Term Insurance

Term insurance is a life insurance plan offered by an insurance company that provides comprehensive financial coverage against premiums paid for a limited period to the beneficiary of the policy; this coverage, provided under term insurance plans, is paid as death benefit upon the demise of insured during the policy term. 

What is Term Insurance?

Term life insurance is one of the most popular types of life insurance that comes with a death benefit in case of a sudden demise of the policyholder during the policy term. Also popular as pure life insurance policy, the term policy can be renewed annually for another term, convert to a regular life insurance or permanent coverage or even allow to cease without a hassle.

A term plan not only offers financial security to your family but also is capable of fulfilling its future needs such as your child’s higher education, child’s marriage, etc.

Among all the life insurance products, Term life insurance policy offers the highest life coverage for the minimum premiums during the term of the policy. Some Insurance Companies also cover permanent or partial disability wherein the policyholder’s regular income is disrupted.

Note: In case of survival of the life insured the coverage at the earlier rate of premiums is not guaranteed after the expiry of the term insurance policy. The buyer has to either obtain extended coverage with different payment condition or forgo the coverage entirely.

Why You Should Buy Term Insurance?

There are various reasons to buy a term plan. However, here are the key and basic reasons that you must buy term insurance:

• The Dependency of your Family: You can use the term insurance money to meet the monthly expenses of your dependents and family when you’re not around. Moreover, it fulfils vital life goals such as education and marriage of your child.
• Protection of the Assets: A term plan allows you to take loans for assets such as a car or a house. Nevertheless, if you’re not around, your dependents and family might be burdened with the repayment of loans. In such circumstances, your family can utilize the term insurance pay-out in paying off the outstanding debts.
• Risks Related to Lifestyle: Present-day lifestyle problems often lead to various ailments and diseases. Some term insurance plans do not just safeguard your dependents and loved ones after the demise of the policyholder but also offer critical illness protection for a lifetime. This key feature pays on the diagnosis of some critical illnesses such as heart attack or cancer.

Benefits of Term Insurance Plan

A term insurance policy is a must for every person and one cannot articulate its importance completely. Term insurance plans are the only life insurance products that are especially designed to solve a sole purpose of protection. Now that everyone knows, it covers death perils and risks; here are some other core benefits of term insurance plans in India:

• Safety for Loans and Liabilities

  A term insurance also aids in providing safety for the dependents from your fiscal liabilities such as loans or any other debts that you have.

• Cover Critical illness

  Together with offering life cover, a term insurance plan also offers protection against critical illness. For a tiny add-on premium amount, Critical Illness cover offers lump sum payment when any critical illness such as kidney failure, cancer, or heart attack, etc. is first detected.

  • Online Term Insurance Plan also takes care of family in case of your disability or critical illness. It provides
    • Supplementary income in case of loss of income due to accidental disability or illness.
    • Get lumpsum amount if diagnosed with critical illnesses.
    • Additional sum insured in case of accidental death.

• Higher Sum Assured at Affordable Premiums

  One of the most alluring features of term insurance plans is that the premiums are always the lowest, unlike the other life insurance products. Moreover, the sum assured offered under term plans is relatively higher when compared to the premium amounts. Regular term insurance plans, including TROP plans come with a 105% return on premium benefit when the policy matures.

• Tax Benefits

  Term insurance plans come loaded with tax benefits on the premiums paid. New-age term insurance plans along with critical illness cover also provide some additional tax benefits on the premiums paid by the policyholder. One can also avail benefits subject to the conditions u/s 10(10D) on the amount that his/her family receives in the case of an untimely demise or unfortunate event.

• Support in the case of Disability

  In some of the term plans, the insurance provider pays the future premiums in the case of permanent or total disability. Consequently, the policyholder’s life insurance cover continues even if s/he is not able to make payment of the premiums.

• Add-on Protection

  So as to amplify the security of the family, a term insurance plan offers add-on pay-out in the case of an accidental or untimely demise.

Top Term Insurance Plans in India

Term insurance offers flexible plan options to suit the need of every individual. You can choose:

• The amount of preferred sum assured
• Premium payment option which can be one-time, limited pay or regular pay.
• Term of the policy
• Add on protection

Key Features of Term Insurance Plans

Term Insurance Plans are specifically designed to secure your family's basic  financial needs in case of death or uncertainty. According to the plan, family/dependents of the life insured is/are eligible for a lump sum amount in case of death or critical illness (if applied for) of the life insured during the tenure of the policy. Let’s take a look at the salient features of the term insurance plans.

