Term insurance is one of the most common type of life insurance policy that provides financial coverage, in the form of death benefit, against premiums paid for a certain period of time to the nominee of the policy upon the demise of the life insured, during the policy term.
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 is paid as death benefit upon the demise of insured during the policy term.
Term insurance plans are the purest and most affordable life insurance plans to provide comprehensive financial protection to your loved ones in your absence. A term insurance plan provides nominee of the policy with a lump sum amount as death benefit, in the event of the insured's death, during the term of the policy.
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, the term 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.
Don't be short-sighted. Get Term Insurance and secure your family's future. Save their harassment by financially securing them through a term plan.
In the event of an unforeseen situation who will take care of your liabilities and responsibilities? It is here that the importance of term insurance is felt. The lumpsum that your family will get as death benefit can bring financial stability and pay off the liabilities.
It is the real support that your family can have if something happens to you. Term insurance is important for everyone and especially more for the bread earner of the family.
“Family is not an important thing, it’s everything."– Michael J. Fox
| Insurers | Term Plan | Claim Settlement Ratio | Max Maturity Age | Premium (for a cover of 1 crore) |
| ICICI Prudential | iProtect Smart Lumpsum | 98.6% | 85 years | Rs. 1017/month |
| HDFC Life | Hdfc Click2 Protect 3D Plus | 99% | 85 years | Rs. 1023/month |
| Max Life | Online Term Plus One Time Lumpsum Plan | 98.7% | 85 years | Rs. 914/month |
| Aegon Life | iTerm | 96.5% | 100 years | Rs. 828/month |
| Tata Aia | Tata Sampoorna Raksha Lumpsum | 99.1% | 100 years | Rs. 1001/month |
| PNB Metlife | Mera Term Plan-Full Lumpsum payout | 96.2% | 99 years | Rs. 955/month |
| Kotak Life | Kotak e-Term Plan | 97.4% | 75 years | Rs. 976/month |
| Aditya Birla Sun Life Insurance | ABSLI DigiShield Plan | 97.1% | 85 years | Rs. 1037/month |
| Aviva Life Insurance | Aviva iTerm Smart | 96% | 80 years | Rs. 842/month |
| Aegon Life | iTerm Life Protect | 96.5% | 100 years | Rs. 757/month |
| Aviva Life Insurance | iLife Total Protect | 96% | 75 years | Rs. 971/month |
| Edelweiss Tokio | Zindagi Plus+ Lump sum | 97.8% | 80 years | Rs. 780/month |
| LIC | eTerm Lumsum plan | 98% | 70 years | Rs. 19432/year |
| Reliance Nippon Life Insurance | Reliance Digi-Term | 97.71% | 75 years | Rs. 890/month |
| Reliance Nippon Life Insurance | Enhanced Life Secure | 97.71% | 75 years | Rs. 1414/month |
| IDBI | IDBI Federal iSurance Flexi Lump Sum Plan | 96.2% | 80 years | Rs. 1013/month |
| Bajaj Allianz | eTouch Lump Sum | 95% | 75 years | Rs. 1128/month |
| Exide Life | Exide Life Smart | 97% | 65 years | Rs. 1331/month |
| India First | e-Term Plan | 94.2% | 75 years | Rs. 780/month |
| DHFL | DHFL Life | 96.6% | 75 years | Rs. 912/month |
| Canara HSBC OBC Life Insurance | iSelect Lumpsum | 95.2% | 75 years | Rs. 796/month |
| SBI Life | Poorna Suraksha | 96.8% | 65 years | Rs. 2987/month |
| Future Generali | Future Generali Flexi Online Term-Lumpsum | 95.2% | 75 years | Rs. 885/month |
| SBI Life | eShield | 96.8% | 80 years | Rs. 1125/month |
| Bharti Axa | online term + Lumsum | 97.3% | 85 years | Rs. 900/month |
Term insurance offers flexible plan options to suit the need of every individual. You can choose:
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.
