Term Insurance Policy

Ensuring the safety and security of your family is undoubtedly your top priority. But have you ever imagined what might happen to your family in the unfortunate event of your absence? Facing the loss of a breadwinner can have profound implications on their financial stability. They may find themselves forced to abandon their dreams and current lifestyle due to financial constraints.

This is where term insurance comes to the rescue. It is a simple, straightforward, and affordable life insurance option. In the event of your untimely demise during the policy term, it provides a predetermined amount called the sum assured to your family, which ensures that their financial needs and goals are met without them having to compromise on anything, even when you're no longer there to provide for them.

However, term insurance is a pure risk cover, so it doesn’t pay you anything if you outlive the policy term.

Term Insurance Plans in India

Here are some of the top term insurance plans available in India. We’ve tabulated their entry ages, maturity ages, and the company’s claim settlement ratio -

Please note that the CSR and solvency ratio details in the table are as of 31st March 2024. All other details are as of June 2024.

Why Should You Buy Term Insurance?

Here are 5 reasons why investing in a term insurance plan is a wise choice -

1️⃣To Guarantee Your Loved Ones’ Financial Stability
Your main intention behind buying term insurance is to safeguard your family's financial well-being. As the primary provider for your family, your unexpected demise would be emotionally and financially devastating for them. Meeting day-to-day expenses and fulfilling basic needs could become exceptionally difficult.

However, with a term insurance plan in place, such concerns can be alleviated. It is your ideal choice if you have financial dependents, i.e. family members relying on your income, including your spouse, children, siblings, parents, etc. In the unfortunate event of your passing during the policy period, the policy provides a death benefit to your family, which can help them ensure a comfortable life, even in your absence.

2️⃣To Help Your Financial Dependents Achieve Their Goals
The key purpose of term insurance is to help your loved ones meet their financial goals in your absence and the level of protection they’ll get depends on the coverage you choose. To determine the appropriate term insurance coverage for your financial dependents, it's crucial to evaluate both short-term and long-term financial requirements.

• Short-term goals encompass everyday expenses like groceries, bills, rent, school fees, etc.
• Long-term goals include funding higher education, hosting your child’s wedding, fulfilling travel plans, etc.

By understanding and quantifying these needs, you can estimate the right coverage you need to ensure that your dependents can maintain their lifestyle and pursue their aspirations in the event of unforeseen circumstances.

3️⃣ High Coverage At Affordable Costs
When it comes to securing high coverage under a term life insurance plan, managing the premiums can be a real challenge. However, term insurance allows you to choose substantial coverage at a surprisingly affordable cost. For a 1 crore term insurance policy, you’ll be paying as little as Rs 900 per month. This means that for every rupee you invest in the premium, your family will receive a substantial 1000 rupees if, unfortunately, something happens to you during the policy term. So, you can provide significant financial protection for your family without taking a big hit to your savings.

4️⃣For Extra Benefits
Many term insurance plans offer add-on covers called riders, which can be added to the base plan for an extra yet reasonable cost. These riders go beyond the basic death cover, providing enhanced coverage. For example, the Accidental Death Benefit rider gives your dear ones an additional amount if you pass away because of accidental causes.

The availability of riders may differ among insurers, but here are the common ones:

• Critical Illness Rider
• Accidental Death Benefit Rider
• Accidental Disability Rider
• Waiver of Premium Rider
• Waiver of Premium Rider on Critical Illness Rider
• Waiver of Premium Rider on Accidental Disability Rider
• Surgical Care Rider
• Hospital Care Rider

Note: This is just an indicative list. The specific list of riders offered under the policy can vary between insurance providers.

5️⃣To Settle Any Debts Or Loans
In the unfortunate event of your demise, before fully repaying a loan, whether a personal loan, home loan, automobile loan, or education loan, your family may have to bear the financial responsibility of settling the outstanding amount. However, if you invest in a term insurance plan, the claim amount can serve as a financial cushion for your family, enabling them to pay back the outstanding loan comfortably.

Who Should Buy A Term Insurance Policy?

Term insurance plan is a must-have if -

1️⃣Your Loved Ones Are Financially Dependent On You
Financial dependents rely on your income to meet their financial needs and aspirations. This can include your spouse, retired parents, younger siblings, children, etc., whether they are already part of your family or are planned for the future.

Given that their lifestyle and life goals are dependent on your earnings, it becomes crucial to safeguard their financial well-being in the event of your untimely demise. Term insurance policies ensure that their standard of living is maintained and their dreams remain intact, no matter what.

It's important to note that even if you share a joint loan with a family member who is financially independent, they should be considered as a financial dependent as they may have to bear the responsibility of repaying the loan in your absence.

2️⃣You Owe Debts Or Have Liabilities
If you've taken substantial loans, such as a home loan or a business loan, and you unfortunately pass away before settling them, your family may need to shoulder the repayment burden. In such challenging circumstances, term insurance serves as a crucial safety net, helping them cover outstanding loans without enduring financial hardship. For example, say you have a home loan of Rs 20 lakhs. You buy a term insurance policy with a sum assured of Rs 50 lakhs. If you pass away during the policy period, your family will receive a sum of Rs 50 lakhs as a death benefit. They can use this money to settle the outstanding loan and utilise the rest to fulfil their financial needs.

3️⃣You Have Not Created Sufficient Wealth Yet
While building substantial wealth to secure your family's financial future is an ideal goal, it may not be feasible for everyone due to varying financial capacities. Term insurance provides an essential solution to ensure your family's financial well-being, even if you are still in the process of accumulating significant wealth. By offering a predetermined sum in the event of your untimely demise, term insurance acts as a reliable financial cushion. The claim amount ensures that your family has a dependable resource to fall back on, regardless of your current wealth-building stage.

4️⃣You Have Financial Obligations
Every earning member of a family bears responsibilities and commitments toward their spouse, parents, siblings, and children. These obligations may include funding a child's education, contributing to a younger sibling's wedding, covering parents' medical expenses, among other financial considerations. However, meeting these responsibilities can become challenging in the face of an unfortunate event.

A term insurance policy addresses this concern by providing a predetermined sum of money to the family should you pass away during the policy period. This financial support acts as a safety net, ensuring that the family's dreams and goals can still be pursued without compromising their current lifestyle.

 

Can NRIs Buy Term Insurance In India?

Yes, NRIs can purchase a term insurance policy in India. If you are an NRI, opting for such a policy is a wise decision, and here's why -

• Protects Your Loved Ones
  If you're the primary earner in your family, and they depend on your income, you need to consider investing in a term insurance policy. In the event of an unforeseen circumstance leading to your demise during the policy period, it provides a predetermined sum of money to them. This fixed payout can assist in covering daily expenses, debts, and other financial obligations, offering a sense of security during challenging times.
• Covers Your Loans
  If you own any properties in India and have associated loans, obtaining a term insurance policy is a vital financial move. Besides helping your family with their short and long-term goals, the claim amount serves as a protective shield for addressing outstanding loans such as business loans, education loans, etc. The payout can be utilised to settle these loans, ensuring that you don't pass on any financial burden to your loved ones.

👉Things to Keep in Mind Before Purchasing Term Insurance As An NRI
If you're an NRI and gearing up to secure a term insurance plan in India, knowing the ins and outs of the process is crucial. Here's a rundown of the key aspects you need to be aware of:

1. Essential Documents
   Here are some of the documents required for the purchase process -
   • A neatly filled-out application form
   • A passport copy, duly attested
   • Records of your medical tests along with the reports
   • Age proof certificate
   • Income proof papers

It's worth noting that the insurance company might ask for additional documents, depending on their specific requirements and policies.

2. Premium Payment
   In India, insurance providers offer Non-Resident Indians (NRIs) a range of options for paying premiums on term insurance policies. NRIs can conveniently manage their payments through:
   • Non-Resident Ordinary (NRO) Account
   • Non-Resident External (NRE) Bank Account
   • Foreign Currency Non-Repatriable (FCNR) Account

It's crucial to confirm the currency in which your term insurance policy is issued. The payment method depends on the following -

• Foreign Currency Policy
  If the policy is issued in a foreign currency, you need to make premium payments in that foreign currency. This can be done using an NRE or FCNR account.
• Indian Rupee Policy
  For policies issued in Indian rupees, you should process premium payments through an NRO account.

