Death is uncertain. While you may expect to live till your golden old age, misfortune can strike any time and if it does your financial planning goes astray. If you are the bread-winner of your family, your untimely death would be a cause of great financial stress for your dependent family. This is why life insurance plans are required. Life insurance plans cover the risk of premature death thereby providing your family with the required financial assistance. Life insurance policies come in many different variants which are as follows –

Term and whole life insurance policies aim to provide coverage against the risk of premature death and give financial security for your family. Endowment and money back plans are traditional savings oriented insurance plans. They provide insurance cover and also create a savings corpus for your future. Child plans and pension plans are goal-oriented life insurance plans which aim to fulfil your child planning and retirement planning needs, respectively. Unit linked plans, on the other hand, are investment-oriented insurance plans. They promise the benefit of attractive returns through market-linked investments and also provide insurance coverage.

Though there are a variety of life insurance plans available in the market, term insurance plans are the most basic and the most important of all plans. Let’s understand how and why –

Term insurance meaning

A term insurance plan is a pure protection life insurance plan. It offers to provide you with very high coverage levels at affordable premiums. You can also choose the coverage duration. In case of death during the term of the coverage, term insurance plans pay the sum assured to the family. Since you could afford a high sum assured level, your family is financially taken care of after your absence. Thus, through a term insurance plan, you can create financial security for yourself and your family members.

Features of term insurance plans

Term insurance plans come with the following salient features –

  1. High sum assured

    The main objective of a term insurance plan is to provide financial security. This security can be achieved only when the coverage level is sufficient enough to cover the financial requirements of your family in your absence. That is why, to ensure that your family is sufficiently secured, term insurance plans allow high coverage levels. You can opt for the desired sum assured based on your financial requirement. Usually, it is recommended that your term insurance coverage should be at least 10 to 12 times your annual income. So, term plans allow you unlimited coverage levels to ensure optimal coverage.

  2. Low premiums

    A high sum assured cannot be sustained if the premiums are not affordable. Term plans mostly cover the risk of premature death and so the premiums are very low. In fact, term insurance premiums are the cheapest among all life insurance plans. So, you can choose a high coverage level without having to worry about unaffordable premium rates.

  3. Long coverage tenure

    The coverage duration allowed under term plans is long to ensure that you remain covered even in your older ages. Term plans grant you coverage for up to 30 or 35 years depending on the plan that you choose.

  4. Different types of plans

    Term plans come in different variants to suit the coverage needs of different individuals. You can, therefore, select a variant which meets your coverage requirements.

  5. Riders

    To make your coverage more comprehensive, term insurance plans offer you optional riders. Riders are additional coverage benefits which can be added to your basic policy for enhanced coverage. Some of the popular riders which are available with term plans are as follows –

    • Accidental death benefit rider – under this rider, an additional sum assured is paid in case of accidental death
    • Accidental death and disablement benefit rider – under this rider, both accidental deaths and disablements are covered. In case of death, an additional sum assured is paid. In case of disablement, the sum assured is paid in instalments for a specified period and the premiums are also waived off
    • Critical illness rider – under this rider, a list of critical illnesses are covered. If any illness is diagnosed during the coverage period, a sum assured is paid in a lump sum
    • Terminal illness rider – under this rider an additional sum assured is paid if the insured suffers from a terminal illness
    • Term rider – under this rider, an additional sum assured would be paid if the insured dies during the policy duration, whether by accident or not.
  6. Benefits payable

    Usually, term insurance plans pay only a death benefit if the insured dies during the term of the policy. If the insured survives till the end of the term, no benefit is paid on maturity. However, there are the return of premium term plans which refund the premiums if the plan matures.

  7. Tax benefits

    Term insurance plans also provide you with dual tax benefits. The premiums that are paid for the policy qualify as a tax-free deduction under Section 80C of the Income Tax Act. You can claim a deduction of up to INR 1.5 lakhs. The benefit that you receive from the policy is also tax-free. The entire benefit that you receive is completely tax-free in your hands under Section 10 (10D) of the Income Tax Act.

    You can choose as many riders as you want. Under some plans, one or two of the above-mentioned riders can also come as an inbuilt coverage benefit.

  8. Types of term insurance plans

    As mentioned earlier, term insurance plans come in different variants. Let’s have a look at these variants –

    • Level term plans
    • These are the basic term insurance plans where the coverage level remains the same throughout the term of the policy.

