
Life insurance assures payment of a particular sum of money to the nominee in case of death of the life insured. Term Insurance is a type of life insurance which sets a cap on the time period during which the policy is active.
A term life insurance financially protects your family in case of your unfortunate demise. Irrespective of whether you are the sole earning member of your family or not, it is advisable to buy a term life insurance to help take care of your loved ones’ needs.
The premium paid is tax exempt under Section 80C of the Income Tax Act 1961, up to a limit of Rs 1.5 lakhs per annum. The maturity benefits are also exempted from tax under section 10 (10D).
Riders are available in Term Insurance policy to help enhance the coverage in the policy. Riders can be for accidental death, disability, critical illness, waiver of premium and income benefit.
It is very important to buy Term Insurance policy from a reliable insurance company. Check the claim settlement ratio of the company, the number of claim rejections, customer grievance redressal mechanism etc. Also search the web for the reputation of a company. A reliable insurance company should have a high claim settlement ratio, low number of claim rejections, a good grievance redressal mechanism and a good online reputation with fewer complaints.
If the policyholder dies within the term of the policy, a claim intimation needs to be sent to the insurance company. The company will provide a form to be filled up and ask for documents like death certificate, original policy document, proof of identity etc. Once all the required documents are submitted, the process will be initiated.
Life Insurance Companies