• Claim Settlement Ratio: The claim settlement ratio can be described as the percentage of claim settled by the insurance company as compared to the total number of claims received.
  **Claim settlement ratio = (No.of claim settled / No.of claim received) *100
  
  With the help of the claim settlement ratio of the company, the policy buyers can get a clear idea of the ratio of claim settled by the insurance company in a financial year. The insurance companies, which have a higher claim settlement ratio are considered more reliable and a better choice of investment.
• Death Benefits : On the demise of the life assured during the tenure of the policy, the nominee/ beneficiary of the policy receives the total death benefit chosen at the time of commencement. Depending on the type of term insurance plan, the death benefit may stay the same over the whole tenure of the plan (standard term plans), decrease (decreasing term plans) or increase (increasing term plans). The insurers provide various options of payment for the term insurance plan. These include a lump sum payment, lump-sum payment plus an annuity that may be monthly, quarterly or yearly, or simply annuities that are spread over the agreed number of years.
  
  Moreover, there are basic life cover plus monthly income term insurance plans which are specifically designed to take care of the monthly expenses of the family, even in the absence of the life insured. Under term insurance plan option, a lump-sum payout is made to the beneficiary in case of demise of the life insured. Along with the one-time payment, the term plan also offers monthly payouts for the fixed tenure of 10 years, in order to meet the daily expenses of the family.
  
  This term insurance plan is best suitable for individuals who are the single breadwinner of the family or whose dependents do not have any other source of income. So, with the monthly income feature of the plan, the dependents can use the money wisely and take care of their monthly liabilities.
• Limited Pay: Limited premium payment term insurance plan allows the policyholder to pay the premiums for the limited-term period, while the coverage continues for the longer tenure. For example, if an individual buys a term plan with policy coverage of 25 years and premium payment tenure of 10 years, then he/she will have to pay the premium only for the term period of 10 years whereas, the coverage will continue for the tenure of 25 years.  There are many different benefits of limited pay option such as:
  • The premium payment term ends within a short- time period.
  • The limited pay plans offer a longer duration of life coverage.
  • Reduce the chances of policy lapse.
    Besides this, one of the major benefits offered by limited pay option is that, under this option of premium payment, one can save up to 40% on the term insurance premium amount.

For Example- Let us assume.

• Policy Term: The minimum policy term is 5 years, with the maximum varying from 25 years to whole life span for equated monthly premium payments. For single premium policies, the policy term can vary from a minimum of 5 years to a maximum of 40 years. People can opt for the term plan period they think works for them. Experts suggests to go for term insurance plan which has a longer term-period as the premium amount generally gets locked and the insured party gets to pay the same premium over the tenure of the term plan for the same amount of cover.
• Entry Age: To be eligible for term insurance plans, the minimum age of entry is 18 years, with a maximum age limit of 65 years with optional add on benefits. The premium of the term plan increases with age and people who are looking for a term policy for a longer period should opt for the best term insurance policy when they are relatively young.
• Maturity Age: The best term insurance plans are those that offer cover well into the lifetime of the insured. Term insurance policy offers coverage to the insured up to 65-70 years of age. Term policy with higher maturity age may also charge a higher premium rate as they offer a term insurance cover against life risks for a longer tenure. Also, the risks increase with age and this is reflected in the premium amount.
• Tax Benefits: Term insurance plans come with excellent tax benefits. You can avail lucrative tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act, 1961. Additionally, the premiums paid for the Critical Illness Benefit towards tern plan, also qualifies for a deduction under Section 80D.
  
  Note: Tax benefits are subject to changes in tax laws. Please consult your tax advisor for details.
• Maturity Benefits: Term insurance plans don't come with any survival or maturity benefits. If one wants maturity benefits, then a TROP (Term Return of Premium) plan is suggested.
• Plan Choice: Term insurance provides flexibility in terms of choosing the plan on a single life basis or joint life basis. Single life means that the term plan will only provide cover for the life of the insured party who is generally the breadwinner of the family. A joint life term plan, on the other hand, covers the life of both the husband and the wife through a single term plan. Most term insurance plans offer the term plan on a first claim basis. This means that the term plan pays the sum insured on the expiry of either of the two insured people. There are also other term plans that pay on the death of both the insured persons.
• Survival Benefits: A standard term plan does not have any survival benefits. However, the demand from investors has meant that various companies have opted to launch term insurance plans with survival benefits. Called Term Return of Premium (TROP) plans, the term plan refunds the premium at the end of the term plan tenure if the insured person survives the period. The TROP plan is becoming popular with people who are looking for savings as well as insurance with their term plan.
  