    • Increasing term plans
    • Under these plans, the sum assured increases every year by a specified percentage. If the insured dies during the term of the plan, the sum assured available in the year of death would be paid. For instance, let’s say that the sum assured increases by 5% every year. Therefore, if you opt for a sum assured of INR 10 lakhs, in the second year it would become INR 10.5 lakhs. In the third year, it would be INR 11 lakhs. In the fourth year it would be INR 11.5 lakhs and so on. If the insured dies in the fourth year, INR 11.5 lakhs would be paid and not INR 10 lakhs which was the original sum assured. Increasing term plans are suitable for those who want their coverage to increase gradually so that their increasing financial responsibilities can be taken care of.

    • Decreasing term plans
    • Contrary to increasing term plans, under decreasing term plans the sum assured reduces every year by a fixed percentage. Decreasing term plans are usually allowed as loan redemption plans. Just like the loan reduces with the repayment that you do, the coverage also reduces to cover the outstanding part of the loan. In case of death of the borrower, the reduced sum assured, representing the outstanding loan would be paid.

    • Return of premium term plans
    • Since term plans pay only a death benefit, many feel that the premiums paid are lost if the plan matures. That is why the return of premium term insurance plans have been designed. These plans refund the premiums that you have paid over the policy duration in case the plan matures and the insured is alive on maturity.

    • Monthly income plans
    • These are a new type of term insurance plans which have become quite popular nowadays. Under these term plans, the death benefit is paid in monthly incomes to the family so that the family gets regular incomes for meeting their financial needs.

    • Group term plans
    • Group term insurance plans are offered to a group of individuals. These plans are meant for registered groups who want to take coverage for their enlisted members. One master policy is issued which covers all the members of the group. A minimum number of members are required to buy a group term insurance plan. The policy is issued for one year after which it can be renewed for continuous coverage. Members who belong to the group are automatically covered under the plan if the group buys the policy. Premiums can be paid by the group itself, its members or partly by the group and partly by its members. Whatever be the mode of premium payment, the life insurance company collects the aggregate premium from the group head itself.

    How do term plans work?

    When you buy a term insurance policy, you first choose the type of policy that you need. Then you choose the sum assured and coverage duration based on which your premiums are calculated. You are required to pay the premiums over the specified premium paying tenure. If, during the coverage tenure, you face premature death, the policy pays a death benefit to your family. If, on the other hand, you survive the plan duration and you have not chosen a return of premium plan, no benefit would be payable.

    Advantages of term insurance plans

    Term insurance plans provide you with the following benefits –

    1. The premiums are very low and therefore you can afford a considerable sum assured for yourself. If the sum assured is high you can ensure sufficient financial security for your family
    2. The plan provides unparalleled coverage which is not provided by any other life insurance plan or investment plan. This coverage is essential to protect against premature death and the financial consequences suffered thereafter
    3. The tax benefits provided by the policy also helps you lower your tax liability. This helps you save your hard earned money U/S 80C while at the same time ensuring coverage.

    How term insurance premiums are calculated?

    The premiums of term insurance plans depend on a lot of factors. These factors affect the premiums negatively as well as positively. Let’s understand these factors and their effect on premiums –

    1. Age of the insured

      Premiums are directly linked to the age of the insured. If the age is more, the premiums would also be high. Thus, increasing age has a negative impact on the premium as it increases the premium amount.

    2. Sum assured

      The sum assured also affects the premium directly. If the sum assured is high, the premium would also be high.

    3. Term of the policy

      The policy tenure is inversely related to the premium. If you choose a higher tenure, the premium would be reduced and vice-versa.

    4. Premium paying frequency

      If you pay premiums monthly, the company incurs a higher administration charge. That is why monthly premiums are higher than annual ones.

    5. Medical health

      If you are suffering from a medical sickness or if you have any medical ailments, it increases your mortality risk. As such, the premiums also increase.

    6. Smoking habits

      If you are a smoker, your mortality risk is high. That is why insurance companies charge a differential premium rate for smokers and non-smokers. The rates are higher for smokers and lower for non-smokers.

    7. Gender

      Males have a higher mortality rate than females and that is why premiums for female lives are also cheaper than male lives at the same age.

    8. Occupation

      If you are employed in a dangerous occupation which affects your mortality risk, the premiums would be high. For instance, if you are a pilot, air hostess, politician, in defence forces, in police, your mortality risk would rise. Premiums of term insurance plans, therefore, would be higher for individuals engaged in such risky professions.

    9. Physical build

      Your height and weight also affects your premium because these parameters determine your health status. Being overweight or underweight is a cause of concern as it makes you unhealthy and increases your mortality risk. To compensate for this increased mortality risk, higher premiums are charged.