In essence, you, as an NRI, have the freedom to choose the most suitable premium payment option based on the currency of your policy and the type of account you hold.

3. The Payout Under Your Term Insurance Plan
   Just like premium payments, the benefits from term insurance policies are provided in the currency specified in the policy document, which can be either in Indian rupees or a designated foreign currency. When it comes to making a claim, the nominee is required to submit the necessary documents as per the policy terms to receive the claim payment.

Here are some of the crucial documents essential for a claim:

• • The original policy document
  • Identification proof of the nominee
  • Death certificate of the insured individual, and other relevant documents

For a seamless and stress-free settlement of the claim, it's imperative to have all the essential documents readily available. This proactive approach ensures a smoother process, expediting the claim settlement.

4. Global Death Coverage
   If you get term insurance in India, it covers you globally for various causes of death, except for suicides within the first year. In case of suicide during this period, the insurer typically refunds the premiums to your nominee. So, no matter where you are in the world, if something unfortunate happens, your family will still receive the claim amount. So, even if you buy a policy in India and happen to pass away overseas, your loved ones are still eligible for the full claim payout. It's like having a safety net that transcends borders to ensure your family's financial security.
5. Taxation And Its Effects
   Considering taxes is a crucial element in the realm of term insurance for NRIs. In the unfortunate event of your passing during the policy term, most insurers will direct the claim payout to an NRE account. It's vital for the nominee to check whether their country of residence imposes taxes on these proceeds.

And, if you file taxes in India, the following are the potential tax benefits outlined in the Income Tax Act of India, 1961:

• Section 80C: You can claim tax deductions on your term insurance premiums under Section 80C, up to a maximum deduction of Rs. 1.5 lakhs.
• Section 10 (10D): If you pass away during the policy term, the claim payout received by the nominee is exempt from tax under Section 10 (10D).

6. Claim Payout Guarantee Under Section 45
   According to Section 45 of the Indian Insurance Act of 1938, life insurance companies are obligated to fulfil a death claim on a life insurance policy, provided that the policy has been consistently active for a minimum of three years. So, the insurer cannot deny the claim under any circumstances, provided that you have been making premium payments on time. This makes term insurance particularly advantageous for Non-Resident Indians (NRIs). In the unfortunate event of your demise during the policy term, the insurance company will provide a payout to the family. This serves as a crucial source of financial stability for the bereaved family, offering support during challenging times.

How Does A Term Insurance Plan Work?

Here is a detailed guide on the working of a term insurance policy -

1. Deciding On The Coverage
   To ensure your family is adequately protected after you're no longer around, it's crucial to choose a term insurance plan with the right coverage. Calculating the appropriate cover involves considering four key aspects:

Living Expenses Fund: Short-term expenses like basic needs, groceries, and monthly bills.

+

Major Expenses Fund: Long-term goals such as children's education or weddings.

+

Major Liabilities Fund: Any significant loans you've taken.

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Existing Funds: Your existing savings, fixed deposits, etc., multiplied by the relevant risk factors.

This sum represents the gap in your family's protection. Subtract any existing life insurance cover and purchase a term plan for the remaining amount. To calculate a future-proof cover, factor in inflation by multiplying the  calculated amount by 2.5 to 3X.

2. Selecting The Policy Duration
   When determining the duration of your term insurance policy, consider your present income, savings, and anticipated future expenses. Project the age at which you expect to have met all your financial responsibilities and amassed sufficient wealth to sustain the remaining part of your life - essentially, your planned retirement age. It's advisable to purchase the term insurance plan until this retirement age, possibly with an additional buffer of 5 years. This approach ensures that your policy duration aligns with your financial timeline.
    
3. Tailoring The Policy To Your Needs
   There are a lot of customisation options available with a term insurance policy. Some of these customisations include -

• Premium payment term
  If you prefer not to continue paying premiums throughout the entire policy duration, you have the following options -
  • Limited pay option: This allows you to expedite the payment of premiums through larger and faster instalments, alleviating your long-term financial commitment.
  • Single pay option: Under this, you pay the entire premium in one go during policy purchase.
     
• Premium payment frequency
  Under term insurance, you have the flexibility to customise the premium payment frequency according to your preferences. Typically, you can choose from four payment options based on your convenience:
  • Annually
  • Semi-annually
  • Quarterly
  • Monthly
• Increasing cover
  As you age and assume greater financial responsibilities, your expenses and liabilities are likely to increase. It becomes imperative to upgrade your term insurance coverage to ensure that your family remains adequately protected.
  The increasing cover option provides a seamless solution for this, especially if you’re investing in term insurance at a young age. With this option, your sum assured gradually increases at specified intervals until it reaches a predefined maximum limit. This ensures that your insurance coverage keeps pace with the evolving needs of your family.
• Claim payout options
  Term insurance offers the flexibility to customise how your family receives the claim amount based on their financial needs. You can choose from the following claim payout options -
  • Lump-sum payout option: The entire claim amount is paid in one go. This option is suitable if you have outstanding loans or liabilities.
  • Monthly income payout option: Your family receives the claim amount in monthly instalments for a specific period. This option is beneficial if you want to provide for your family's everyday needs and don’t have any outstanding loans or liabilities.
  • Lump-sum with monthly income payout option: This option combines the above two choices. A portion of the claim is paid as a lump sum, while the remaining amount is disbursed in monthly instalments for a specific period.

Choosing the right payout option allows you to tailor the benefits of the term insurance policy to align with your family's financial situation.

• Riders
  Many term insurance policies offer riders as optional add-ons for an additional cost. Riders are supplements that provide extra payouts under specific circumstances. For instance, the Accidental Death Benefit Rider offers an extra amount of money in case you unfortunately pass away due to an accident.
  Here are some of the riders available with term insurance plans:
• • Critical Illness Rider
  • Accidental Disability Rider
  • Accidental Death Benefit Rider
  • Waiver of Premium due to Critical Illness Rider
  • Waiver of Premium due to Accidental Disability Rider
  • Hospital Care Rider
  • Surgical Care Rider

Please note that this is an illustrative list. Besides these, there may be other types of riders depending on the insurer. It's crucial to review the policy documents to understand the available riders before making a purchase.

4. Premium Payment and Policy Issuance
   The premium for your insurance policy is determined by various factors, including -

• Age, gender, health, lifestyle habits, etc.
• Cover amount
• Policy duration
• Premium paying option (limited pay or regular pay)
• Riders, etc.

Once you provide your basic information, select the customisation options you want, and make the initial premium payment, the underwriting process begins. During underwriting, the insurance company assesses your risk profile. If your application is accepted, the policy is issued to you.

5. Paying the renewal premium
   Once the policy is issued, it's crucial to pay the premiums regularly to keep it active. Missing even a single premium payment can lead to the policy lapsing, and your benefits will cease to exist. To ensure timely payments, consider these options -

• Standing Instructions on Bank Account: Set up standing instructions on your bank account for automatic premium payments. It's advisable to avoid using credit or debit cards for this purpose, as cards come with an expiry date, which may disrupt the payment process.
• e-SI (Electronic Standing Instruction) Option: When purchasing term insurance, opt for the e-SI option. This allows your premiums to be directly transferred to the insurer, streamlining the payment process and reducing the risk of policy lapse.

6. Death Benefit
   If you pass away while your term insurance policy is active, the insurance company will pay the death benefit - a predetermined sum of money to your family. Your family will receive this money depending on the claim payout option you selected when purchasing the policy.
    
7. Surviving The Policy Term
   Term insurance is a pure risk insurance cover. So, if you outlive the policy duration, no benefits will be to you.
   Let’s look at an example to understand the concept of a term insurance policy. Raghav, a 30-year-old, decides to secure his family with a term insurance policy. He opts for a sum assured of Rs. 1 Crore and a policy duration of 50 years. To make his premium payments more manageable, he selects the limited pay option, with a premium payment term of 20 years. Meaning he’ll complete all payments in the next 20 years. He also goes for the lump sum claim payout option and designates his wife, Priya, as the nominee.

