Best term life insurance
What is Term Insurance?
Term Insurance or Term Life Insurance, is a life insurance that provides coverage of your life for a particular duration or a fixed and limited term/ period at a fixed payment.
Why Term Insurance is Important?
To secure your family and their future when they are completely dependent on you and especially when you being a single hand earning. It ensures financial stability for your loved one’s, in case of any mishap or any unfortunate event. It also covers you for any kind of critical Illness, say Cancer, heart disease etc……
Top 13 Reasons Why you need to Buy Term Insurance
First of all, most of the people think that there is no return from doing Term Life Insurance then why do we need it. If we take Life Insurance policy, say LIC or HDFC, at least we will get Money back or lump sum amount in completion of policy tenure.
This thought itself is wrong. Term insurance is equally Important as other Life insurance where money back is available. Term Insurance helps the needy to give freedom in case of any mishap happened to Him/Her and they secure their family with small payment but with good amount of life insurance coverage which is easily affordable But the same is very costly in Life Insurance policies with money back guarantee which is not easily affordable to everyone.
13 Top Reasons Term Life is beneficial:
- Premium Affordability – As mentioned above, many people cannot afford a considerable Huge amount of Life insurance which can be easily affordable through a term Insurance Plan, you can have the highest death benefit or life cover by paying a very nominal premium amount. But as stated earlier, it provides only life protection plan and no other benefits like money back is available.
2. Benefits of starting early – If you start early on choosing Term Insurance, you will be charged with very minimal amount because the premium amount depends on age and policy term.
3. Financial Security: In India, people think that financial security comes only with spending in property, Bank FD or Gold. But all these gives financial security up to some extent that too you need to spend and save good amount. They do take life insurance but with very less amount. Term insurance will help giving financial security affordable with a very low amount to spend on monthly basis. With term insurance, you can live a secure life without worrying about the financial security of your family in your absence.
4. Covering Critical illness/ Disability – Term plans cover Critical illness and disability also for which you don’t need to take a separate medical insurance policy.
5. Fixed premium – The sum assured, or the premium is not indexed to the market, which makes it a very stable insurance product. Once an insurance company accepts your request, the premiums remain the same throughout the policy term. The taxes are payable on the premium as per prevailing tax laws.
6. Riders benefit – Most of the Term plans has given additional feature of adding riders like, accidental death cover, critical illness rider or specific disease riders. By paying a nominal amount, you can cover Riders.
7. Income Tax Benefits – This is covered under 80C of the Income Tax Act 1961 (Within 1,50,000). Majorly, the death benefit paid to nominee (in case of unfortunate death) is tax free under Section 10 (10D) of the income Tax Act 1961.
8. Easy to buy (Online) – Now a days, it is very easy to buy a Term insurance. Simply go to website who provide comparison option, compare the term plan, choose and make a payment.
9. Flexibility payment option- Term insurance plans have given flexible payout options. You can opt for a lump-sum payment or choose to receive a part of the sum assured as lump-sum and the balance in equal installments. The premiums can also be paid on a monthly, Half-yearly or annual basis.
10. Lower tenure to choose– In term Insurance, you have option to choose lower tenure duration, say 10 years. Reason of taking shorter duration is basically you are having other payments like Home loan, personal loan, or can be other liabilities. Term insurance plans with short tenures like 10 years can be taken to secure your family against liabilities.
11. Spouse Coverage: In today’s scenario, we would like to cover spouse as part of Financial security is as important as ours. Opting for an additional policy is critical. Few Banks like Canara Bank, HSBC Bank, OBC Life Insurance etc. provides an option to cover both husband and wife under a single policy with an additional premium under its term insurance plan.
12. Highly Flexible– Flexibility is one of the major benefit in Term plan. You can select any Online or Offline plans for which Health plans are not mandatory. You can also change and customize the Term plan as and when required.
13. No Brokerage– Normally, brokerage fee is mentioned in any of the Insurance plan under premium allocation changes and this is a recurring expenditure. Every time you pay premium, you need to pay an allocation towards brokerage charges. But in term plan when you buy online, no brokerage charges are applied to that. This way you will save a good amount.
Top 8 companies with Best Term life Insurance
Please see below Table that will give you some basic idea for Age group 25 with a Life coverage of 1 crore for 35 years tenure (Non-smoker)
|Insurance Company||Scheme name||Premium |
(Monthly- In Rs.)
