Term insurance plans are a type of life insurance that provides a lump sum amount to the nominee or beneficiary in case of the death of the policyholder during the term of the policy. Term insurance is one of the most affordable and simplest forms of life insurance, as it does not have any maturity or survival benefits. Term insurance is also a great way to secure the financial future of your loved ones, as it can cover your liabilities, debts, and expenses in your absence.
However, buying term insurance plans in India can be a daunting task, as there are many factors to consider and many options to choose from. In this article, we will guide you through the process of buying term insurance plans in India and help you make an informed decision. We will cover the following topics:
Term insurance benefits and features
Comparing term insurance plans online
Top-term insurance plans in India for 2024
Term insurance riders and add-ons
Term insurance claim process and settlement ratio
How to choose the right term insurance coverage amount
Term insurance tax benefits and exemptions
Term insurance myths and facts
Term Insurance Plans: benefits and features
Term insurance plans offer many benefits and features that make them a suitable choice for anyone who wants to protect their family’s financial security. Some of the main benefits and features of term insurance plans are:
High coverage at low premiums: term insurance plans offer a high sum assured at a low premium rate, as compared to other types of life insurance. For example, a 30-year-old non-smoker male can get a term insurance cover of Rs. 1 crore for a term of 30 years for a premium of around Rs. 700 per month.
Flexibility and customization: term insurance plans allow you to choose the term, sum assured, premium payment mode, and frequency as per your convenience and needs. You can also opt for various riders and add-ons to enhance your coverage and benefits.
Tax benefits: Term insurance plans offer tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, 1961. You are eligible to avail a deduction of up to Rs. 1.5 lakh for the premium paid under Section 80C, and the death benefit received by the nominee is tax-free under Section 10(10D).
Peace of mind: Term insurance plans give you peace of mind, as you know that your family will be financially secure in case of any unfortunate event. You can also avail of a critical illness cover or a terminal illness cover, which can provide you with a lump sum amount in case you are diagnosed with a life-threatening disease.
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How to compare term insurance plans online
One of the best ways to buy term insurance plans in India is to compare them online. Online comparison can help you save time, money, and hassle, as you can access multiple plans from different insurers in one place and compare their features, benefits, premiums, and reviews. You can also get instant quotes, apply online, and get the policy document in your email.
To compare term insurance plans online, you need to follow these steps:
Visit a reliable and reputed online insurance aggregator or broker website, such as Policybazaar, Coverfox, or Bankbazaar.
Enter your basic details, such as name, age, gender, income, smoking status, and coverage amount.
Choose the term, premium payment mode, and frequency that suit your needs and budget.
Compare the plans based on their premiums, features, benefits, ratings, and reviews.
Select the plan that meets your requirements and preferences, and click on the ‘Buy Now’ or ‘Apply Now’ button.
Fill up the online application form with your personal, professional, and health details, and upload the required documents, such as identity proof, address proof, income proof, and medical reports (if any).
Pay the premium online using your preferred mode of payment, such as a debit card, credit card, net banking, or UPI.
Receive the policy document in your email and verify the details.
best term insurance plans in India 2024
There are many term insurance plans available in the Indian market, but not all of them may suit your needs and expectations. Therefore, it is important to choose the best term insurance plan that offers you the maximum coverage, benefits, and value for money. Here are some of the best term insurance plans in India in 2024, based on their popularity, features, benefits, and customer feedback.
LIC Tech Term Plan: This is an online term insurance plan from the Life Insurance Corporation of India (LIC), the largest and most trusted insurer in the country. The plan offers a high sum assured of up to Rs. 25 crore, with an option to choose between a level sum assured and an increasing sum assured. The plan also provides an option to avail of the accidental death benefit rider, which can double the sum assured in case of death due to an accident.
The plan has a low premium rate, starting from Rs. 1,800 per year for a 30-year-old non-smoker male for a cover of Rs. You can receive a deduction of up to Rs. 50 lakh over a 20-year term. The plan has a high claim settlement ratio of 97.79% for the financial year 2022–23.
HDFC Life Click 2 Protect 3D Plus: This is an online term insurance plan from HDFC Life, one of the leading private insurers in India. The plan offers comprehensive coverage, with 9 plan options to choose from, such as life option, 3D life option, extra life option, income option, income plus option, life long protection option, 3D life long protection option, return of premium option, and life stage protection option. The plan also offers various riders and add-ons, such as critical illness cover, accidental death benefit, accidental disability benefit, and waiver of premium.
The plan has a competitive premium rate, starting at Rs. 2,100 per year for a 30-year-old non-smoker male for a cover of Rs.A term of 20 years comes with a coverage of Rs. 50 lakh. The plan has a high claim settlement ratio of 99.07% for the financial year 2022–23.