For Example- Let us assume.
| Payment Type | Monthly Premium | Payment Term | Total Premium |
|
Regular Pay |
Rs.944 |
44 years X 12 |
Rs.4. 98 lakh |
|
Limited Pay |
Rs.2.34 K |
10 years X 12 |
Rs.2.81 Lakh |
|
Savings |
Rs.2.17 lakh |
||
|
Effective Savings |
44% |
||
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.
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.
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 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.
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.
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:
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:
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.
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.
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 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:
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.
Apart from the hassle-free and simple process of purchase, an online term plan offers many other benefits.
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.
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.
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.
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.
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.
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.
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:
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.
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 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.
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.
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.
What is term insurance?
Known what is term insurance? Term insurance is the cheapest and simplest form of insurance. It is a pure risk cover and is determined by the sum assured. On the demise of policyholder, this pre determined amount is paid to the nominee.
Why should you buy term insurance?
The need to buy term insurance varies from one individual to other, but the most common benefits which influence a person decision to buy a term insurance are as follows-
Secure your family: If you are the sole earner of your life, buying term insurance is indispensable for you. Term insurance offers monetary assistance to your family after your death. It means there would be no monetary burden on your family and they could carry on their normal lifestyle even if you are not around.
Safeguard against liabilities: - In today time, we take a lot of liabilities to buy our home, new car and for meeting other expenses. Many of these liabilities are usually paid over a period of time (loans repayments). However, if something happens to you, responsibility of repaying liabilities falls directly on your family. A term insurance helps your dependents to manage your financial obligations.
Cost-effective:- Term insurance plan is cheap. For instance, a risk cover of Rs 30 lakh for a male age 30 years can be as low as Rs 3000/year.
Tax benefits: - Term insurance is a great tax saving instrument. By investing in plan, you will get deduction under Section 80C & 10(10D) of the Income Tax Act, 1956.
Additional protection options: Many term insurance plans comes with additional cover options in the form of riders such as Critical Illness, Accidental death or disability, Hospital cash etc. It is easy to appreciate the need of these benefits with our current lifestyle habits.
How much risk cover should I buy?
How much risk cover you should buy primarily depends on your annual income. The general thumb rule says that risk cover should be 10 - 15 times of your annual income. It means if you are earning Rs 4 lakh/annum then you should buy a term risk cover of at least Rs 40 lakh. The idea is to arrange for self sustainability of dependents so that life style can be maintained and future needs could be settled after the demise of a policyholder.
This also depends on the age. Younger age people should and can buy higher term insurance cover – up to 25 times. This is because their dependents will take a longer time to be on their toes. To know more click here.
What are the benefits of buying term insurance online at PolicyBazaar?
Buying term insurance online at PolicyBazaar is always advised. You can find a most effective plan by comparing all available options on a click of the mouse. When you buy term insurance at PolicyBazaar, you make substantial savings because policy is directly sold to the person without the involvement of agent.
You can also upload all documents online and submit them to the insurer. There are various insurance policies which can only be bought online like SBI eShield, HDFC Click2Protect, ICICI Prudential iProtect etc. When a company specifically designs a product for online market, distribution cost is saved and the benefits of term plan is transferred to the policyholder. It is a general observation that the claim experience has been better for online customers.
Moreover, you can even compare different insurance policies online to see which plan suits you most. By entering basic details like name, age and type of policy intending to buy, you can get free insurance quotes on a click of the mouse.
What are the maturity benefits of term plans?
There is no maturity benefit attached with the term plans. Term plans will pay your beneficiary only in case of insured’s death. However, if you survive the term, nothing will be paid.
Term with Return of Premium option has maturity amount attached. Generally it pays back the premium on survival till end of policy term. Few plans add a certain percentage of interest on the premium. These plans are however costly.
What are the riders available in a life insurance policy?
Bought by the policyholder, term insurance riders are supplementary benefits added in the life insurance policy. However, you need to shell out extra money to get life insurance riders. Like term insurance policies, premium paid on riders also give you tax benefits as per prevailing tax laws.
Can I switch my term plan from one company to another if I get better benefits under other plan?