(Yearly- In Rs.)
|ICICI Prudential||iprotect smart||1,121 (Base premium + Critical illness)||13,119||98.6%|
|SBI Life||eshield||689 (Base premium + Terminal Illness)||8,101||93.39%|
|Max Life||Smart term plan||738 (Base premium + Critical illness)||8,378||99.22%|
|Kotak Life Insurance||Preferred e-term||625 (Base premium + Disablement benefit)||7,100||89.1%|
|Tata AIA life||iRaksha Trop||800 (Base premium)||9,600||98%|
|Bharti Axa Life Insurance||Flexi term||610+ (Base premium + Critical illness)||7,275||97.08%|
|HDFC Life||HDFC Life Click 2 Protect Plus||786 (Base premium)||8,988||99%|
|PNB MetLife||Mera Term Plan||683 (Base premium + Critical illness)||8,196||96.21%|
Links of Best Term Life Insurance providers and calculator
Term Insurance Buying Guide
As a thumb rule for buying Term plan, you must opt for Term Insurance cover equal to minimum of 10 times of your Gross salary/ annual income and may go up to 20 times of the same.
If you annual income is 20,00,000 INR, you must take a cover of 20,00,000 x 10 = 2,00,00,000 (2 crore)
Based on your requirement, you can choose tenure, various types of term plan say,
Types of Term Insurance plans
- Level Term Plans– This is the simplest form of a term insurance plan where the sum assured does not change during the tenure and benefits are paid out to the nominee on the death of the policy holder.
- Return of Premium Plans– The Return of Premium feature refers to the Lump-sum on survival through the maturity benefit of Savings Suraksha. The return of the entire premium will be subject to the return on future investment being equal to 8% or higher.
- Increasing Term Plans– In an increasing term insurance plan, the sum assured increases every year by a predefined amount to adjust against inflation or other financial goals. Unlike a regular term insurance plan, an increasing term plan allows the policyholder to increase the sum assured during the policy period.
- Decreasing Term Plans– Decreasing term insurance is renewable term life insurance with coverage decreasing over the life of the policy at a predetermined rate. Premiums are usually constant throughout the contract, and reductions in coverage typically occur monthly or annually.
- Convertible Term Plans– A convertible term life insurance plan has an option attached to the plan which allows the conversion of the plan to an endowment assurance plan. The policyholder can choose to attach this feature by paying an additional premium.
- Term Plans with Riders– A term insurance rider is an attachment, amendment, or endorsement made in a term insurance policy that gives the policyholder supplementary coverage. Riders strengthen a term insurance policy by providing multiple additional benefits, apart from the core offering of a death benefit.
How much term insurance do you think you need?
To figure this out, you have to evaluate your age and income bracket along with whether you are smoker or not. If you are a smoker, premium amount will get almost 50% extra of normal Term premium amount.
For example: HDFC Life Click 2 protect (99% claim settlement ratio which is very good)
- At a age of 25, for a tenure of 35 years, with 1 Crore coverage and keeping non-smoker, the premium amount on monthly basis will be- Rs. 1,896/-
- At a age of 25, for a tenure of 35 years, with 1 Crore coverage and keeping smoker, the premium amount on monthly basis will be- Rs. 2,453/-
Benefits of Purchasing Term insurance online
- You can call customer care and get the details
- You can chat with support executive as most insurance service provider give this facility online
- You can drop an email and get all required information
- All required information are available online. Before purchasing an insurance policy, a prospective buyer can research about various insurers as well as their offerings.
- Easy access to make payment online. You can choose plan, fill forms, make a payment online using net banking, cards.
- Cost saving for a customer by not paying to insurance agent or distributor or any brokerage.
- In case you are not happy, you can withdraw policy within 30 days of time.
- All claims will be settled through mobile apps (Leading company follow this practice). You will get all claim related information through email or sms.
How to buy Term Insurance online
Purchasing insurance online is an easy process. You need to keep all scanned copies ready for
- passport size photo
- address proof
- age proof
- identity proof
- income proof
Please note: You must furnish all correct information about medical history of insurer else there will be a problem during claim or settlement in case of demise.
Steps to buy term plan
- Go to company website which you want to buy the insurance
- Select the plan (In case multiple options are there)
- Furnish all required details: name, gender, date of birth, policy term, sum insured, smoking habit and in some cases city where you reside. There can be couple of more information about your annual income, your savings, your expenses, your health details which depends on company to company.
- Based on above information, a quote will be generated to choose with details on monthly, half-yearly or annual payment of premium.
- If you are satisfied with quotes, you can choose and make a payment online.
- A soft copy of the insurance policy will be emailed to your registered email id.
Who should buy a Term Insurance Policy?
Anyone with financial dependents should buy a term insurance policy. This includes young professionals with dependent parents, married couples, parents, businessmen and self-employed, SIP investors, and in some cases, even retirees.
- Newly married couple
- Working women
- Young professional
- Tax payer
- Self employed
How to choose Best Term Insurance Plan?
Below factors help you choosing right Term insurance:
- Claim settlement ratio (As shown in above table against each Insurance company)- The claim settlement ratio (CSR) reveals the percentage of claims the insurer has paid out during a financial year. In simple words, CSR is defined as the percentage of insurance claims settled by an insurer compared to the total number of claims received.
