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Term Insurance Plan - How to Buy the Right Term Insurance Plan Research Team | Posted On Thursday, December 27,2018, 04:11 PM

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Term Insurance Plan - How to Buy the Right Term Insurance Plan



What is Term Insurance Plan?

In simple words a term insurance plan is a form of life cover that provides coverage against a specific set of risks for a defined period of time. The term insurance plan aims to provide coverage to secure family needs of the policy holder in case of a sudden demise. In this type of policy, there is no saving component like an endowment policy.  An individual can opt for a term insurance policy as the premiums are very affordable compared to other life insurance policies. If the policy holder expires within the term of the plan, then the death benefit is given to the nominee.

A term life insurance plan offers pure risk protection. If a policyholder dies within the term of the plan, the insurer pays your family the sum assured. Your family meets living expenses, children get good education and loans are repaid. Term life insurance has no survival benefits.

Want to know more on Term Life Insurance? will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. It only provides FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

See Also: What is Niti Aayog?

Types of Term Insurance Plans:

A term insurance policy is a traditional form of life cover that can be availed for a fixed term. Almost all major insurers offer term plans at affordable rates. A number of insurers offer policyholders a choice when it comes to the type of plan they wish to avail. Policyholders can choose between single or joint life plans, depending on their need.

  • Regular term insurance plans: this is a term insurance plan where the insured gets coverage against various risks in return for a premium. The premium that needs to be paid is pre-decided by the insurance company and the policy holder. This is the most basic form of life cover that comes with lower premiums and higher returns. These plans do not offer any benefit after maturity.
  • Group term insurance plans: Group insurance policies are life cover that is made to suit the needs of an organization, companies, society or an association. The group insurance plans offer similar benefits as individual term insurance plans; the difference is that it covers a group of individuals in an organization rather than a single person. The coverage on this plan expires with a job change or end of membership.
  • Term return of premium plans (TROP): This a term insurance policy that refunds the money paid for the cover, in case the policy holder survives the term of the policy. This type of policy also allows the policy holder to add riders to existing plans to increase coverage.
  • Decreasing or increasing term insurance plans: the decreasing term plans are renewable plans where the cover and the premium decrease over the tenure of the policy whereas in case of increasing term policy, the cover and the premiums increase over the tenure of the plan.
  • Joint term plans: joint term plans are the policies where the policy covers more than a single person. These schemes can be availed by individuals for the inclusion of spouse under a single policy. This scheme offers financial protection to families with dependent children and helps maintain financial stability in case of demise of any one or both the insured members.
  • Convertible term insurance plans: as the name suggests, a convertible term plan provides an option to the policy holder to convert the term plan into endowment or a whole life assurance plan. This is savings with insurance. Consequently, convertible term policies are more expensive than other term plans and have higher premiums.

See Also: Personal Loan Status

Types of Term Life Insurance Plans:

Level term life insurance plans: In Level term life insurance plans, the sum assured does not change during the tenure of the policy. The benefits are paid to the nominee (This may be a beneficial nominee) on death of the policy holder, within the term of the plan.

Return of Premium plans: Unlike normal term life insurance plans, the return of premium plans have a maturity benefit.

Increasing term plans: You can opt for an increase in the sum assured at an annual frequency during the term of the plan. The premiums would remain the same.

Decreasing term life insurance plans: These plans are the exact opposite of the increasing term plans. The sum assured would decrease each year, so as to match the financial needs of the policyholder.

Convertible term plans: The convertible term plans have an option where these plans can be converted into other types of plans at a future date.

The Benefit of the Term Insurance Policy:

  • The nominee is entitled to get a lump sum amount in case of sudden death of the policy holder.
  • It helps the family of the insured pay off debts and loans in case of sudden demise.
  • Term insurance policy is a good option for people who want life cover at affordable and lower premiums.
  • The term plan with accidental death benefit rider provides an additional sum insured in case of accidental death of the policy holder.
  • Term insurance policies offer flexible premium payment options, allowing policyholders to choose a payment plan based on their convenience. Premiums can be paid monthly, quarterly or annually.

Documents Required for Term Insurance:

Following are the list of documents that an individual needs to provide while buying a term insurance plan:

  • Proof of identity:  Passport, Voter ID card, Aadhaar card, or driving licence.
  • Proof of age:  passport, birth certificate, driving licence or PAN card.
  • Proof of address:  Utility bills or ration card or bank account statement or Voter ID card or passport.
  • Proof of income: Income tax returns or employer’s certificate or Income Tax assessment order.
  • Passport sized photographs

If you are availing term life insurance online, you can upload the relevant attested documents.

See Also: How Much Term Life Insurance Is Required?

Eligibility Criteria for Term Insurance Plans:

A person who wishes to buy a term insurance plan must meet some basic eligibility criteria defined by the insurance company:

  • The policy holder must attain a minimum age of 18 years while buying the policy.
  • The maximum age limit for the policy holder at the time of maturity of the policy is 75 years.
  • The minimum age of maturity of the policy will be calculated based on the age of entry and the tenure offered.
  • The sum assured is an important factor in calculating the eligibility as many policies have a fixed minimum sum assured.