Term insurance portability is not yet available and hence one cannot switch from one insurance company to another but you can surrender your policy and buy a new plan with desired benefits. However, surrendering a term policy is not recommended because that will cost you a lot as the entire premium paid towards current plan will lapse without any return and the new policy which you will buy come at high cost since your age has increased.
In such a case, it is advised to continue with your current term policy and buy another term insurance policy after declaring your current insurance plans, thus availing benefits of both the plans. For the term plans bought offline, one can consider closing them down after analyzing cost difference. Generally online term plans will be way cheaper with the age factor as well.
Why term insurance premium rates for a smoker are higher than that of a non-smoker?
According to current rules and regulations, insurance companies charge high premium from smokers or tobacco users than non-smokers as there is more risk involved in insuring a smoker. Also, a smoker becomes more susceptible to diseases, especially heart related disorders, and therefore, increasing the risk for the insurer. To combat high risk, insurers charge higher term insurance premium rates from smokers. To know more click here.
What are the exclusions of term insurance plans?
Term plans does not pays death claims if death occurs due to suicide within first year of policy issuance or within first year after reviving a lapsed term insurance policy. To know more click here.
Are there any benefits of buying insurance at an early age?
Yes, buying insurance at an early stage would entitle you to a lower premium on the policy. The earlier you buy an insurance policy; the lower will be your premium amount. Also, chances of getting a policy are higher because of your good health.
What is life insurance?
Life insurance is a contract between the insurance company and the policyholder. In return for a premium, insurance company agrees to pay a particular amount to the policyholder or his/her beneficiary on the happening of certain events like death of the insured, critical illness and personal disability.
Which are the traditional life Insurance instruments available?
Traditional Insurance products consist of Term Insurance, Term with Return of premium, Endowment, and Whole Life Policies. The cash value increases every year as you pay the premiums under these policies. Some traditional life insurance policies are participating, that means they offer bonus and dividend to their customers.
Should I buy a term plan even if my employer has already covered me under group policy?
Yes, it is always advised to buy individual to buy term plan even if you are covered under a group policy because:
What documents will I need to buy term insurance plans?
Documents you need are:
Age proof (Voter’s ID card, Passport, Driving license, etc.)
Address proof (Voter’s ID card, Passport, Utility bills, etc.)
Photo identity proof (Passport, Voter’s ID card, PAN card, Driving license, etc.)
Recent passport size photographs
Income proof (Salary slip, Form 16, ITR etc.)
Some insurance companies might need specific documents apart from these.
What are the tax benefits on life insurance?
Life insurance is one of the most preferred investment avenues in India as it helps in tax planning. Following are the tax benefits one can avail by taking life insurance:
Premiums paid for all life insurance policies are exempt from tax up to a maximum of Rs 1.5 lakhs under Section 80C of the Income Tax Act, 1961.
The life insurance proceeds are not taxable for the deceased’s family under section 10 (10D).
For how long should I buy term plan?
Term insurance plans are beneficial if they are bought for the longest duration possible. A term insurance policy should cover the person till the age he intends to work. Also, late marriages and children at a high age mean responsibilities do not end at 60 years, which was earlier considered as a retirement age. Our financial experts at PolicyBazaar believe that a person needs coverage at least till 65 years, though it may vary as per circumstances. You should go for plans that offer you flexibility of fixing the tenure. For example, a businessman might have planned for extended earning years and therefore, it makes sense to buy income replacement plan.
When will my life insurance coverage start?
Your life insurance coverage will start only after the acceptance of your proposal form. Insurer will send a written confirmation regarding this. Policy kit is also sent across by the insurer.
Can I avail loan on term insurance plans?
No, you can’t avail loan on term insurance plans because these policies do not have maturity benefits.
How can I change my communication address?
You can get the changes done by visiting the branch office of your insurance company. A written communication is required. This can also be done via registered email id in case branch is not easily accessible. Few insurers allow the change through the customer portal.
Will the term plan cover me if I am travelling abroad for business/leisure purpose?
Yes, term plan covers an insured even if he/she travels abroad for business/leisure purpose. However, if any such trip is scheduled at the time of buying the term insurance policy then the same should be mentioned in the proposal form.
What is sum assured?