Here’s how his term insurance policy will pay out –

Scenario 1: If Raghav passes away in the middle of the policy period,
The insurance company will pay a claim of Rs. 1 Crore to Priya, Raghav’s nominee. Since Raghav chose the lump sum claim payout option at the time of policy purchase, she will receive the claim amount in a lump sum in one go.

 Scenario 2: If Raghav survives until the end of the policy duration,
His policy will terminate. And he won’t receive anything back.

Term Insurance Calculator

Determining the appropriate cover amount or premium for a term insurance plan can be a challenging task without professional assistance. However, we have a solution to simplify this process. Introducing the Term Insurance Coverage Calculator and Term Insurance Premium Calculator.

What Is A Term Insurance Coverage Calculator?

A term insurance coverage calculator acts as your personal guide to help ensure your family's financial security. This simple tool helps you figure out the right amount of coverage needed to take care of your loved ones when you're no longer around to support them. It's like having a helpful friend by your side, assisting you in making smart decisions for your family's future - all without any cost.

How Does It Work?

Here’s what you need to do -

1. Begin by putting in your personal details, like your age, gender, and retirement plans.
2. Then, fill in the asked for financial details, such as your income and any existing life insurance you hold.
3. Depending on the platform, you might also be asked to add information about your financial dependents, such as your spouse, parents, children, etc. who will be covered by the term insurance plan.

Once you've filled in these details, the term insurance coverage calculator swiftly calculates your estimated cover amount, making the entire process a breeze!

What is a Term Insurance Premium Calculator?

A term insurance premium calculator helps you figure out the premium amount you'll need to pay for your term insurance coverage along with any extra benefits or features you opt for. This user-friendly calculator is designed to be hassle-free, saving you time and effort - at zero cost.

How Does It Work?

Here are the steps you need to follow to get the premium quotes using a term insurance premium calculator -

1. To begin, enter some details such as your age, income, gender, policy duration, cover amount, etc.
2. After you submit these details, this calculator will generate the premiums of different term insurance policies.
3. Additionally, you have the option to review the changes in your premiums as you customise your plan. This involves adding riders, incorporating desired benefits or features, adjusting the coverage amount, etc.

This tool guides you in making a well-informed choice by comparing different policies in the market. It's an excellent way to make sure you get the best value for your investment without sacrificing the coverage or features you want.
 

Term Insurance - Benefits

Include YT Video -

Benefits of Term Insurance | Everything You Need to Know | Term Insurance | SMC Insurance

Here are some of the benefits offered by term insurance -

• Provides Financial Stability
  A term insurance plan offers the crucial assurance of financial stability to your loved ones when you're no longer around. In case you have dependents relying on you financially, the claim amount from the term insurance plan can be a lifeline for them covering everything from daily expenses and utilities to school fees and even substantial commitments like clearing loans, supporting your child's higher education, etc. Owning a term insurance plan allows you to lead a life without constant worry, providing a smart and straightforward way to safeguard the financial well-being of those you care about - in your absence.
   
• Affordable Premiums
  Opting for a term insurance plan comes with the advantage of budget-friendly and consistent premiums that remain unchanged throughout the entire duration of the policy. This unique feature ensures that, despite the inevitable rise in costs over time, your premium stays the same. So, you have the flexibility to select a coverage amount that is immune to inflation, all while enjoying the affordability of fixed premiums.
   
• Covers All Kinds Of Death
  The policy extends coverage to various types of deaths, encompassing accidents, critical illnesses, natural causes, and more. The sole exception is suicide within the first year of policy purchase. In such unfortunate instances, the nominee receives the premiums paid until that point (excluding taxes).
   
• Guaranteed Claim Payout After 3 Years
  If you have consistently maintained your policy for a continuous three-year period, the insurance company cannot reject your family's claim due to fraud, misstatement, or the withholding of information. According to Section 45 of the Insurance Act, if you fulfil the premium payments, the insurer is obligated to honour your family's claim under any circumstances once the policy has been active for three years or longer.
   
• Offers Customisation Options
  When it comes to term insurance, there are several ways you can personalise your coverage. Some of these customisation choices include -

Premium Payment Duration
You have the flexibility to decide how long you want to pay your premiums. You can choose from three options:

• • Regular Pay Option: Pay premiums consistently until the end of the policy term.
  • Limited Pay Option: Complete the premium payments within a set number of years.
  • Single Pay Option: Make a one-time lump sum payment when you buy the policy.

The choice of the premium payment term is entirely up to you and can be based on your financial capacity and current life stage. For instance, if you're salaried, the regular pay option might be suitable. On the other hand, if you're self-employed and prefer larger and faster payments, the limited pay option could be a more fitting choice.

Premium Payment Frequency
You have the flexibility to choose how often you pay your premiums - whether it's annually, half-yearly, quarterly, or monthly, based on what works best for you. For example, if you're on a fixed monthly salary, the monthly payment option might align better with your budget. Conversely, if you're a business owner dealing with fluctuating but substantial income, opting for the yearly payment plan could be more suitable.

Claim Payout Options
You have the flexibility to tailor how your loved ones receive the claim amount based on factors like their financial situation, your liabilities, future goals, etc. The payout can be structured as a lump sum, monthly payments, or a combination of both.

For instance, if you believe that a large sum might be overwhelming for your family, you can opt for the monthly payout choice. On the other hand, if you have outstanding loans, selecting a one-time lump sum payment ensures that your family can swiftly become debt-free.

Increasing Cover Option
If you opt for this feature, the coverage amount of your plan will grow by a certain percentage until it reaches a predetermined limit. This proves to be a valuable feature, especially if you anticipate increasing financial responsibilities in the future, such as your child's higher education, wedding, etc. It's also an excellent way to ensure that your coverage keeps pace with inflation over time.

Riders
Riders serve as valuable add-ons that elevate the coverage of your plan, providing extra financial security for unforeseen events throughout the policy duration. The great part is, opting for riders doesn't entail additional paperwork or medical tests beyond what you undergo for the basic term plan. You have the option to choose from various commonly available riders, such as the critical illness rider, accidental death benefit rider, accidental disability rider, waiver of premium rider, and more.

Tax Advantages
Term insurance plans offer tax benefits as per the provisions of the Income Tax Act of 1961 -

• • You're eligible for a tax deduction on the premiums paid, up to Rs. 1,50,000 per year, under Section 80C.
  • Additionally, the claim amount your family receives in  the event of your unfortunate demise during the policy period is exempt from taxes under Section 10 (10D).
     

Types of Term Insurance Plans

Here are some of the types of term insurance plans available in the Indian market -

• Regular Term Insurance
  When you opt for a regular term insurance plan, you are required to make premium payments throughout the entire policy term. In simpler terms, the duration for paying premiums aligns with the total length of the policy you select.

• Limited Pay Term Insurance
  Selecting this option enables you to wrap up your premium payments sooner, providing a sense of financial relief. You only have to manage premiums for a shorter, predetermined period under this option. If you find yourself uncertain about your future income or financial capacity to sustain premium payments for the complete policy duration, you can go for this option.

• Single Pay Term Insurance
  Here, you pay the entire premium in one go when you purchase the policy. The advantage is that you settle the premiums in a single transaction, so you need not worry about keeping up with due dates or risking policy termination due to missed payments. Once this is taken care of, both you and your family can relax, knowing that the term life insurance coverage is in place for the chosen duration. It's important to note that these policies come at a higher cost compared to other types of term insurance plans.

• Whole Life Term Insurance
  A whole life term insurance policy, true to its name, offers coverage for practically your entire lifetime, extending up to 99 or 100 years of age. This type of plan becomes an appealing option if you have a desire to leave a lasting financial legacy for your loved ones. The likelihood of living up to such an advanced age is relatively low, and so, opting for these plans emerges as a smart and effective strategy to safeguard the financial well-being of your family.