  This term insurance plan has a higher premium than the standard term plan but has the advantage of assurance that the policyholder will get back the premium he or she paid to the life insurance company for the cover. Policy holder should read the insurance terms and conditions carefully to ensure they know the amount of money they will get back as survival benefits. Check out the term insurance policy that meets your needs with our term insurance comparison.
• Additional Rider Benefits: Additional optional benefits such as critical illness and accidental death/ disability or Accelerated Sum Assured are also available under the term insurance policy. The benefits can be added to the term plan by paying an additional premium amount. The best term plan in India is the one that offers these riders at a comparatively lower price than opting for such cover through individual plans. Choose the additional optional benefits for your term insurance plan with our website. Use the term plan comparison features to shortlist the additional benefits you need. Some common term insurance riders are:
  • Critical Illness Rider
  • Waiver of Premium
  • Accidental Death Benefit Rider
  • Accidental Total and Permanent Disability Rider
  • Income Benefit Rider

Types of Term Insurance Plans in India

There are a number of term insurance plans available in the market from various insurance companies in India. All of these companies offer both types of online and offline term life insurance with each term policy having its own set of specific features that make it the best term insurance plan in the market. To understand these plans we need to look at them a bit more in depth.

• Standard Term Insurance Plans

  A standard term insurance plan is one where the insured person gets a cover against various risks against payment of a certain premium amount. The most common term plan and generally also considered the best term insurance policy is the one that charges a yearly premium for an annual cover.

• Term Return of Premium (TROP) Plans

  A term return of premium policy is a term insurance plan that refunds the premium paid for the cover in case the insured party survives the policy period. These term plans are increasingly becoming popular as the policyholder gets the money they have invested in the term insurance policy at the end of the policy period.

  These term plans also give the insured the option to add on riders that they feel are essential. These riders add to the premium of such a term plan just like any other standard term insurance policy.

• Group Term Insurance Plans

  Group term insurance are term insurance plans that are specially designed for businesses, companies, societies, associations or large families and provide term plan insurance cover for all the members of the group. These policies provide the same set of benefits that an individual term plan offers but the overall coverage is generally more in terms of illnesses or other factors that are generally excluded in the individual policies. Most of these term plans are offline as each policy is generally customised to suit the needs of the group taking the policy.

• Term Insurance Plans by Number of Years

  Insurance companies also provide term insurance plans for a specific number of years. Term plans are called level term plans in industry parlance as the nominees receive the same level of death benefit if the worst comes to pass during the tenure of the term policy. However, some companies also provide decreasing term options.

  The amount of premium to be paid each year in these term plans generally remains the same throughout the whole tenure of the policy. In some instances, term insurance companies may increase the premium every few years for some longer term insurance plans. These term life insurance plans can range from 5 years to 30 years . The policyholder can further renew the plan for an additional period of the same tenure, subject to him or her meeting the conditions laid down under the plan for renewing the term policy. The level term insurance plans do not generically provide a maturity benefit as the focus is to keep the premium low.

  5 Year Term Insurance Plans: The 5-year term insurance plan comes with a minimum policy tenure of 5 years. These plans come with a lower premium and the term insurance buyers have the option to pay the premium in different modes i.e. monthly, quarterly, half-yearly or annually.

  • The 5 year term plan is suitable for:
  • Individuals who have short-term financial goals.
  • People who are retired and want an additional cover for five more years.
  • Citizens with lower premium potential.

  10 Year Term Insurance Plans: A 10-year term insurance plan offers a minimum policy tenure of 10 years.
  
  Similar to other term insurance plans, the premium of the policy generally remains the same throughout the period of the plan. The term plan insurance companies offer different options of premium payment i.e. single premium payment option and regular payment option, which includes annual, half-yearly, quarterly and monthly premium payment. Generally, the premium amount of single pay policy is lower as compared to the total of the premiums paid through the regular mode of premium payment.

  A 10 year term plan is ideal for:

  • Long term coverage and future financial stability of the family.
  • Planning for the retirement years till 60 years of age.

• Decreasing and Increasing Term Insurance Plans

  • Decreasing Term Insurance Plans: The decreasing term insurance plans are a renewable term plan where the sum assured of the policy decreases every year by a fixed percentage over the tenure of the policy. These plans are generally offered as mortgage clearing plan. Decreasing term plans are taken to clear debts and loans. In case of demise of the insured person, the available sum assured amount is paid towards the repayment of the loan. The premium rate of decreasing term plans is less as compared to the normal term plans. This term insurance policy provides financial security to the insured’s family and offers the benefit of tax exemption at an affordable premium rate.
  • Increasing Term Insurance Plans: The cover and the premium increase over the overall tenure of the renewable term insurance plan. This term plan helps to cover against risk from rising inflation costs that may affect the real value of the death benefits that the insured individual's family would receive. The cover under these term plans rises at a pre-specified rate and keeps increasing until the overall value of the cover is 1.5 times the original cover under the term policy. 

