Reasons Why The Cheapest Term Insurance May Not Be The Best

When purchasing term insurance, it is only natural that one seeks to purchase the policy that is most affordable. However, it is not advisable to purchase term insurance solely based on its premium. The idea behind purchasing term insurance is to secure the financial future of one’s family. Therefore, it is imperative to take into account other factors apart from the premium.

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Let us take a look at some of the reasons that show why it is not advisable to purchase term insurance solely based on its premium.

Can the Cheapest Term Insurance Provide Enough Coverage?

One of the biggest concerns with choosing a term insurance purely because it costs less is that the coverage amount may not fully match your financial obligations. For instance, it is important to understand that when you select a term insurance policy, it is because you want to provide for your family in case of an emergency. However, it is also important to understand that when you select a term insurance policy, you must be aware of how much you can afford. The coverage must be enough to take care of your family even when you are not around.

Term Plans

₹1
Crore

Life Cover

@ Starting from ₹ 13/day⁺

₹50
LAKH

Life Cover

@ Starting from ₹ 8/day⁺

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day⁺

What are the Disadvantages of Buying the Cheapest Term Insurance?

While lower-priced term insurance can make it easier to start coverage, such plans may also come with a few limitations that buyers should understand before making a decision.

Limited Coverage Period

Most term insurance plans offer coverage for a fixed number of years, such as 10, 20, or 30 years. Once this period ends, the protection also comes to an end.
For example, if someone buys a 20-year term plan at age 30, the coverage will stop when they turn 50. If they still have financial responsibilities at that stage, they may need to buy a new policy. Since age and health conditions change over time, the new premium could be higher.

No Savings or Cash Value

Term insurance is designed mainly for financial protection. Unlike some traditional life insurance policies, it does not build savings or investment value over time.
This means that it is not possible to withdraw the amount or take loans from the policy. This can be considered a disadvantage if an individual is looking to purchase insurance as well as accumulate savings.

Renewal Can Be Costlier

Term insurance policies often come with renewal options even after the completion of the policy term. However, the premium for renewal is calculated based on the policyholder’s age at the time of renewal.
The premium may be higher for renewal, and this is something to be taken into account while purchasing a policy, especially if it is very cheap.

Fewer Riders and Additional Benefits

Riders are extra benefits that make a basic term insurance plan stronger. Some of these are critical illness coverage, accidental death benefits, or disability protection.
Some low term insurance plans may offer fewer rider options. This can limit the flexibility of the policy and reduce the additional protection you could have added.

Policy Conditions May Be Stricter

In some instances, most affordable term life insurance might have stricter policy conditions. This does not mean that claims will be denied; it simply means it is necessary to understand the policy conditions.
Understanding the coverage and details of an insurance policy can help ensure it meets your requirements.

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What are the Benefits of Affordable Term Insurance Plans?

Lower premiums make it easier to start early: Most affordable term life insurance plans allow individuals to begin financial protection without placing too much pressure on their monthly budget.
Basic life cover for family: Even the low term insurance premium plans have a sum assured that can be used to support the family in case of the unfortunate death of the policyholder within the policy term.
Simple and easy to understand: The lower-priced term insurance plans have a basic structure that is easy to understand for first-time buyers of life insurance plans.
Low financial needs: If you are a young person, you can opt for buying a term insurance policy, considering you have low financial needs such as debts to pay off.
Get tax benefits: You can get tax benefits as per the prevailing tax laws under section 80C and 10(10D) of the Income Tax Act, 1961.

Final Thoughts!

Although the premium of the term insurance plan might be on the lower side, one must not forget to look beyond the premium. The coverage amount, the features, and the reliability of the insurance company are also important factors. Thus, making the right choice will be beneficial for the family in the long run.

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FAQs

Q: Is the lowest premium always the best choice for term insurance?

Ans: Not always. While premiums are an essential aspect to consider while purchasing term insurance plans, the lowest premium is not always the best choice since there are chances that the features and benefits attached to the lowest premium may not be sufficient.
Q: What should I check besides the premium when choosing term insurance?

Ans: You should look at the coverage amount, available riders, claim settlement record of the insurer, policy terms, and the flexibility offered by the plan.
Q: Can paying a slightly higher premium offer better protection?

Ans: Yes, there are chances that you may get better benefits if you are willing to pay a bit more premium.
Q: Why is comparing term insurance plans important?

Ans: It is necessary to compare term insurance plans so that you are well aware of the different features and benefits offered by different insurance companies and are then able to make an informed choice.

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˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

Rs. 400/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 400/month (Rs.13/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 230 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 12/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 497/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 487/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 626/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 905/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10

+Rs. 1,267/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. 447/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.679/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 910/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,924month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

Women

+Rs. 400/month is Starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.

1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale

Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.

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