• Increasing Term Insurance
  As you age, life tends to come with more financial responsibilities – you may get married, have kids, etc. These significant events can quickly deplete your savings if you lack a solid financial plan. That's where an increasing term insurance policy becomes invaluable, as it aligns with your growing obligations and the ever-rising tide of inflation. In this type of policy, the sum assured gradually increases until it reaches the maximum limit set by the insurance company. And, the policy remains active and provides coverage until the end of the specified policy duration.

• Decreasing Term Insurance
  In the unfortunate event that you pass away with outstanding loans or financial responsibilities, the weight of repayment can become a significant concern for your family. To address this issue, it's advisable to go for a decreasing term plan. This type of policy is designed to ease the financial burden on your loved ones by gradually reducing the sum assured at specified intervals, typically every 5 years.

• As you make periodic loan repayments, the coverage amount will gradually decrease. If, unfortunately, you were to pass away, the insurer would then provide the claim amount to your family. This money can be utilised by them to settle the outstanding loan or liability, offering a practical financial cushion during a challenging time.

• Your age can play a significant role in considering decreasing term insurance. Typically, as you get older, your financial obligations may decrease. This is because, over time, loans get paid off, and dependents become more financially independent. Let's take an example: if you currently have a spouse and a child, along with a substantial home loan of Rs 30 Lakhs, your financial responsibilities are high. In such a scenario, it makes sense to have a larger cover to address these substantial obligations. However, as your home loan diminishes and your children become self-sufficient, your financial liabilities decrease. Consequently, you might not require a large cover.

• Level Term Insurance
  In a Level Term Insurance Plan, the coverage amount stays constant throughout the entire policy duration. This means the sum assured doesn’t increase or decrease, providing a steady and reliable level of protection over the policy period.

• Joint Life Term Insurance
  When you opt for a Joint Life Term Insurance policy, it extends coverage to both you and your spouse. In this scenario, you take on the role of the 'primary life assured,' while your spouse is designated as the 'secondary life assured.' These Joint Life Term Plans can be structured in two ways - either with a shared sum assured or with separate sum assured amounts. Let's delve into how the plan operates in both of these setups.

• Shared Sum Assured
  If the sum assured is the same for both you and your spouse in a joint life term insurance policy, your term insurance coverage will operate on a first-death basis. In the event of the first death, the insurer will disburse the entire claim amount to the surviving spouse. Following this payout, the policy terminates.

• Separate Sum Assured
  In a joint life term plan with separate cover amounts for you and your spouse, your spouse's coverage can be structured in either of these three ways –

• •  
  • Same as your coverage
  • 50% of your cover amount
  • 25% of your cover amount

  If, unfortunately, the primary life assured (you) passes away unexpectedly during the policy period, the cover amount designated for the primary life assured will be disbursed to the secondary life assured, i.e., your spouse. Now, in the event that the secondary life assured also passes away while the policy is still active, the cover amount assigned to the secondary life assured will be paid out to the nominated beneficiary.

  Group Term Insurance
  Group term insurance provides coverage for a group of individuals under a single policy. This policy is offered by various entities like companies, banks, and organisations for their employees, customers, or members. Typically, the insurer issues a master policy to the master policyholder or group administrator, i.e. the employer or an organisation, who then takes responsibility for premium payments. This master policy extends coverage to all members within the group. In the unfortunate event of a member's demise during the policy duration, their designated nominee will receive a predetermined sum, known as the death benefit. This fixed amount provides financial support to the deceased member’s family.

  Term Return of Premium (TROP) Plan
  The term life insurance policies we talked about earlier typically don't provide any payout if you survive the policy duration; they're designed to offer a fixed sum (death benefit) only if you pass away during the policy period. For some, the idea of paying premiums over the years without receiving anything in return can be a concern. In response to this, insurers introduced a solution known as a term return of premium option.

  With the term return of premium option, you get both a death benefit and a maturity benefit:

  • If, unfortunately, you pass away during the policy period, your family receives the claim amount.
  • On the other hand, if you live beyond the policy duration, the insurer refunds the premiums you've paid over the years (minus taxes) - as per policy T&Cs.

  
  What Is A Term Insurance Rider?

  When you're investing in a term insurance policy, it's crucial to choose the right features and customise the policy to cater to both your and your family's requirements. One effective way to tailor your policy is by adding riders. These are optional add-ons that can be included in your base policy for an extra cost. Essentially, they provide you with an extra layer of protection on the happening of certain situations.

  Here are some of the benefits of riders -

  • Enhance Your Coverage
    Riders offer protection from different risks. In case a specific event covered by the rider occurs, the insurer steps in and provides an additional sum of money.
  • Save You Time
    Riders make life simpler by sparing you from the complexity of managing multiple insurance policies.
  • Easy To Add
    You won't have to deal with the hassle of more paperwork or go through additional medical tests with the insurance company beyond the ones you underwent during the initial purchase of your term life insurance plan.

  
  What Are The Types Of Term Life Insurance Riders?

  You have the option to personalise your policy by adding specific riders, such as -

  1️⃣Critical Illness Rider
  Receiving a diagnosis of a serious illness, be it heart disease, cancer, or any other, is undoubtedly a tough situation for both you and your family. On top of that, there are various expenses related to medical treatments, medications, follow-up visits, etc. This is where a Critical Illness Rider steps in as a financial safety net. If you are diagnosed with a critical illness covered in the policy document, this rider provides a predetermined amount of money as specified in your policy. This money can help you and your family deal with the financial strain associated with a critical illness.

  Typically, this rider comes in two main types -

  • Accelerated Critical Illness Rider
    Under  this rider,  you’ll receive an advance amount out of your total base cover. Using the rider for a certain amount will reduce your base policy cover by that amount.  
  • Comprehensive Critical Illness Rider
    This rider doesn't decrease the base policy cover amount. Here, the sum assured remains independent and unaffected by the cover amount.

  Example: Rahul has a term insurance policy with a sum assured of Rs. 1 Crore and buys a Critical Illness Rider with a cover amount of Rs. 25 lakhs along with it. Case 1: Rahul buys an accelerated rider, If Rahul gets diagnosed with a listed critical disease, the insurer will pay Rs. 25 lakhs to him. And his term life insurance cover will get reduced by this amount to Rs. 75 lakhs. Case 2: Rahul buys a comprehensive rider, If Rahul gets diagnosed with a listed critical disease, the insurer will pay Rs. 25 lakhs to him. And, his term life insurance cover will remain unaffected.

  2️⃣ Surgical Care Rider
  The Surgical Care Rider steps in when you need a necessary surgery. If you undergo the recommended surgery and you’re hospitalised for a at least 24 hours, this rider offers a fixed sum of money to help ease the financial strain during this period. You get to choose the benefit amount, and the rider sum assured is 50 times that chosen amount. And, you can use this benefit amount up to 50 times throughout the life of your term insurance policy and up to 10 times in a single policy year.

  The payout from the Surgical Care Rider depends on the type of surgery, as outlined in the policy document. For major surgeries such as valve replacement, etc. the lump sum payment is set at five times the chosen benefit amount. On the other hand, for surgeries falling into the 'other surgery' category, you receive the exact benefit amount you selected.

  Two important conditions that come with this rider:

  • You need to be 18 years or older to be eligible for the rider.
  • The policy period for this rider shouldn't surpass the duration of your term life insurance policy.

  Example: Sarah buys a Surgical Care Rider with her term insurance plan. She opts for a benefit amount of Rs. 20,000. So, the rider sum assured works out to be Rs 10,00,000 (Rs 20,000 * 50). After a few years, Sarah undergoes a major surgery. In this case, the lump sum payment she will receive is calculated as 5 times her chosen benefit amount, which is Rs 1 Lakh (Rs 20,000*5).

  3️⃣Hospital Care Rider
  This rider provides a fixed cash amount for each day you spend in the hospital if your treatment is medically necessary. To qualify, you must be hospitalised for a minimum of 48 hours. The daily cash benefit can be tailored to your specific needs, and the premiums will vary depending on the chosen benefit amount.