• Single Life and Joint Life Term Insurance Plans

  A joint term insurance plan works out to be cheaper than buying two individual term insurance plans. Moreover, the features and benefits remain the same, ensuring both the members get the same advantages of the plan.

  These policies are ideal for a couple with children as it will ensure the dependents will not have to worry about their future if the unfortunate comes to pass and both parents pass away. A joint term insurance policy is the best option to go with as it also provides insurance cover for the surviving spouse.

• Offline and Online Term Insurance Plans

  Offline term plans are those that are sold through traditional methods such as through an agent or a branch, while online term plans refer to term insurance plans that are sold over the internet. Term insurance providers offer an online term plan at a significantly discounted rate than the offline plan. The primary reason for this is the lack of any intermediaries such as the agent or the branch between the policyholder and the insurance company for an online term insurance plan.

  People could now buy online life insurance at the click of a mouse in a few minutes.Research shows that an online term insurance plan may be cheaper by as much as 40% in some cases than the offline plan that offers the same features and benefits. There are various reasons for the low premium in an online term insurance policy. For instance:

  • No commission to be given to agents in online term life insurance.
  • Well-informed decision, since the online term plan space gives a lot of scope to compare the choices.

  There are quite a few online life insurance plans that may suit your requirements. A smart way to look at online life insurance plans is to compare term insurance plans side by side and pick the term plan that makes sense. Choose your online term insurance plan using our term plan comparison options.

  Your hunt for the best online term insurance plans ends at PolicyBazaar. We go extra miles to serve you with the best term insurance quotes that suit your budget and requirements. Just provide us with the minimum basic details such as name, age, income and here you go. We not only suggest the quotes but also calculate the premiums for you. On the basis of our suggestions, all you need to do is to compare term insurance plans and opt for the best deal. Do you comparison on the basis of certain parameters like premium offered, claim settlement ratio of the insurer, tenure, coverage etc. This way we help you make an informed decision while suggesting the best available options in a hassle-free manner.

Why is It Important to Compare Term Insurance Plans?

As there is an extensive range of term insurance plans available in the market, choosing an apt plan can always be a daunting task for insurance buyers. Different insurance providers offer a different type of term insurance plan and each plan varies from another based on various factors.

Thus, in order to choose the best plan as per one’s own requirement and suitability, it is very important to compare term insurance plans online before zeroing in on one.

While comparing term insurance plans, it is very important to check the various aspects of policy such as Insurance Coverage, Maturity Age, Claim Settlement Ratio etc.

By comparing the quotes of various term insurance plans, the policy buyers can choose the plan which fulfils their requirement at an affordable premium rate.

Term Insurance Comparison Chart

For the better understanding of our readers, here we have shown the term plan comparison chart.

How to Choose the Best Term Insurance Plan?

To select the best term insurance plan, a policyholder should look into the following factors:

• Claim Settlement Ratio: The record of term insurance claim settlement provides a clear picture of the insurance provider to the prospect policy buyers. The ratio of claim settlement is released by the Insurance Regulatory and Development Authority (IRDA) India every year. A claim settlement ratio that is consistently good indicates that the insurance provider has been quick and robust in its claim settlement process.
• Feature to Add Terminal/Critical Illness Benefit: A critical medical issue such as brain surgery or cancer costs a lot of money and cripples the finances of the family. However, if a term plan chosen by a policyholder covers critical illness or if it has the feature to add-on critical illness cover in it, then one can easily safeguard self from such risks. Most of the critical illness add-ons immediately payout upon diagnosis of the critical illness.
• Company Reliability: The reputation of a company and stability is very important in any sector of business, especially in the sector of life insurance for the customers to trust.  Before zeroing in on a plan, it is important to check the credibility of the insurance company.
• Premium: The premium rate of a term insurance plan plays a vital role while purchasing the plan. Hence it is important to compare term insurance policies online and choose the term plan which offers higher coverage at an affordable premium rate. Additionally, choose a company that provides discounted premiums to non-smokers.
• Premium Waiver Rider upon Diagnosis of Terminal Illness: If the policyholder gets affected by some terminal illness, then all the future premiums for his/her term policy will be waived off.
• Solvency Ratio: The solvency ratio is something that tells whether the insurance provider chosen will be capable financially for settling the claims if the requirement arises. As per IRDA, every life insurance provider should maintain a solvency ratio of 1.5 at least.
• Enhanced Cover: Some of the specific insurance companies offer the option of enhanced cover in the term insurance policy. In this option, the policyholders can enhance the coverage of the policy under particular circumstances or critical situations.
• Riders: While purchasing a term plan, it is important to check the rider benefits offered by the term insurance company in a detailed way. An insurance rider is extra to the essential plan that offers advantages far beyond the subject of the policy in case of any eventuality.
• Go for a Regular Income Payout Option: Since their inception, the life insurance plans like term insurance plans are providing a large sum of amount to the nominee of the policyholder. However, some modern term insurance policies are providing the option of regular payout along with some lump-sum. So, opt for a policy that provides a regular payout option.