Smokers and Non-Smokers Criteria in the Term Plan:

This is a special type of benefit offered by the insurance company. It states that non-smokers are eligible to get special discounted premium rates on term insurance policies. This term does not include the smokers or users of any tobacco products. Smokers who have quit smoking are also eligible for lower premiums.

See Also: Top 5 Best Term Insurance Plans in India 2018

Tax Benefit on the Insurance Premium:

Premiums paid towards term insurance policies are exempted from tax up to a maximum of Rs 1.5 Lakhs under Section 80C of the Income Tax Act, 1961. The death benefits are tax free under Section 10 (10D) of the Income Tax Act.

Term insurance policy is an excellent way to provide financial safety to your family. These plans provide financial security to the dependents of the family, in case of untimely death of the policy holder, thus ensuring financial stability during hard times or during the absence of an earning member of the family.

When is the Period of Term Insurance Increased or Decreased:

Opt for sufficient coverage in the term life insurance plan. You don’t want the money nominees get to dry up. The amount of term life insurance depends on life goals. If life goals increase (let’s say the size of family increases), you need increasing term life insurance.

If you avail a home loan, take a decreasing term life insurance plan. The sum assured matches the home loan outstanding amounts, as EMIs are repaid. You save on the premiums.

Riders in Term Life Insurance:

Avail riders in term life insurance which is additional protection at a slightly higher cost. Opt for a critical illness rider, where you get money on diagnosis of a critical illness like heart ailments, stroke or kidney failure. You can also opt for the accidental death benefit rider, which is an amount over and above the sum assured, on death of the policyholder in an accident.

Top 5 Best Term Insurance Plans in India 2018

Before choosing the term life insurance plan, take a look at the features of top 5 best term life insurance plans.

  • Check the claim settlement ratio of the insurer. It must be over 90.
  • The claim settlement process must be hassle free.
  • Look at the after-sales service.
  • Check for exclusions in the term life insurance plan.
  • Term Insurance offers many riders. Choose the ones relevant to you.
  • Check how old the insurer is. (The number of years he has been in the business).
  • Opt for lower premiums, but remember, cheap does not mean best.
  • Go for a medical test before availing term life insurance plan. This will ensure a hassle-free settlement.

If you want to know more on life insurance, get in touch with our wealth doctors. Our wealth doctors are qualified, well trained and offer free unbiased financial advice.

Online Term Life Insurance Plans In India

It’s the festival season. E-Commerce Companies are raining deals on you. Mobiles…electronic gadgets….clothes….the list is endless.  You just can’t concentrate on your work. Feel you’ll miss a GREAT DEAL, if you leave your desktop for even a second? You’re not alone.

Welcome to the digital age, where most things are purchased online.

Today’s youth, love to buy most things online. With almost everything being bought online these days, can term life insurance be far behind? Online term life insurance plans, are sold like hot cakes these days. The reason….Online term life insurance plans are cheaper, compared to their offline counterparts. Now to the Big Question….Are these cheap online term life insurance plans, good for you?

Why Online Term Life Insurance Plans are Cheap?

You can avail online term life insurance plans, directly with the life insurer. You do not require the help of an intermediary….read life insurance agent. No commissions need to be paid to the life insurance agents, as you are availing the term life insurance plan, directly with the life insurer.

The life insurer passes on, what is saved. This makes the online term life insurance plans in India, quite cheap. Your online term life insurance plan, is about 30-50% cheaper, than its offline counterpart.

See Also: Term Insurance for Home Loan

Do Online Term Life Insurance Plans Settle Claims?

Why do you avail term life insurance? It has to be for claim settlement. Your biggest fear….On your unexpected demise, your family would be forced to run from pillar to post, seeking the death benefit (claim amount), on your online term life insurance plan. Worse….there’s nothing you can do about it. Do not worry about this. You would avail online term life plans in India, if you are young and tech savvy. Generally the highly paid working youth in India, avail online term life insurance, with a high sum assured. A high sum assured means a compulsory medical test. With everything done properly, including a medical test to confirm your health situation, why should your family’s claim be denied?

In many cases you are better off availing an online term life plan, than its offline counterpart. The absence of an intermediary like a life insurance agent, forces you to make an honest disclosure. If you are a smoker, you would disclose this while filling the proposal form. If you are a smoker, you would have to pay a higher premium on your online/offline term life insurance plan, than a non smoker. Life insurance agents advice you not to mention SMOKER, even if you are a smoker. Life insurance agents, pocket their commissions and leave. If on your unexpected demise, the life insurer finds you are a smoker, your family’s claims would be rejected. This would be a desperate situation.

"Fun is like life insurance, the older you get, the more it costs.” Avail an online term life insurance plan, when you are young and healthy. Then sit back….relax….and enjoy a tension free life.

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