  There are two fundamental conditions for this rider:

  • Available only for individuals aged 18 and above.
  • The policy period for this rider should not exceed the duration of your term insurance policy.

  Example: Sara buys a hospital care rider along with her term insurance plan. A few months later, she gets hospitalised for a surgery that requires a 5-day hospital stay.  She will receive Rs. 5,000 (as per policy T&Cs) for each day she spends in the hospital under the hospital care rider. Over the 5-day duration of her hospitalisation, she’ll receive a total of Rs 25,000.

  4️⃣Accidental Death Benefit Rider
  If, unfortunately, you pass away due to an accident during the policy period, this rider steps in to provide an extra sum to your family. It's important to keep in mind that the rider benefit kicks in only if the demise occurs within 180 days of the accident.

  Example: Priyanka buys a term insurance policy with a sum assured of Rs. 50 lakhs along with Accidental Death Benefit rider with a cover amount of Rs 10 lakhs. Unfortunately, Priyanka meets with an accident during the policy term and passes away. Consequently, her family will receive benefits from both term insurance and the rider, i.e. Rs. 60 lakhs.

  5️⃣Accidental Disability Rider
  Facing an accidental disability can turn life upside down, affecting not just your ability to earn but also your everyday routine. Supporting your family and covering regular expenses becomes a daunting challenge. Not to mention the added costs for medical devices and home modifications to ensure a safer and more comfortable life.

  This is where Accidental Disability Rider steps in. If you find yourself permanently disabled due to an accident, it provides a sum of money. This amount serves as a lifeline to help manage daily expenses, cover medical costs, and other unforeseen costs. It is worth noting that the insurer provides the benefit amount only in case of permanent and total disabilities and the amount you receive will depend on the type and nature of your disability.

  Example: Alex buys an Accidental Disability Rider with a  cover amount of Rs. 10 lakhs along with his term insurance plan. Unfortunately, a few months after getting the policy, Alex faces an accident that results in permanent disability. He’ll receive a rider benefit of Rs. 10 lakhs (as per policy T&Cs) that can help him cover his medical expenses and other financial needs.

  6️⃣Waiver Of Premium Rider
  This rider can be classified into two types: 

  • Waiver Of Premium Due To Critical Illness Rider
    If you get diagnosed with one of the listed critical illnesses, this rider will waive all your pending premiums. Meaning, all future premiums associated with your term insurance plan as well as riders will be waived till the end of the policy period.
  • Waiver Of Premium Due To Disability Rider
    If you experience accidental injuries leading to a disability, this rider steps in to cover all your pending premiums. This means you can enjoy the coverage without the worry of having to pay any future premiums.
     

  Example: Roma buys a term insurance policy with a sum assured of Rs 30 lakhs for a policy duration of 20 years. She needs to pay an annual premium till the policy term ends. She also opts for a Waiver Of Premium Due To Disability Rider with a cover amount of Rs. 15 lakhs. In the 15th policy year, Roma meets with a severe accident resulting in permanent disability. So, her insurer waives all her remaining premiums for the next five years.

  Note: This is just an indicative list. Besides these, there may be other riders as well, depending on the insurer and the product.

  
  How to buy Term Insurance from SMC?

  Here is a step-by-step guide to help buy term insurance online at SMC.

  1. Go to https://www.smcinsurance.com/.
  2. Click on the 'Life Insurance' section on the website.
  3. Fill in your details, including gender, full name, date of birth, and mobile number.
  4. Answer basic lifestyle questions in the following step, like whether you smoke or chew tobacco, your annual income, preferred coverage amount, and the policy duration.
  5. Move forward and select 'Compare Quotes.'
  6. Explore various term insurance plans displayed.
  7. You can adjust various policy aspects such as policy period, coverage amount, premium payment frequency, and see how these affect the premiums.
  8. For additional details on the plans, you can download their brochures.
  9. Once you've identified your preferred term insurance plan, click 'Buy Now' to initiate the application process.

  
  How To Select The Best Term Insurance Plan?

  When it comes to term insurance policy, there isn't a one-size-fits-all "best" option. It's all about tailoring your term plan to suit your unique needs. To ensure your plan stands out as the best for you, focus on selecting the right coverage, customising it based on your preferences (look for a plan with the flexibility you need), and choosing a reliable insurer.

  Here's a simple guide to help you navigate this journey and choose a term insurance policy that truly fits you like a glove -

  1️⃣Research Is The Key
  When you are buying any product, it is natural to scrutinise its specifications. However, a crucial step is to evaluate the manufacturer's reputation and overall quality before making an investment.

  Likewise, when it comes to term plans, it goes beyond just evaluating the features, benefits, and costs. You need to check the credibility of the insurance company. Opting for a reputable insurer becomes essential, given that term insurance is a commitment that spans the long term. A credible insurance provider ensures a hassle-free experience both when acquiring a policy and in the event of a claim. They are committed to resolving problems and providing support for any concerns or issues that may arise during the policy purchase or its duration.

  2️⃣Pick The Right Policy That Fits Your Needs
  Term insurance plans come in various types, each designed with unique features to cater to specific needs.

  • If your goal is to safeguard your financial dependents only against outstanding loans or liabilities, a decreasing term plan could be the right fit. This type of plan involves a gradual reduction in the sum assured at predefined intervals, typically every 5 years, until it reaches a maximum limit of 50% of the base cover. In the unfortunate event of your unexpected demise while the plan is active, the insurer will provide your family with the decreased sum assured, offering financial support to settle the loan or liability.
     
  • If you're considering including your spouse in your insurance coverage, a joint term life plan is a suitable option. With this type of plan, both you and your spouse are covered under a single policy.
     

  Beyond these options, there are numerous other plans designed to meet your specific requirements.

  3️⃣Decide On The Cover Amount
  After considering the available options, the next step is determining the appropriate coverage amount for your policy. While it might be tempting to opt for a substantial cover, such as a 1 Crore plan, thinking it would adequately safeguard your family, it's important to note that what seems sufficient today may not meet your family's future needs. It's crucial to carefully assess and choose the right level of coverage based on your family's specific requirements. This ensures that your family remains financially secure, avoiding any potential shortfall in funds down the road.

  To determine the right term cover, it's crucial to identify the gap between what you'll leave behind and what your family truly needs. This involves calculating the difference between these two key factors:

  • The amount you owe - Consider your short and long-term expenses, financial goals, outstanding loans, and other financial commitments.
  • The amount you own - Take into account your savings, investments, fixed deposits, and any other assets.

  This will give the financial gap that a term insurance policy should fill. It's essential to factor in an inflation rate of 6-8% while determining the cover amount. This ensures that your family is adequately protected against the rising cost of living in the future. Additionally, if you already have existing life insurance, deduct that amount from your current coverage. You can now purchase a term insurance policy to cover the remaining gap.

  4️⃣Pick The Right Policy Duration
  Once you've settled on the coverage amount, the next step is determining the duration of your policy. For that, you need to assess your existing income, savings, and anticipated future expenses. You need to figure out when you expect to reach your financial goals and accumulate enough wealth to sustain a comfortable lifestyle throughout your lifetime. Essentially, your coverage should extend until the age at which you plan to retire. Also, consider adding a 5-year buffer to this duration. This ensures that your term insurance policy aligns with your financial timeline and provides adequate protection.

  5️⃣Choose The Right Premium Payment Term
  To ensure your policy remains active, it's necessary to make regular premium payments. Typically, these payments need to be made until the end of the policy period. For example, if you opt for a 30-year policy, you'll be making premium payments throughout that entire duration.

  However, if you anticipate future fluctuations in your income, you might consider an alternative approach. You have the option to pay off your premiums in a shorter duration so you don’t have to carry the burden of financial commitments for an extended period of time.

  When it comes to paying your premiums, you've got two options to choose from:

  • Single pay option – This option lets you pay off the entire premium amount all at once during policy purchase.
     
  • Limited pay option - With this choice, you can fulfil your premium payment commitments in a shorter span of time and enjoy coverage until the end of the policy period.