Reasons to Buy Term Plan Online

Apart from the hassle-free and simple process of purchase, an online term plan offers many other benefits.

• Affordability: Purchasing an online term insurance plan is more affordable as compared to purchasing the plan offline. This is because there are no agents involved in between. The policy buyers can directly purchase the online term plan by visiting the website of the insurance company. By purchasing the plan online, the paperwork and processing fees automatically decrease as everything done online and these benefits are offered to the customers as discounts. Thus, buying an online term plan is more beneficial as compared to the offline term insurance policy.
• Sum Assured: This is yet another benefit of buying an online term insurance plan. Mostly, the sum assured amount offered by an online term plan tends to be higher on contrary to offline term insurance plan, because the overall cost of purchase is low. Moreover, while purchasing the term plan online, most of the insurance companies do not ask for any medical test. Medical test of the insurance buyer is only required in case the sum assured amount of the policy is above Rs.50 lakhs.
• Comparison: One of the perks of buying online term insurance plan is that it offers the advantage to compare term insurance policies online and then choose a particular plan as per one’s own requirement and suitability. By comparing term insurance plans online, the insurance buyers can zero in on the most beneficial plan at the most affordable premium rates.
• Reliability: The online process of policy purchase is more reliable. The online term insurance policy offers transparency while purchasing a policy. The policy buyers can know about the features, terms and conditions of the policy in a more detailed way by simply visiting the website of the insurance company. Moreover, in order to make an informed decision, the insured can also check the reviews of the plan.
• Easy Access: Unlike offline term insurance policy, the online term insurance plan can be accessed easily. The insurance holder has the convenience to access and know the policy details whenever they require. Moreover, they can also check and keep track of the policy status from time to time.

Who Should Buy a Term Insurance Policy?

Any individual with financial dependents should consider purchasing a online term insurance policy. This includes young professionals, parents, married couples and people who want to gain tax benefit as term insurance plan provides tax benefit under section 80C of Income Tax Act 1961. Hence, any individual who wants to provide life protection to their family at an affordable premium rate along with the benefit of tax exemption should purchase a term insurance policy.

• Parents: Parents are generally the single breadwinner of the family and the only financial support for their children. Thus the best way to secure the financial future of the children is to have a term insurance policy. As in term plan, a death benefit is paid to the beneficiary of the policy in case of the unfortunate demise of the insured person.
• Newly Married: A term insurance policy can work as a financial safety net for your spouse even in your absence. In case of any eventuality, the term insurance plan not only provides financial security to the beneficiary but also takes care of the liabilities.
• Young Professionals: Purchasing a term insurance policy at a young age is more beneficial as compared to buying a policy at an old age.  This is because the policy offers very low premium rate to the young individual as compared to the old policy buyers. Moreover, one can also secure the financial future in the long-term by buying a term insurance plan while being young.
• Taxpayers: Along with the benefit of life coverage, one of the major advantages of purchasing a term insurance policy is that it offers the benefit to save on taxes. The premiums paid towards the policy are tax exempted under section 80C of the Income Tax Act. Thus, if you want to save on taxes along with the benefit of life cover then you should certainly consider buying a term policy.

How Does a Term Insurance Plan Work?

As the simplest form of life insurance product, term insurance is the most affordable insurance plan which offers higher insurance coverage. As the purest insurance product, only death benefit is offered by the term plan. Under the online term insurance plan, the insurance company gets into an agreement with the insurance buyers.

According to this agreement, a lump-sum, sum assured amount is paid to the beneficiary of the term insurance policy as a death benefit in case of the unfortunate demise of the policyholder during the policy tenure. The insurer pays the sum assured amount to the beneficiary as mentioned in the term insurance policy documents.

The sum assured amount is paid on the basis of the type of payout option chosen by the insured at the time of policy purchase. The payouts can be made as a lump-sum payment at one go or as monthly income at specific intervals of time.

Term Insurance Payouts

1. Lump-sum

The entire sum assured amount is paid at one go to the beneficiary of the term insurance policy.

For example-

Sum assured= 1 crore

Payout= Rs.1 crore as a lump-sum payment to the beneficiary of the term insurance policy.