Sum assured is usually referred to as the amount of insurance in a policy. It is the amount that would be paid to the nominee in case of death of the policyholder. Sum assured plays a major role in deciding premium rates of a term insurance policy.
Few policies also pay additional cover along with sum assured. This increases total life cover for the same sum assured.
Can I increase or decrease value of sum assured in future?
Slightly unrelated, there are a few plans which have increased income facility in their structure. It means, these term insurance plans offer the benefit of monthly income increase every year. For example, HDFC Click2Protect Plus Increasing income, Max Life Increasing Monthly Income Plan, etc.
What is a premium paying term?
It is a term during which a policyholder pays premium to the insurance company.
What is death benefit?
The amount received by nominees at the time of death of a policyholder is called death benefit.
Who is a proposed insured?
A proposed insured is a person whose interests are safeguarded by insurance company. For instance, if you are an individual whose life is going to be covered under the life insurance policy then you will be called proposed insured.
Is a pregnant lady covered in life insurance policy?
A pregnant lady is not covered if claims fall under exclusions of pregnancy clause imposed by the insurer at the time of issuing the policy. Also it will not be covered if non-disclosures are found with regard to pregnancy related questions (history of miscarriage, abortion, ectopic pregnancy) at the time of proposal.
If a pregnant lady wishes to cover under life policy, insurer can ask her to apply for it 3 months after delivery. However, this clause is not applicable if a pregnant lady is already covered under a plan.
What if I become an NRI after purchasing term insurance plan?
Your term insurance plan coverage will remain active even if you become an NRI post policy issuance. It is good to keep the insurer informed about the change in status though.
How does a life insurance company evaluate my risks?
The life insurance company’s decision to insure your life or not relies on the information you provide in the application form. The evaluation of your risk is determined by several factors such as your age, habits, occupation, and medical history. If you have any pre-existing medical condition then the insurer will raise the premium of the term insurance policy. The increase in premium is subject to the actual medical status of the policyholder and risk posed to his life.
Do term plans cover death due to natural disaster?
Yes, term insurance plans cover death due to natural disaster, like flood, earthquake, storm, etc.
Does insurance company cover death due to terrorist attack?
Yes, death due to terrorist attack/war/natural calamities is covered in term insurance policy (unless specifically excluded by insurance company) and claim is settled if documentation is in order.
Who is a preferred non-smoker and how is an individual declared as preferred non-smoker?
Non-smoker refers to a person who does not consume tobacco in any form. Preferred non-smoker is the one who does not have any pre-existing medical conditions at the time of signing the term insurance policy. Below are the situational requirements to fall under this category:
No use of tobacco or nicotine-based products in last 12 months
Cholesterol level not exceeding 280, with or without treatment
Blood pressure not exceeding 152/92, with or without treatment
No cardiovascular or cancer death of more than one parent before age 60
These customers generally fall under non-medical category – depending on their age. Preferred rates are applicable for this category if there is any differentiation by the insurer.
Can I get term insurance cover if I am a smoker or tobacco user?
Yes, you will be entitled to get term insurance cover even if you are a smoker or tobacco user. However, the premium rates will be higher than a non-smoker. Do declare in the proposal form.
I am an occasional smoker. Do I need to declare myself as a tobacco user?
Even if you are an occasional smoker, you need to declare yourself as a tobacco user in the proposal form.
I used to smoke earlier but now I have quit smoking. Shall I declare myself as a smoker or non-smoker?
Anyone who has not consumed tobacco product in last 5 years will be considered as a non-smoker. In your case, if you haven’t smoked for last 5 years, you can declare yourself as non-smoker in the proposal form. Usually, the time frame is mentioned in the proposal form.
Currently, I am a smoker but if I quit smoking a few years down the line, can I get my re-assessment done and avail rebate on policy in the middle of the policy term?
Once you have booked your insurance policy under smoker category, it is not possible to do re-assessment for a non-smoker category. Your term insurance policy will continue with the same premium rate.
You can apply for a new one if you wish to. Chances are that the premium will become the same after those 5 years.
How do you decide if a customer is a non-smoker at the time of policy issuance?