  6️⃣Choose The Right Premium Payment Frequency
  You have the freedom to decide how often and how much you want to pay for your term insurance premiums:

  • Annual Payment Option: If you're comfortable handling a larger premium once a year, you can choose the annual payment option.
  • Half-Yearly Payment Option: For those who find the annual lump sum a bit challenging, there's the half-yearly payment option, allowing you to pay premiums every six months.
  • Quarterly or Monthly Payment Option: If you prefer more manageable instalments, you can opt for the quarterly or monthly premium payment options.

  7️⃣Opt For The Increasing Cover Option To Ensure Adequate Coverage
  As years go by, especially with added responsibilities like marriage and kids, your expenses tend to rise. It's only natural that you'd want your term insurance coverage to evolve to meet the changing needs of your growing family. That's where the increasing cover option comes into play. With this choice, your coverage amount grows gradually at specified intervals until it reaches a maximum limit. It also helps you beat the impact of inflation over time.

  8️⃣Make Sure You Choose The Right Riders
  While term insurance offers fundamental life coverage, it might not cover all the potential risks that could threaten your family's financial stability, such as accidents, critical illness diagnosis, accidental disabilities, etc. This is where riders come in.

  Riders are optional add-ons that can be added to your policy for an extra yet reasonable cost. They enhance your base coverage.

  For example, a waiver of premium on critical illness rider waives all your future policy premiums if you get diagnosed with a serious illness specified in the policy.

  Some of the types of riders available with a term insurance policy -

  • Critical illness rider
  • Accidental disability rider
  • Accidental death benefit rider
  • Hospital cash rider
  • Surgical care rider
  • Waiver of premium on critical illness rider
  • Waiver of premium on accidental disability rider, etc.

  9️⃣Choosing The Right Claim Payout Option
  In the unfortunate event of your unexpected passing during the policy term, your family receives a lump sum as a claim payout. However, this significant amount might feel like a sudden windfall, and your loved ones could find themselves grappling with the challenge of managing it.

  To prevent the risk of the claim amount being mishandled through poor investments or financial missteps, you have the option to customise how your family receives it.

  Here are the claim payout options available under term insurance -

  • Lump-Sum Payout Option
    If you believe your nominee is financially savvy and capable of managing a substantial amount, the lump-sum payout option might be suitable. It provides the entire claim amount at once.
  • Monthly-Income Payout Option
    If you think your nominee may find handling a large sum challenging and you want the claim amount to cover regular expenses like groceries and utility bills, the monthly-income payout option is worth considering. This spreads the claim amount over regular instalments for a fixed time span.
  • Lump Sum with Monthly Income Payout Option
    If you have debts to cover and your nominee is not financially savvy, you can opt for this combo option. Here, a portion of the claim is paid as a lump sum, while the rest is disbursed in monthly instalments for a specified period.

  🔟Purchase Your Plan Under MWP Act
  It's essential to be aware that the claim amount, as stipulated by the law, is typically allocated first to settle any outstanding loans and liabilities. Also, family members may seek their share based on succession laws, thereby adding additional challenges during an emotionally draining period. However, there's a practical solution for married men. You can secure your term plan under the Married Women's Property Act (MWP) by consenting to an additional addendum. This ensures that the term insurance claim amount is directed straight to your wife, providing a safeguard against potential legal intricacies.

  
  Choosing the Best Term Insurance With the Right Sum Assured Option

  When it comes to purchasing term insurance, you need to remember that you're securing your family’s future. You need to make sure that your financial dependents can lead a comfortable life even in the unfortunate event of your absence. For that, it is essential to have appropriate coverage. A robust coverage not only ensures their financial strength but also provides a safety net against the uncertainties that life might throw their way.

  
  Why is Sum Assured an Important Factor When it Comes to Term Insurance?

  The sum assured plays a pivotal role in term insurance for several reasons:

  1️⃣Ensures Financial Security
  The main reason for getting term insurance is to make sure your loved ones are financially secure if something happens to you unexpectedly. The sum assured is the amount your family would receive if you were to pass away while the policy is in effect. It's like a safety net for them, ensuring that they can keep up with their financial needs and lifestyle even if you're no longer around.

  2️⃣Acts As Your Income Replacement
  Ideally, the sum assured should be significant enough to step in for your income. It's like making sure there's enough financial support to handle your family's day-to-day living costs, pay off any debts you might have, and reach future milestones like your kids' education, weddings, etc.

  3️⃣Accounts For Inflation
  When deciding on the coverage amount (sum assured), it's crucial to factor in the influence of inflation. As time goes on, the cost of living rises, and the purchasing power of money diminishes. A carefully calculated sum assured takes inflation into account, ensuring that the payout retains its value over the years. This approach guarantees that, in the event of any unforeseen circumstances, the financial support remains effective in meeting your family's evolving financial needs

  4️⃣Covers Outstanding Loans or Liabilities
  If you happen to have outstanding loans or mortgages, having a substantial sum assured can be a lifesaver. It acts as a financial cushion, stepping in to settle those debts if something were to happen to you. This way, your family won’t have to face additional financial strain during challenging times.

  5️⃣Fulfils Your Family’s Big Dreams
  The sum assured covers future costs, like your kids' education or big life moments. It makes sure that your family can still go after their dreams even if you aren’t there to support them. This financial support serves as a beacon of hope for your family, allowing them to move ahead, no matter what life may throw their way.

  6️⃣Provides Peace Of Mind
  Having the right sum assured in your term insurance is like a reassuring anchor. It gives you a sense of peace, knowing that if something unexpected occurs, your loved ones won't face financial uncertainties. It's about living up to your role as the main provider and protector of your family, ensuring they stay financially secure even when life takes unexpected turns.

  
  When is The Right Time To Buy a Term Insurance Plan?

  Before you get into the nitty-gritty of when to buy insurance, it's crucial to circle back to why you're getting it in the first place. The whole idea behind a term insurance policy is making sure your loved ones are financially secure even in your absence. So, if you have financial dependents or financial responsibilities like loans, etc. then getting a term insurance policy is a prudent move.

  Here is an example to help you understand better. Ravi, 25, lives with his mom, a housewife, and his dad. a retired bank manager. He is the primary breadwinner of the family, and both his parents depend on him for their financial needs. So, he should buy term insurance to secure their financial future.

  But, when is term insurance not needed?

  If you have no financial dependents or significant responsibilities, you need not buy term insurance at the moment. Here’s an example: Aisha is a young professional working in a tech firm. Both of her parents are financially independent and have substantial savings. Aisha doesn't have any outstanding debts as well. Since she is not responsible for the financial well-being of her family, and there are no significant liabilities, there is no immediate need for her to purchase term insurance.

  
  Can You Save Money if you Buy Term Insurance Early in Life?

  Purchasing term insurance early can be a cost-effective decision. As a rule of thumb, the sooner you secure a term insurance policy, the lower your premiums are likely to be. The insurance company determines your premium rates based on your age at the time of purchasing the policy. Once set, these premiums remain constant throughout the entire duration of your policy. Therefore, the traditional advice is to acquire the policy as early as possible to lock in the lower premium rate and maintain it over the life of your coverage.

  But but but…buying term insurance solely because it's more affordable might not be the most sensible approach. It's essential to take a thorough look at both your family's short-term and long-term financial needs before deciding on the coverage amount and considering any customisations, such as adding the Married Women’s Property addendum. Opting for a policy too early, especially when there are no immediate financial dependents or clear future plans, could lead to decisions that may not be the best fit for your situation. So, invest in term insurance when there are actual financial dependents or liabilities.

  And, one more important thing is that, as you age, the risk of developing lifestyle-related conditions such as diabetes or high cholesterol increases substantially. These health changes can result in significantly higher insurance premiums or even the possibility of your policy being rejected altogether. So, if you're approaching the age of 35 and foresee having financial dependents in the future, this moment could be the deadline to secure a term insurance policy to secure your family’s future.

  
  Documents Needed To Buy Term Insurance

  When you're in the process of buying a term insurance plan, there are some documents you'll need to submit to ensure a smooth experience. These can vary based on factors such as the insurance company, the chosen sum assured, your health declarations, nationality, and other relevant details.