2. Lump-sum + Monthly Income

Half of the sum assured amount is paid as a lump-sum payment to the beneficiary of the term insurance policy, whereas, the other half of the sum assured amount is paid as monthly income to the beneficiary of the policy.

For example-

Sum assured= Rs.1crore

Payout=  Rs.50 lakh as a lump-sum payment at the time the claim is made by the nominee and Rs.50,000 every month as a death benefit.

3. Income Replacement or Monthly Income

A fixed percentage of sum assured amount is paid as monthly income from the first month of life insured’s death.

For example-

Sum assured= Rs.1 Crore

Payout= Rs. 1 lakh per month (Rs. 12 lakh yearly) for 83 months approximately.

How Does a Term Plan from Policybazaar Help You?

A term plan from Policybazaar helps you in the following way:

• The plans offer the benefit of tax saving under section 80C of the Income Tax Act.
• The plans are available for the long policy term.
• Offers long term coverage.
• It protects from critical illness when diagnosed.
• Offers a regular income for meeting the household needs.
• Offers disability benefit rider to be added to the term plan.
• Provides coverage against life-threatening illness.
• The plans provide a high maturity age.

Term Insurance Claim Process

The steps to process a claim for a term insurance plan is mentioned below:

• Filing the Term Insurance Claim

  The very first step is to file a claim. One can follow any of the below steps to file the claim:

  • Go to the claims section available on the official website of the insurance provider for intimating the claim.
  • Or call the toll-free number of insurance providers for intimating.
  • Or Go to the nearest branch office of the insurance company.
  • E-mail the insurance provider for claim intimation email id provided.

  Remember

  A claim is formally registered and accepted only after receiving a written request for claim settlement with a duly signed and filled claim settlement form with other relevant documents. An individual should file a term claim via phone call or by visiting the nearest branch of the insurance company for the quick claim process.

• Claim Process in case of Death

  The process of claim settlement starts when the nominee of the policyholder submits a duly filled and signed claim form with all the supportive and valid claim documents. The list of all the required documents is given below:

• Document required in case of natural death:

  • Documents of term insurance policy
  • Copy or original death certificate of the life insured.
  • Duly filled and signed the claim form.
  • Statement of the claimant
  • Any other documents as required by the insurance company.

• Document required in case of accidental death:

  • Police investigation report, police FIR report
  • Medical reports and hospital certificate including the discharge and admission summary of the policyholder, test reports, death summary, etc.
  • Statement of attending doctor/s, certificate released from the medical attendant.
  • Report of post mortem
  • Statement of the claimant
  • Any other relevant documents as asked by the insurance provider.

• Filed Term Insurance Payouts and Claim Approval

  As soon as the insurance provider verifies all the required documents and then accepts the claim, the payouts will be made according to the payment options present in the term plan. The payouts are usually given via ECS, for which, the nominee should submit the details of the bank, photocopy of the passbook of bank account, and canceled cheque. Some insurance providers may need these details attested by the concerned bank, so do check the same.

• Some Important Aspects Related to the Claim Process of Term Policy

  • If the nominee dies with the insured, then the payouts of the policy are given to the next legal heir.
  • If the nominee dies before the policyholder, then the policyholder should appoint some other person as his/her beneficiary before the expiration of the term plan.  

Term Insurance Plan Exclusions

Before purchasing any term plan, it is very important for policy buyers to go through the terms and conditions of the policy and check all the exclusions mentioned in the policy documents.  However, term insurance plans come with only one exclusion i.e.

Suicide Exclusion

In case, the life insured (sane or insane) commits suicide within 12 months (1 years) from the date of policy inception or from date of revival of policy, the policy terminates immediately. In such cases, the beneficiary of the term insurance policy receives only the total premium amount paid by the insured from the insurance company (inclusive of extra premium, if any, but exclusive of applicable charges and taxes imposed by the government).

Apart from the above, there are other exclusions as well, which come under critical illness rider. If any of these exclusions are found at the underwriting stage of the term insurance policy, then no benefit will be offered. Let’s take a look at the exclusions, which comes under critical illness rider.  