A customer needs to declare his tobacco and alcohol usage at the time of filling the proposal form. Also, the insurer conducts additional nicotine/continue medical test to confirm tobacco usage by a customer.
What would happen if I start taking alcohol after the policy issuance?
If the insured starts smoking & drinking after buying the policy, it will not affect the base cover.
What is a policy number?
A policy number is a unique identifier that attaches a policy to a specific individual. It is the number by which the insurer keeps the track record of your policy details.
Are policy conditions different for all term insurance plans?
Yes, every policy has distinct features to meet the specific needs of the insured. The features that your policy holds will vary according to the plan and term of the policy. Hence, it is important that you read the policy document and understand the policy conditions.
How do I know if the agent is authorized to sell life insurance policy?
It is very important that you buy a policy directly through the insurance company or an authorized agent. To check whether the agent is authorized to sell life insurance policy or not, you can ask for his authorization card issued by IRDA (Insurance Regulatory and Development Authority). A safer option is to buy online term plan!
Can I change the policy duration after the issuance of the policy?
No, it is not possible to change the policy duration after its issuance. However, if you wish to increase the duration of the policy then a good idea is to buy a fresh policy with a longer duration.
Will my premium amount change during the policy tenure?
No, premium amount will not change during the policy tenure, provided you continue paying your premiums on time.
What are the different options to pay premium?
There are various options provided by insurance companies by which you can pay your term insurance premiums. Policyholders can make their insurance premium payment via:
There are various options provided by insurance companies by which you can pay your premiums. Policyholders can make their insurance premium payment via: National Electronic Fund Transfer (NEFT) Net Banking Credit card Debit card Electronic Cleari
The following are the benefits of holding Term Insurance policies in electronic form:
Safety: There is no risk of loss or damage of a policy as is common with paper policies
Payment Options: Premium for all the policies can be paid online and several service requests can be logged from the e-Insurance account.
Convenience: All insurance policies can be electronically held under a single e-Insurance account. You can access them whenever required.
Less Paper work and savings in time: An e-Insurance account holder is freed from the trouble of submitting KYC details each time a new policy is taken.
Single Point of Service: Service requests in respect of e-Insurance account or any of the electronic policy can be submitted at any of Insurance Repository's service points.
Statement of Account: At least once every year, the Insurance repository would send a statement of account to the e–Insurance account holder with the details of the policies of the account holder.
Is there any policy where I can get money during the policy tenure?
Yes, money back policy is the insurance plan under which you can get money at regular intervals during the tenure of the policy. It is an anticipated endowment policy with an additional feature of receiving regular benefits during the policy term. Even if the installments are already paid to you in advance, the risk cover continues for the entire sum assured. In case you outlive the policy, the balance sum is paid back to you along with the accumulated bonus.
What if my insurance policy has lapsed? Or if I fail to make the required premium payments?
For a regular premium paying policy, premium has to be paid within 30 days of due date. It will be 15 days incase selected mode is monthly. The insurance company provides a grace period during which you can pay premium and keep the term insurance policy in force. However, if premium is not paid within the grace period, your policy is considered lapsed. Insurance companies offer different ways to revive lapsed policies. Some of them are mentioned below-
By paying all the arrears of the term along with interest, you can revive your policy. In some situation, the company offers installment revival process. It means, you can pay arrears and interest in installment along with regular premium. The balance revival amount is paid in installments spread over a year.
You can revive your money back policy by using survival benefits (amount received from the insurance company at regular intervals) to pay premium and extra charges. If the survival benefit is lower than the revival value, you have to pay shortfall. If it is higher, you receive excess funds from the company
What is income replacement plan?
Known as protection plan, income replacement plan is a non-linked and non-participating term plan. It gives death benefits in the form of lump sum amount and ensures an uninterrupted annual income for a family for specified number of years in case a policyholder dies within the tenure.
What is the age eligibility to buy income replacement plan?
Any individual lying in the age bracket of 18-65 years can opt for this plan. Even NRIs are allowed to buy this plan.
What is the tenure of receiving money under income replacement plan?