  Here's a indicative list of documents you might be asked for when purchasing a policy -

  • Identity Proof - Passport, voter ID card, Aadhaar card, driving licence, authority letter verifying identity, or any other government-issued document that proves your identity.
     
  • Address Proof - Bank account statement, ration card, electricity bill, telephone bill, voter ID card, passport, or pension order issued by the government, etc., to verify your residential address.
     
  • Income Proof - Salary slips, latest employment contract letter, Form 16, income tax returns, employer's certificate (for PSUs), Income Tax assessment order, CA's certificate showing past three years' income, etc. Salaried individuals may need to submit bank statements and salary slips for the last 3 to 6 months. And, self-employed individuals may have to submit Income Tax Returns and Computation of the Income of the last 3 years.
     
  • Age Proof - Birth certificate, PAN card, passport, driving licence, or any other document that verifies your age.
     
  • Other Documents - Beyond the previously mentioned documents, insurance companies might request additional information to strengthen your application. If you have a pre-existing medical condition or specific health-related circumstances, the insurer could ask for medical reports or related documents.

  It's crucial to note that the list of necessary documents for purchasing term insurance can vary among insurers. Therefore, it's advisable to check with your specific insurer to ensure you provide all the required documentation for a smooth application process.

  
  Eligibility Criteria for Term Insurance Plans

  Term insurance policies typically come with specific eligibility conditions related to various factors such as age, income, occupation, and location. To be eligible to purchase a term plan, it's essential to meet all the criteria set by the insurance company.

  Here are the eligibility requirements of term insurance -

  • Entry Age
    The minimum age for purchasing term insurance is 18 years. The maximum age limit varies, typically falling between 60 and 65 years, depending on the insurance company. This means individuals above the age of 60 or 65 may not qualify to buy term insurance from most insurance providers.
  • Income

  In general, to be eligible for term insurance, you need to have an annual income of Rs. 5 Lakhs or more. However, some insurers may extend this eligibility to individuals with lower incomes. It's noteworthy that your annual income not only determines your eligibility but also influences the maximum sum assured you can select.
  The calculation for the maximum term insurance cover considers your income and the age at which you purchase the policy. Insurers use specific factors, like 25X or 20X (depending on your age), by multiplying it with your income to determine the maximum sum assured you can opt for. Importantly, if you already have an existing life insurance policy, the sum assured from that policy is subtracted from the term insurance cover you're eligible for.
   

  • Educational Qualification

  Certainly, your educational qualifications can play a role in determining your eligibility for a term insurance plan. In general, many insurers require individuals to have completed their graduation to be eligible for a term insurance policy. However, it's worth noting that there are insurers that may extend term insurance coverage to non-graduates as well.

  • Occupation
    Typically, insurance companies extend the opportunity to purchase term insurance to a wide range of individuals, including professionals, self-employed individuals, salaried workers, small business owners, and even housewives.
    However, it's important to note that there could be restrictions on certain occupations, particularly those considered too risky for coverage. For instance, if you're working in a chemical factory or an underground mine, the insurer may decline your application due to the higher associated risks.
     
  • Place Of Residence

  Insurance companies utilise specific sets of pin codes for various insurance policies, seamlessly integrated into their backend systems. These pin code sets may undergo regular updates, so it's advisable to stay informed before proceeding with your application. Typically, insurers encompass all Tier 1, Tier 2, and a significant portion of Tier 3 cities. However, it's important to verify the eligibility of your pin code by entering it in the proposal form when prompted. If you're purchasing through a financial advisor, they can provide you with the list of eligible pin codes.

  • Medical history

  Your overall sum assured and the premiums you'll pay also hinge on your medical history. In some cases, the insurer might request a medical checkup before approving your term insurance. Depending on the findings in your medical reports, if you carry a higher risk, they may either charge you higher premiums or, in some instances, may choose to deny coverage.

  
  Terms Related To Term Insurance Plans

  • Nominee
    Your nominee is the person who will receive the benefits from your term life insurance policy in the unfortunate event of your passing during the policy term. You have the flexibility to choose any financial dependent, such as your spouse, children, parents, etc. as your nominee.
     
  • Riders

  Riders are optional add-ons that provide you with an extra layer of protection at a certain extra cost. These add-ons allow you to safeguard against various risks, ranging from loss of income due to a listed critical illness to dealing with permanent disability.For example, if you meet with an accident that leaves you permanently disabled, the Accidental Disability Rider kicks in, providing an extra sum of money to assist you during such challenging times.

  • Policyholder

  The policyholder is the person who owns or buys the term insurance policy. They have the authority to make any adjustments to the term life insurance contract and are the one who is responsible for keeping up with the premium payments, which is essentially the cost of the term insurance plan.

  • Life Assured

  The life assured is the person covered by the insurance contract, essentially someone whose life is protected against the risk of an untimely death. It's important to note that the life assured and the policyholder might be the same person, meaning the one whose life is covered also owns the policy and takes care of the premium payments. Alternatively, they could be different individuals as well. For instance, a husband might purchase a life insurance policy for his wife, who is a homemaker. In such a case, the wife is the life assured, and the husband, as the policyholder, is responsible for managing the policy and premium payments.

  • Premium Payment Term

  To keep your life insurance plan active, you'll need to make premium payments over a specific period, known as the premium payment term. There are generally three types of premium payment terms to choose from:

  1. Single Pay Option: With this choice, you make the premium payment only once when the policy begins and enjoy coverage for the entire policy term.
  2. Regular Pay Option: Under this option, you'll make periodic premium payments throughout the entire policy period.
  3. Limited Pay Option: With this premium payment option, you can complete your premium payment liability in large instalments early in life, and enjoy the cover for the rest of the policy duration.
     ​​​​​
  • Life Stage Benefit

  The Life Stage Benefit is a feature of term insurance which allows you to upgrade your term insurance coverage at specific life stages or important milestones, without any underwriting by the insurer. A life stage is predecided by your insurer and can include marriage, childbirth, and more.

  To get the life stage benefit, you need to select the option when you purchase your term insurance plan. It can be used within 6 months of the said life stages. Basically, it increases your coverage and you need to pay an additional premium in return.

  For instance, typically you can get a 50% increase of your base cover amount (maximum of Rs 50 Lakhs) on your first marriage. On the birth of your first or second child, you can avail a 25% increase on your base cover amount (maximum of Rs 25 Lakhs).

  Please note that the specified life stages can differ across insurers, and the extra premium that you’ll pay will depend on the upgrade, the remaining policy term, as well as your age at each milestone. Also, different insurers may impose different T&Cs.

  • Policy Term

  The policy term is the time frame during which you are covered by your life insurance policy. Throughout this period, you're guaranteed coverage and entitled to receive the benefits, as long as you stay on top of your premium payments. You have the option to choose the policy term at the time of purchasing the policy.

  • Free Look Period

  The free look period is a duration spanning 15 days (or 30 days if you've bought it online or over the phone), during which you can thoroughly examine the term insurance policy you've chosen. This period kicks in right from the moment you receive the policy document. Take your time to go through the policy document, terms and conditions, features, etc. If you find that the policy isn't quite what you're looking for and you're not satisfied, you have the option to return it to the insurer. The best part is they'll refund your premium. Please be aware that there might be deductions for certain administrative charges, stamp duty charges, etc.

  • Grace Period

  ​​​​​​​When you sign up for a term insurance plan, it's crucial to stay on top of your premium payments by the set due date to ensure your coverage remains intact. However, if you miss your premium payment, the insurer offers extra time to pay your premium and maintain your coverage. This is known as the grace period. For monthly payments, the grace period is typically 15 days, and for yearly, half-yearly, and quarterly modes, it extends to 30 days beyond the original due date. However, if you miss the grace period, your policy could lapse, and unfortunately, you and your loved ones would lose that coverage.

  • Revival Period

  ​​​​​​​If you miss paying the premium during the grace period provided by the insurer, your term insurance policy could lapse. But fear not, insurers give you an option to revive it. They allow a revival period of 5 years from the date of the first unpaid premium, giving you the opportunity to reinstate your coverage. The step-by-step process for this can be found in your policy document.