• Any health condition or ailment that has been suffered by the life insured/ were diagnosed/or receiving treatment within 48 months before the policy initiation date, the insurance provider will not provide insurance protection under critical illness rider of term plan.
• The critical illness rider offered by term plan does not provide coverage in case of intentional self-inflicted injuries, self-abuse, attempted suicide, psychological disorder, etc.
• The external congenital anomaly, which is in the accessible and visible part of body, is not covered under the critical illness rider offered by term insurance plan.
• The critical illness rider offered by term insurance plan, does not provide any benefit in case the life insured delays the medical treatment in order to avoid the waiting period.
• No critical illness rider benefit is offered by the term plan in can of invasion, war, act of foreign enemy, civil war, revolution, rebellion, strike, mutiny, etc.
• The life insured will not be entitled to avail the benefit of critical illness rider offered by term plan, in case, the insured is an alcoholic or addicted to drugs and narcotics.
• Any man-made disasters such as wars or rights which result in the loss of life are not covered under the critical illness rider of an online term plan. Any suffering or damage resulted due to the carelessness of the people is not counted by the insurance company. Thus, no coverage is offered to the insurance holder in such case.
• Term plans do not offer any critical illness rider coverage in case of involvement of the life insured in extreme and risky sports activity such as scuba diving, bungee jumping, trekking, rock climbing, paragliding, skydiving, water sports activity, etc.
• Term plans do not offer any critical illness rider in case of sexually transmitted diseases such as AIDS/HIV, the claim made by the beneficiary of the policy is rejected by the insurance company.
• The term insurance company does not provide any critical illness rider in case of any casualty resulting from the involvement of law violation or unlawful activities. The beneficiary of the policy will be eligible for the claim only in case it is a sudden and unintentional act.

Term Insurance Riders

Riders are the add-on coverage which can be purchased by the policyholder along with the basic term plans in order to enhance the coverage of the policy. There are various online term insurance plans which offer rider as an in-built feature of the policy. Before, zeroing in on an online term plan it is very important to check what are the in-built riders and add-on riders offered under term insurance policy. The rider benefit can be availed by paying an extra premium to the insurer along with the basic premium of the policy. Some of the riders offered by the term plans are:

• Critical Illness Rider

  With this term insurance rider benefit, the insurance holder receives a lump-sum amount in case of valid diagnosis of any critical illnesses as pre-specified in the policy. The illnesses which are covered under critical illness cover are heart attack, cancer, paralysis, stroke, kidney failure, coronary artery bypass surgery, major organ transplant, etc.

• Waiver of Premium

  This is one of the most beneficial rider benefit offered under term insurance policy.  Under this rider benefit, in case the life insured fails to pay the future premium of the policy due to a disability or income loss, then all the future premiums of the term plan are waived off and the policy continues to remain active.

• Accidental Death Benefit Rider

  Accidental death benefit rider can be bought in order to enhance the coverage of the term insurance policy. Under this rider benefit, an extra sum assured amount is paid to the beneficiary of the policy along with the basic sum assured amount in case of accidental demise of the insured person.  This rider benefit works as a saviour by offering an add-on payment to the family at the time of financial hardship.

• Accidental Total and Permanent Disability Rider

  This is an add-on rider benefit offered by the term insurance wherein, an extra sum assured amount is paid to the policyholder in case; he/she suffers from an accidental permanent or partial disability which leads to unemployment. Generally, the insurance companies offer 10% or more sum assured amount per year in order to compensate for the regular income that may happen due to total and permanent disability of the policyholder.

• Income Benefit Rider

  This rider offered by term plan is specifically designed to generate income after the demise of the life insured. Under this rider benefit, the insured’s family receives additional income every year for the tenure of 5-10 years, along with the regular sum assured amount.

How Much Term Insurance Cover Do You Need?

There are various factors which determine how much term insurance coverage one should take. For the convenience of the insurance buyers, here we have discussed some of the factors.

• Current Income and Expenses: The current expenses and income of the individuals determine that how much premium they can pay towards the online term insurance plan. While determining the insurance coverage one needs, it is important to analyze the monthly income and all the expenses occurred in a month.
• Current and Future Liabilities and Assets : While determining the sum assured amount of the term insurance policy, it is very important to consider the loan installments like home loan, personal loan, car loan, etc. and the EMIs that the term insurance buyers have opted for. As the liabilities and monthly assets also include investments such as fixed deposit, ELSS, ULIPs, gold, capital market, etc. it is always important to leave room for such investment and decide the coverage amount of the term plan accordingly.
• Future Financial Goal for Family and Self: Keeping the long-term and short-term financial objectives of life, the insurance buyers should determine that how much premium they can pay towards the policy and how much coverage they need to secure the financial future of their loved ones and family.
• Make Use of Human Life Value Calculator: There are various term insurance providers which offer human life value calculator. It helps the policy buyers to get an idea of how much sum assured amount they require for a term insurance policy. Human life value calculator calculates the sum assured amount based on the simple formula of time value for money. An individual just needs to enter certain details such as the current age, expenses, present yearly income, and estimated future inflation rate, in order to get the sum assured amount that they should opt for. To know the right cover amount for you, please use the human life value calculator here.

What should be the Term Insurance Policy Duration?