Max Life Online Term Plan Plus: This is an online term insurance plan from Max Life, another leading private insurer in India. The plan offers flexible coverage, with 3 plan options to choose from, such as basic life cover, life cover plus monthly income, and life cover plus increasing monthly income. The plan also offers various riders and add-ons, such as comprehensive accident benefits, critical illness benefits, premium waiver benefits, and disability income benefits.
The plan has an attractive premium rate, starting from Rs. 2,200 per year for a 30-year-old non-smoker male for a cover of Rs. A term of 20 years comes with a coverage of Rs. 50 lakh. The plan has a high claim settlement ratio of 98.74% for the financial year 2022–23.
Term insurance riders and add-ons
Term insurance riders and add-ons are additional benefits that you can opt for along with your base term insurance plan by paying an extra premium. Riders and add-ons can enhance your coverage and benefits and provide you with more protection and peace of mind. Some of the common term insurance riders and add-ons are:
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Accidental death benefit rider: This additional provision ensures an extra sum assured for the nominee if the policyholder passes away due to an accident. The sum assured under this rider is usually equal to or less than the base sum assured.
Critical illness cover: This cover provides a lump sum amount to the policyholder in case of diagnosis of any of the specified critical illnesses, such as cancer, heart attack, stroke, kidney failure, etc. The amount can be used to pay for medical expenses or for any other purpose. The cover usually terminates after the payment of the benefit.
Terminal illness cover: This cover provides a lump sum amount to the policyholder in case of diagnosis of a terminal illness, such as AIDS, Alzheimer’s, etc. The amount can be used to pay for palliative care or any other purpose. The cover usually terminates after the payment of the benefit, and the death benefit is reduced by the amount paid.
Accidental disability benefit: This benefit provides a regular income or a lump sum amount to the policyholder in case of total or partial disability due to an accident. The benefit can help the policyholder cope with the loss of income or livelihood. The benefit usually ceases after a certain period or age.
Waiver of premium: This benefit waives off the future premiums of the policy in case of death, disability, or critical illness of the policyholder. The benefit ensures that the policy continues without any interruption, and the nominee gets the full death benefit.
Term insurance claim process and settlement ratio
The term insurance claim process is the procedure that the nominee or beneficiary has to follow to receive the death benefit from the insurer in case of the death of the policyholder. The term insurance claim process involves the following steps:
Intimation of death: The nominee or beneficiary has to inform the insurer about the death of the policyholder as soon as possible, along with the policy number, date of death, cause of death, and place of death. The intimation can be done online, offline, or through a toll-free number.
Submission of documents: The nominee or beneficiary has to submit the required documents to the insurer to prove the identity, relationship, and cause of death of the policyholder. The documents may include death certificate, policy document, claim form, identity proof, address proof, bank details, medical reports, post-mortem reports, FIRs, etc. The documents can be submitted online, offline, or through a courier service.
Verification and approval: The insurer will verify the documents and the claim and check for any discrepancies, frauds, or exclusions. The insurer may also conduct a field investigation or ask for additional documents if needed. The insurer will then approve or reject the claim based on the verification results.
Settlement of claim: If the claim is approved, the insurer will settle the claim and pay the death benefit to the nominee or beneficiary within the stipulated time frame, as per the IRDAI guidelines. The payment can be made through a check, NEFT, RTGS, or IMPS. The insurer will also send a confirmation letter or email to the nominee or beneficiary.
The term insurance settlement ratio is the percentage of claims that the insurer has settled out of the total claims received in a financial year. It indicates the reliability and efficiency of the insurer in paying the death benefit to the nominees or beneficiaries. A higher settlement ratio means that the insurer has a good track record of honoring the claims, and a lower settlement ratio means that the insurer has a high rate of claim rejection or pending. The settlement ratio of term insurance plans can vary from insurer to insurer and from year to year. Therefore, it is advisable to check the latest settlement ratio of the insurer before buying a term insurance plan.
How to choose the right term insurance coverage amount
The term insurance cover amount is the sum assured that the policyholder chooses to buy and that the nominee or beneficiary will receive in case of the policyholder’s death. Choosing the right term insurance coverage amount is crucial, as it determines the financial security and well-being of your family in your absence. If the cover amount is too low, it may not be sufficient to meet the needs and goals of your family. If the cover amount is too high, it may result in paying unnecessary premiums and affecting your savings and investments.
To choose the right term insurance coverage amount, you need to consider the following factors:
Your income and expenses: The cover amount should be able to replace your income and cover your expenses, such as household expenses, children’s education, marriage, etc., for at least 10 to 15 years.
Your liabilities and debts: The cover amount should be able to pay off your liabilities and debts, such as home loans, car loans, personal loans, credit card bills, etc., so that your family does not have to bear the burden of repayment.
Your future goals and aspirations: The cover amount should be able to fulfill your future goals and aspirations, such as retirement planning, wealth creation, legacy planning, etc., for yourself and your family.