    10. Riders selected

      If you opt for optional rider coverage benefits, the premiums would increase. Each rider comes at an additional premium because it offers an additional scope of coverage. So, if you choose one or multiple riders, their respective premiums would be added to the premium of the base policy and your overall premium outgo would increase

    11. Discounts allowed

      Term insurance plans allow different types of premium discounts which help in lowering the premium charged. If you are eligible for these discounts, your premiums would reduce.

    Best term plans in India

    Here is a list of some of the best term insurance plans which you can find in the market for your coverage needs –

    Name of the plan

    Entry age

    Coverage duration

    Sum assured

    Salient features

    TATA AIA Sampoorna Raksha

    18 years to 70 years

    10 years to up to 100 years of age

    INR 50 lakhs onwards

    · There are four coverage options under the plan

    · Whole life coverage option is also available

    ICICI Pru iProtect Smart

    18 years to 65 years

    5 years to up to 99 years

    Depends on the minimum premium which is INR 2400/year

    · You can avail coverage for up to 99 years

    · The death benefit can be received in four ways

    · Terminal illness benefit is inbuilt under the plan

    HDFC Life Click 2 Protect 3D Plus

    18 years to 65 years

    5 years to whole of life

    INR 10,000 onwards

    · There are nine coverage options to choose from

    · The death benefit can be availed in multiple options

    Max Life Online Term Plan Plus

    18 years to 60 years

    10 years to 50 years

    INR 25 lakhs to INR 100 crores

    · There are three coverage options

    · The sum assured can be enhanced at important milestones in your life

    AEGON Life iTerm Insurance Plan

    18 years to 65 years

    5 years to 82 years

    INR 25 lakhs onwards

    · There are three coverage options and each option provides inbuilt riders

    · The sum assured can be increased on marriage or child birth

    How to buy term insurance plans?

    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 –

    • Visit www.turtlemint.com/life-insurance
    • Choose ‘Term Life Plans’ and enter in your valid details like your age, gender, smoking preference, annual income, marital status, etc.
    • After the details are entered, you would be able to see a list of the best term insurance plans
    • You can compare the available plans on their coverage features and premium rates and then choose the best plan which suits your coverage requirements as well as your pockets
    • Fill up an online application form and pay the premium online to buy the policy at the earliest

    Documents required for buying term insurance plans

    To buy a term insurance plan, the following documents would have to be submitted –

    • Proposal form, filled and signed
    • Age proof
    • Identity proof
    • Address proof
    • Proof of income
    • Recent coloured photographs of the insured and the policyholder (if both are different)

    Making a claim under term insurance policies

    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 –

    • The nominee should fill up a claim form issued by the company and submit it to notify the company of the death of the insured
    • The death certificate and other relevant claim related documents would have to be submitted
    • The company would verify the details contained in the claim form and check the documents
    • If everything’s in order, the claim would be settled

    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 claims@turtlemint.com.

    Documents required for death claims

    For your death claims to be settled, the following documents would have to be submitted along with the claim form –

    • Death certificate
    • Policy bond
    • Identity proof and bank account details of the claimant
    • Police FIR, post-mortem report and other documents associated with an accidental death

    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.


FAQ’s

The premium payment modes under term plans depend on the plan that you buy and its terms and conditions. Usually, premiums are payable throughout the policy tenure. However, under most plans, especially those which offer coverage for up to 99 or 100 years, premiums are payable only for a limited tenure. Moreover, many plans also allow for single premiums. So, check the policy details to know the premium payment modes.


Yes, you can choose to cancel the policy after buying it if you do so in the free-look period. Each term insurance plan allows a free-look period of 15 days from the date the policy is issued. During this period you can opt to cancel the plan and get a refund of your premium.


Yes, suicides committed within 12 months of buying the policy or reviving a lapsed policy would not be covered under term insurance plans. Under such situations, 80% to 90% of the premium paid is refunded back as a death benefit.


No, term plans usually do not allow surrender or paid-up benefits. If you stop paying premiums, the policy cover would lapse and you would usually get no benefit.


The types of discounts which you can find under term insurance policies include the following –

  • Online discount – many policies allow you a premium discount if you buy the policy online
  • High sum assured discount – if you choose higher coverage levels, you might enjoy a premium discount
  • Modal discount – paying premiums yearly or half-yearly earn you discounts under many plans
  • Non-smoker discounts – many policies offer you a premium discount if you do not smoke

Life Insurance Companies