The term offered by most of the term insurance plans ranges between 5 to 40 years. One must opt for the term of a policy according to his/her retirement age. Indians generally retire at the age of 60 years. In this way, if a person purchases a term insurance plan at the age of 60 years, then by that age most of his/her liabilities and responsibilities are cleared. However, a policyholder can opt for the life cover till the age of 99 years, if he/she has several dependents and wants to provide financial coverage to them for their entire life span.

Three Steps to Find the Right Online Term Plan

The best thing about the online term plan is that the freedom of the policyholder to select the most suitable policy. In addition to this, the online term insurance plan as well bring some additional responsibility on the insured of staying focus and informed for the features of the product. It is only when one matches his/her requirements with the term plan; he/she is eligible to purchase it. Mentioned below are three steps for making the right choice while buying a term policy:

• Select the Right Term Life Insurance Amount

  The first step that every term life insurance buyer should consider while purchasing it to find out the amount of coverage as per the requirements of his/her family’s future needs. To find out the same, there are many term insurance calculators available online. One can use one of these calculators and find out how much he/she should invest per month so that the future requirements of his/her family are met when he/she is not around.

  If one wants to calculate it manually, then he/she can do the same by following the thumb rule of the term policy calculation. According to this rule, the life or term insurance coverage should be 15 times the annual salary of the policyholder. So, if Mr. A’s annual income is Rs.12 Lakh, then he requires a term insurance of Rs.1.8 Crore. However, the second step is also added in this, wherein one should also find out the required coverage from term life insurance for covering his/her other financial obligations like the higher education of policyholder’s children and other outstanding loans. For example, the sum of these financial obligations on Mr. A is Rs.50Lakh, and then the total coverage from the life or term insurance that he wants is Rs.2.3 Crore.

• Different Term Insurance Plans Comparison

  Term insurance plans are the purest form of life insurance. Term insurance premiums are lower than other life insurance plans. However, in order to ensure the right plan, one should go for term insurance comparison. Compare term insurance with other insurance plans online and stay covered.

  A term insurance aspirant as well is suggested to compare term insurance plans through online term insurance comparing websites. One should compare different term insurance plans on various features such as duration of the term, maximum coverage provided, etc. It is also suggested to search for the background of the term insurance provider like the claim settlement ratio of the company, the company’s existence in the insurance industry, etc.

• Consider the Riders for Better Risk Coverage

  Term plans as well allow purchasing riders for widening the risk coverage for the family of the policyholder. For example, to provide coverage against critical illnesses or accidents, there are riders provided by most of the term insurance providers. One can check for an appropriate rider on an online term insurance provider’s website. The riders are available at an additional cost, but most of the insurers make these available at affordable premiums. Therefore, it is worth to attach a suitable rider in the term insurance plan. In this way, the policyholder will have better risk coverage and he/she can give better protection to his/her family.

  Purchasing an online term plan provides its policyholder with a lot of coverage. However, it is the responsibility of the insured to select the most affordable and suitable term insurance plan without missing out on any required detail. This is because a term plan secures the future of the family of the insured.

How Long Must be the Term of the Term Plan?

The tenure of the term policy is an important aspect. This is because it involves the premium amount that one pays for his/her term insurance policy. The longer is this tenure, the greater will be the annual premium of the term plan. However, if one keeps this period very short, then there are chances of being without cover at the time when the family of the policyholder is at utmost need. Therefore, it is essential to consider different necessary factors such as the tenure of the term insurance plan and its coverage.

Related Terms

• Term Life Insurance

  Term insurance is the simplest form of life insurance product, which financially safeguards the future of the family and takes care of the liabilities in case of an eventuality. Read More

• Death Benefits

  The death benefit is the total sum assured amount paid to the beneficiary of the policy in case of the unfortunate demise of the insured person. Read More

• Term Insurance Riders

  Term insurance riders are add-on benefits offered under the policy, in order to enhance the coverage of the policy.Policyholder can add riders to the plan by paying an extra premium along with the basic premium of the policy. Read More

• Claim Settlement Ratio

  The claim settlement ratio of an insurance company is the number of claims settled in a year against the number of claims filed.  The higher the claim settlement ratio of the company, the more reliable the insurance company is. While purchasing a term insurance plan, it is very important to check the claim settlement ratio of the company. Read More

• Traditional Term Plan

  It is a pure term insurance plan, wherein only death benefit is paid to the beneficiary of the policy in case of the unfortunate demise of the insured person during the tenure of the plan. Read More

• Term Insurance Premium

  The term insurance premium is a specific amount paid by the policyholder to the insurance company in yearly, half-yearly, quarterly or monthly mode.  The premium paid by the policyholder determines the insurance coverage of the policy. The term policy is known to provide higher insurance coverage at an affordable premium rate. Read More

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