- Option to add Critical illness benefit- Critical illness insurance provides additional coverage for medical emergencies like heart attack, stroke, or cancer. Because these emergencies or illnesses often incur greater than average medical costs, these policies pay out cash to help cover those overruns where traditional health insurance may fall short.
- Option to add Rider benefit- A rider is an insurance policy provision that adds benefits to or amends the terms of a basic insurance policy. Riders provide insured parties with options such as additional coverage, or they may even restrict or limit coverage. A rider is also referred to as an insurance endorsement.
- Option to add Accidental Death benefit- The term accidental death benefit refers to a payment due to the beneficiary of an accidental death insurance policy, which is often a clause or rider connected to a life insurance policy. The accidental death benefit is usually paid in addition to the standard benefit payable if the insured died of natural causes
- Waiver of premium on terminal illness- A waiver of premium rider is an optional insurance policy clause that waives insurance premium payments if the policyholder becomes critically ill or disabled. … You cannot get a waiver of premium rider if you are already disabled or have a pre-existing condition.
- Solvency ratio- A solvency ratio measures the extent to which assets cover commitments for future payments, the liabilities. The solvency ratio of an insurance company is the size of its capital relative to all risks it has taken.
FAQ on Term Life Insurance
What happens at the end of a term life insurance policy?
You need to pay premium, the duration of your term life insurance policy, to keep your coverage in effect. At the end of your policy the coverage will end and your payments to the insurance company are complete. If you outlive your term life insurance policy, the funds are forfeit.
Do you get your money back at the end of a term life insurance?
During the policy, if you passed away, your family or beneficiaries will get the death benefit. But, If you outlive the policy, you get back exactly what you paid in (with no interest). The money you will get back will not be taxable. With a regular term life insurance policy, if you are still living when the policy expires, you will not get what you paid.
What does a term life insurance policy cover?
A term life insurance policy can help cover:
- the income that is lost when a provider passes away.
- the costs of a mortgage
- outstanding debts
- college tuition
- daily living expenses and so on.
Which type of death is covered in term insurance?
The death happened naturally or may caused due to health-related issues. In case the policyholder dies due to any type of critical illness, the policy beneficiary will get the sum assured as the death benefit.
What are the disadvantages of term life insurance?
- Increasing Prices.
- Cost Prohibitive Over Time.
- Not Designed to Last a Lifetime.
- No Cash benefit.
Can you cash out a term life insurance policy?
No, the benefit comes only in death of beneficiary during policy’s term. It does not have any cash value.
When should you stop term life insurance?
Most term life insurance policies do not technically expire and continue till Insured reaches age 95. This means you can keep your existing policy in force by continuing to pay the premiums. You can stop any point of time.
Which is better term or whole life insurance?
Term life insurance provides life insurance coverage for a specific amount of time. Also, it is much more affordable than whole life insurance.
Is term insurance a good idea?
Yes, it is because it is a worthwhile and affordable to help financially protect your family. This helps death benefit that could help getting lost income and pay living expenses, like rent or a mortgage. Also, Pay debts an insured leave behind.
How long should I have term life insurance?
Term life policies are generally sold with terms of 5, 10, 15, 20, 25 or 30 years.
What is a 20 year term life insurance?
In Short, it means your life is covered until 20-year, meaning the premiums that you pay and the coverage amount does not change during this period.
Is AAA Term Life Insurance Good?
AAA offers a good variety of term, whole and universal life insurance policies. The company receives strong financial strength ratings and few complaints, reviews of its post-purchase customer service are mixed.
What is not covered by term life insurance?
Death due to:
- self-inflicted injuries
- hazardous activities
- sexually transmitted diseases like HIV or AIDs
- drug overdose, unless covered by a rider
Does Term Life Insurance get taxed?
Generally, it is not. But any interest you receive is taxable.
Is Accidental Death Not Covered in term insurance?
It is covered. Even Suicide – Up until now, if the policyholder committed suicide after 1 year of the start of the policy, only then the death benefit would have been given.
Is term life insurance an asset?
No it is not but the benefit comes out with this in case of insured sudden demise is treated as an asset.
Can I convert my term life to whole life?
The good news is that most term life insurance policies are convertible, so you can change it to permanent life insurance, such as whole life insurance.
What is the cash surrender value of a term life insurance policy?
Cash surrender value is the accumulated portion of a permanent life insurance policy’s cash value that is available to the policyholder upon surrender of the policy. Depending on the age of the policy, the cash surrender value could be less than the actual cash value.
Can you cancel term life insurance early?
Yes, you can without paying any cancellation fees. You simply stop paying the premiums and your coverage will lapse, ultimately terminating the policy.
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