Usually, there is no fixed period of payouts under the plan and thus, it could vary between 10-20 years.
What is underwriting?
Underwriting is a term used by the insurance companies to evaluate proposal and assess risks, ensuring that the cost of cover is proportionate to the risks faced by an individual. The evaluation is done on the basis of information submitted by the proposer in the term insurance form along with the reports of medical tests. Usually, insurance companies take 3-4 days for underwriting after receiving all documents like medical certificates, financial and other relevant information.
What is free look period?
While forwarding policy documents to the policyholder, insurance company will inform the insured by issuing a letter that they have 15 days from the date of receipt of documents to review all terms and conditions of the policy. If the insured disagrees with conditions, he has the option to return the policy and the insurance company has to refund the premium paid, subject to deductions. This 15-day period is also called cooling off period. It remains same for all products/policies.
Can I get full refund of premium if I cancel my policy within the free look period?
Yes, if you bought a term insurance policy and later realized that you don’t want it then you can return it and get a refund. You can exercise this option within 15 days of receiving the policy document. Very nominal charges are deducted. For example, stamp duty charges, premium on pro rata basis for the days covered along with medical charges, if applicable.
Can I change the date of birth after the free look period? If yes, what are the documents required?
Yes, you can change the date of birth after the free look period of the policy. Just submit the proof of age with the correct date of birth, along with a covering letter.
However, if the age changes premium or eligibility, it will involve additional premium payment or cancellation.
What is a claim?
A claim is a formal request to an insurance company asking for the payment based on the terms of the policy. It is reviewed by the company and once approved the benefits are paid out to the insured or the beneficiary.
What parameters are considered by the company while asking the claimant to submit particular records / document?
The term insurance company checks the sum at risk, circumstances of the claim, cause, and duration of the policy before asking the claimant to submit the documents. For example, in case of accidental death, company requires police report, post mortem report etc. while in case of death due to illness, the company calls for medical records.
Once all the requirements are submitted, how much time does the company take to settle the Claim?
It generally takes 8 – 10 working days after all the documents, records, necessary forms are submitted, and documentation is completed. In case, the claim warrants further verification, the insurance company keeps the applicant informed of the same.
What documents are required for claim settlement?
Following are the documents required for claim settlement:
• Mandatory documents: In case of death claims the mandatory documents include
Original Policy bond
1.Copy of death certificate and self attested by the nominee.
2. Copy of photo identity proof
3.Copy of residential proof
4.Copy of bank passbook of the nominee along with cancelled cheque.
• Additional documents:
In case the policy holder is murdered or killed in an accident, the following documents are required along with the mandatory ones:
1.Copy of FIR
2.Copy of Post Mortem report
In case of non-accidental death of the policy holder, the following documents are required along with the mandatory ones:
1. Copy of medical and legal cause of death
2.Copy of medical reports
3.The certificate issued by the attending physician
4.certificate issued by family doctor (optional)
What will happen if death occurs within a year of policy purchase? Will claims be settled?
If death occurs within a year of term insurance policy purchase, the insurance company will do a thorough investigation on the matter to strike out any chance of fraudulency or criminal intent. The nominee will get the entire amount of the assured money and the claim will settle within 180 days of submitting all the relevant and necessary documents of the early death claim to the insurance company.
Who is entitled to receive claim benefit?
The nominee last recorded under the policy is entitled to receive the claim benefits in case of death of the policy holder.
What will happen if my claim is rejected and my nominees wishes to re-apply for it?
If your term insurance claim gets rejected your nominee can re-apply for it. For that, he will have to submit a written application to challenge the insurer’s decision of repudiation of your claim. If the nominee is not entertained by the insurance company he can approach the local insurance ombudsman (for claims up to Rs. 20lakhs). He can even move to consumer court and claim for above Rs. 20lakhs. Both the ombudsman and the consumer court have the power to compel the insurer to reconsider his decision.
What are reasons for the rejection of a claim?
Here are a few main reasons for which a claim may get rejected:
• Lapsed policy: Once your policy is lapsed there is no chance that your claim will be paid any more.