Your age and health: The cover amount should be based on your age and health, as they affect your life expectancy and premium rate. Generally, the younger and healthier you are, the lower the premium and higher the cover amount you can get.
Your lifestyle and habits: The cover amount should also reflect your lifestyle and habits, such as smoking, drinking, hobbies, etc., as they affect your risk profile and premium rate. Generally, the riskier and unhealthier your lifestyle and habits are, the higher the premium and lower the cover amount you can get.
A simple formula to calculate the term insurance coverage amount is:
Term insurance cover amount = (Annual income x 10) + (Liabilities and debts) + (Future goals and aspirations) – (Existing assets and savings)
For example, if your annual income is Rs. 10 lakh, your liabilities and debts are Rs. 20 lakh, your future goals and aspirations are Rs. 50 lakh, and your existing assets and savings are Rs. 15 lakh, then your term insurance cover amount is:
Term insurance cover amount = (10 lakh x 10) + (20 lakh) + (50 lakh) – (15 lakh) = Rs. 1.65 crore
Term insurance tax benefits and exemptions
Term insurance plans offer tax benefits and exemptions under various sections of the Income Tax Act, 1961. These are:
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Section 80C: You are eligible for a deduction of up to Rs. 1.5 lakh for the premium paid for your term insurance plan under Section 80C. The deduction is available only if the premium is less than 10% of the sum assured and the policy is in force for at least two years.
Section 10(10D): The death benefit received by the nominee or beneficiary is exempt from tax under Section 10(10D), subject to certain conditions. The exemption is available only if the sum assured is more than 10 times the premium, and the policy is not a keyman insurance policy or a policy issued under Section 80DD or 80DDB.
Section 80D: You are eligible for a deduction of up to Rs. 25,000 for the premium paid for the critical illness cover or the health insurance cover that is attached to your term insurance plan under Section 80D. The deduction is available only if the premium is paid by check and the policy is issued by a registered insurer or a scheme approved by the IRDAI.
Section 80DD: You can claim a deduction of up to Rs. 75,000 for the premium paid for the disability income benefit or the waiver of premium benefit that is attached to your term insurance plan under Section 80DD. The deduction is available only if the policyholder or the nominee is a person with disability and the policy is issued by a registered insurer or a scheme approved by the IRDAI.
Section 80DDB: You can claim a deduction of up to Rs. 40,000 for the premium paid for the terminal illness cover that is attached to your term insurance plan under Section 80DDB. The deduction is available only if the policyholder or the nominee is a person suffering from a specified terminal illness and the policy is issued by a registered insurer or a scheme approved by the IRDAI.
Term insurance myths and facts
Term insurance plans are often misunderstood and misinterpreted by many people due to a lack of awareness and knowledge. Here are some of the common myths and facts about term insurance plans that you should know:
Myth: Term insurance plans do not offer any returns or benefits, as they do not have any maturity or survival benefits.
Fact: Term insurance plans offer the highest returns and benefits, as they provide a high sum assured at a low premium rate, which can secure the financial future of your family in case of your death. Term insurance plans also offer tax benefits and exemptions, which can reduce your tax liability and increase your savings.
Myth: Term insurance plans are only for young and healthy people, as they have a lower risk of dying and a longer life expectancy.
Fact: Term insurance plans are for everyone, regardless of their age and health, as they provide protection for a fixed term, which can vary from 5 years to 100 years. Term insurance plans are especially beneficial for older and unhealthy people, as they can get coverage at a reasonable premium rate and avoid the risk of being uninsured or underinsured.
Myth: Term insurance plans are complicated and difficult to buy, as they involve a lot of paperwork, medical tests, and verification.
Fact: Term insurance plans are simple and easy to buy, as they are available online and can be purchased in a few clicks. Term insurance plans do not require any paperwork, as the application form, documents, and payment can be done online. Term insurance plans also do not require any medical tests, as they are based on the self-declaration of the policyholder. Term insurance plans also have a fast and hassle-free verification and approval process, as they are backed by advanced technology and automation.
Conclusion
Term insurance plans are one of the best ways to protect your family’s financial security and well-being in your absence. Term insurance plans offer a high sum assured at a low premium rate, along with various features, benefits, and options to suit your needs and preferences. Term insurance plans also offer tax benefits and exemptions, which can reduce your tax liability and increase your savings. Term insurance plans are simple and easy to buy, as they are available online and can be purchased with a few clicks.
However, buying term insurance plans in India can be a challenging task, as there are many factors to consider and many options to choose from. Therefore, it is important to do your research, compare the plans, and choose the best term insurance plan that offers you the maximum coverage, benefits, and value for money. You can also consult a financial expert or an insurance advisor before making any decisions. Remember, term insurance is not an expense but an investment for your family’s future. So, buy term insurance today and secure your family’s future.