• Avoiding Compulsory medical tests: Some insurance plan ask for some mandatory medical tests. If you avoid those tests your claim may get rejected.
• Mandatory exclusion plans: Some policies are pre conditioned to exclude some particular events or loss. If you ask for coverage on such events your claim may get rejected.
• Inadequate or untrue information: If you have not provided some important information (e.g. some pre existing condition) in the proposal form, your claim may get rejected. Similarly If you have provided some false information, your claim will be rejected.
What is IRDA?
Insurance Regulatory Development Authority or IRDA in short is the apex body that oversees the insurance industry in India. Apart from protecting the interests of the policyholders, it promotes, regulates and makes sure that the development of the insurance industry in India is in order.
What are IRDA guidelines pertaining to claim processing?
According to IRDA guidelines, the company has to process a claim within 30 days. If the claim needs further verification, it should not take more than 6 months to settle. In case the company fails complete the whole procedure within 6 months the company will have to pay interest on the claim amount.
Should I pay my premiums through the agent?
You can pay through the agent only if you are sure that he is IRDA authorized and provides you the receipt after your payment of the premium. But it is always better and reliable to pay your premiums directly to the insurance company itself.
Why should you split your desired sum assured between multiple policies?
There are numerous benefits of splitting your money among multiple policies instead of sticking to only one policy. For example, instead of buying a 20/25years long plan you can buy multiple policies with different maturity dates. This will help you manage your finances better through different stages of your life. Moreover, when you have multiple policies, the rejection of claim from one insurer will not matter most as long as you have other back up policies to file your claim. On the other hand if you have only one policy and your claim gets rejected, the entire money would be lost. So it is always better to buy multiple policies instead of one.
How much premium will be raised in case there are issues with my medical condition?
In case there are issues with your medical condition, your term insurance premium will increase. However, there is no fixed percentage of increase in premium. It is completely depended on the insurer’s decision as well as on the policy holder’s actual medical condition. Even you can reject the offer if you do not want the raise in your premium.
What is nomination? Who is a nominee?
Nomination is the act of authorizing another person the right to receive the policy money in case of death of the policyholder. Nominee is the person who, chosen by the policyholder, will receive the term insurance policy money in case of the policyholder’s death.
Can I change my nominee?
Yes you can change your nominee just by filling up the nomination form and submitting it to the term insurance company anytime before the maturity date of your policy.
What details am I to provide about the nominee/s?
While appointing a nominee you have to provide the details including his/her full name, address, age, and your relationship with your nominee. Make sure that the information you provide are correct to avoid any future complications.
What is the difference between nomination and assignment?
Nomination means the right of the policyholder to appoint another person who will receive the policy money in case of death or unavailability of the policy holder. On the other hand, Assignment is an act of legally transferring the rights of the policy holder (assignor) to another person (assignee).
What is the benefit of opting for riders / add-ons?
The main benefit of riders/add-ons is that it provides additional insurance coverage on your existing term insurance policy. You can get riders/ add-ons by paying some extra amount on your basic policy premium.
In case I lose my policy document, how do I obtain a duplicate policy?
ou have to apply for a duplicate copy of your policy from the insurance company. You will also have to pay the necessary fees and execute the indemnity bond in order to get the duplicate policy.
How can I change my term insurance policy details?
In order to change your policy detail you have to submit a written request either online or by visiting the insurance company office in person.
Can I change the frequency of payment for my term insurance policy?
Yes, you can, but only in case of your term insurance policy renewals. If you were paying your term insurance premium annually (low frequency) you can change your frequency to pay half-yearly or quarterly (high frequency) or vice versa.
What do I need to do to surrender my term insurance policy?
Either visit the Insurance Company office in person or submit the request online. You can also surrender your term insurance policy simply by not paying your term insurance premiums.
How does health condition affect premium rates?
Term insurance premium rates are hugely affected by health conditions. The chances of a healthy person to be hospitalized are very low. In the same manner , a person having some pre-existing condition may have to be hospitalized more than once for which he would have to pay higher premium rates or the disease may also be excluded from the policy coverage.
Total Coverage(Sum Assured) 649330 Crore
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