  Please bear in mind that during the revival process, the insurer might request a medical check-up. In the event that the check-up reveals a new health condition, the insurer may choose not to accept your proposal, or agree to revive the policy with additional premiums or new terms and conditions. 

  
  What Are The Factors That Can Affect Term Insurance Premiums?

  Your ultimate goal is to ensure your family's financial future and one practical way to do that is by getting term insurance. It's a straightforward deal: you pay a premium to the insurer, and in return, they commit to providing a fixed sum of money to your family if something were to happen to you during the policy term.

  But, how are these premiums calculated? Insurers determine the premiums based on several factors, including -

  1️⃣Your Age
  In  term insurance, age plays a pivotal role in determining the premium costs. In essence, younger individuals often enjoy lower premiums. This is due to the fact that younger people tend to be in better health and face a reduced likelihood of health-related issues compared to their older counterparts. Insurance companies factor in these considerations when assessing the overall risk associated with insuring an individual.

  The premium you pay is decided by your age when you start the policy, and it stays consistent throughout the term. Getting coverage early, especially when you're younger, can lead to long-term savings. However, it's crucial to recognise that the decision to purchase term insurance shouldn't solely hinge on potential cost savings. You should buy term insurance only if you have oystanding liabilities or dependents who rely on you financially – whether it's your retired parents, children, spouse, etc. If you don't have liabilities or such financial dependents, term insurance might not be a necessity for you.

  2️⃣Your Status Of Health
  Your health plays a substantial role in determining the cost of your term insurance premiums. As part of the process, insurance companies might ask you to undergo medical tests before issuing the policy. If you're in good health, you'll likely be charged the standard premium. However, if you have a serious medical condition, the insurer may impose an extra premium, often referred to as a 'loading.' This is because an individual with a serious medical condition poses a higher risk for the insurance company, and the additional premium offsets that increased risk.

  3️⃣Your Gender
  Gender can influence the cost of term insurance. Women often experience lower premiums because statistical data shows they tend to have longer life expectancies compared to men. So, insurers consider them less risky and less likely to make a claim. Thus, resulting in more affordable premiums for them.

  4️⃣Your Lifestyle
  Your lifestyle choices and the way of living have a great influence on the cost of your term insurance. If your job involves risks or you're into adventurous activities, you might find yourself paying higher premiums. Such activities increase the likelihood of accidents, so insurers adjust the premiums accordingly. Likewise, if you smoke, drink, or have other unhealthy habits, you could face elevated premiums. These lifestyle choices increase the risk of health issues that may impact your life expectancy.

  5️⃣Your Occupation
  Your job could impact the cost of your term insurance. Insurance companies take into account the inherent risks associated with certain occupations when determining premiums. If your job involves significant physical risks, you may find yourself facing higher premiums. For example, if you work in fisheries, chemical factories, etc., you carry a higher risk since there is an increased likelihood of health challenges associated with certain professions. So, insurers may charge more premiums to compensate for the risk.

  6️⃣Your Cover Amount
  Selecting the appropriate coverage amount is a crucial element of term insurance. It's not just about protection, it also impacts your premiums. Essentially, the more coverage you require, the higher your premiums will be. The cover amount represents the sum that your nominee would receive if, unfortunately, you were to pass away during the policy term.

  Opting for a higher coverage amount in your term insurance usually means a higher premium. The reason for this is that the insurance company assumes a greater risk of having to make a substantial payout in the event of your passing. Conversely, if you go for a lower coverage amount, your premium is likely to be more affordable.

  7️⃣Premium Payment Frequency
  When purchasing a term insurance policy, you'll need to determine the frequency of premium payments, and this choice can impact the overall cost of your premiums. Typically, if you decide to pay premiums annually, you'll pay a lower amount compared to those who opt for monthly, quarterly, or semi-annual payments. For example, selecting a monthly payment frequency could result in a 5-8% higher cost compared to choosing the annual payment frequency. In the end, the decision on payment frequency should align with your specific requirements and financial circumstances.

  
  How To File A Term Life Insurance Plan Claim?

  Navigating the term insurance claim process can seem intimidating and complex. The last thing you would want is for it to end in rejection or disputes, jeopardising the very purpose for which you purchased the same. To ensure a seamless and stress-free experience for your nominee, you need to guide them through the necessary steps and required documentation.

  Here’s a brief guide to simplify the term insurance claim settlement process -

  Step 1: Notification
  The initial step your nominee should take is to inform the insurance company about your passing and their intent to file a claim. They can do this by visiting the insurer’s office or reaching out via phone, email, or their website. Once the insurer is notified, the claim settlement process commences.

  Step 2: Submission Of Claim Form And Necessary Documents

  Following this, your nominee should proceed to submit necessary documents along with a completed claim form. They can find this form either at the insurer’s physical  branch office or on their website. It’s important to note that specifics in the claim form and documentation requirement can vary across insurers.

  Once the documents are submitted, your nominee should ensure they receive a system-generated acknowledgement of receipt from the insurer. Additionally, it is advisable for your nominee to scan and retain copies of documents for future purposes.

  Step 3: Additional Documentation
  The insurance company might ask your nominee for extra documents to further verify the claim they’ve initiated. It's crucial for your nominee to promptly submit these documents to prevent any potential disputes or delays in the claim settlement process.

  Step 4️: Claim Approval
  After your nominee submits all the required documents, the insurance company will review and assess them. Based on this evaluation, they will make a decision to either approve or deny the claim. If everything is in order, and the claim is approved, your nominee will receive the claim amount according to the payout option you selected.

  
  Documents Required for a Term Insurance Claim

  Here's a common list of documents your nominee needs to submit when filing a claim -

  👉Natural Death

  • Policy certificate (original)
  • Copy of death certificate issued by local authorities
  • Nominee’s proof of address
  • A photo identity proof
  • Cancelled cheque
  • Bank passbook copy
  • Medico-legal cause of death copy
  • Health records (like test reports, admission notes, discharge/death summary, etc.   

  👉Unnatural Death

  • Policy certificate (original)
  • Copy of death certificate issued by local authorities
  • Nominee’s proof of address
  • A photo identity proof
  • Cancelled cheque
  • Bank passbook copy
  • Medico-legal cause of death copy
  • Health records (like test reports, admission notes, discharge/death summary, etc.   
  • Driving licence
  • FIR copy
  • Panchanama
  • Inquest report
  • Postmortem report

  Note: This is an indicative list. The list of documents can vary across insurers.

  It's always recommended that you inquire with the insurer about the specific claim settlement procedure when purchasing your policy. Once you have this information, collect all the required documents and inform your nominee about the details. It's advisable to keep these documents in a secure and easily accessible location to avoid any hassles at the time of claim.

  For added precaution, you can also create a Digilocker account or an e-insurance account to store your documents digitally. By sharing the account credentials with your nominee and/or family members, you ensure convenient access to the documents in a secure digital format.

  
  Popular Term Life Insurance Myths

  Many people have many misconceptions about term insurance, which may hamper their decision of buying a plan. Let’s demystify these notions, so you can make a well-informed decision -

  👉Myth 1: Term Insurance Can Be Expensive
  Term insurance is one of the most affordable life insurance options out there, because there’s no maturity benefits involved. You pay comparatively lower premiums in exchange for the high coverage you get.

  👉Myth 2: I Need 20X My Yearly Income As The Cover Amount
  While many people may advise you to buy term insurance coverage that’s 20X your yearly income as a thumb rule, this is not completely correct. The cover amount you need to buy depends on many things like how old you are, how many financial dependents you have, your financial responsibilities, life goals, etc. and not just your annual income.

  It’s best to take into account all these factors to get a precise calculation of what your loved ones will need, so they are not left bereft or in want. Consider your short and long-term expenses, any debts or loans you’ve taken, and the funds/assets you own. Jot down your family’s financial goals and bridge the gap between what you have and what they’ll need in your absence with term insurance.
  
  👉Myth 3: Term Insurance Is A Wasteful Expense
  Many people tend to think that term insurance is a waste of money, because it doesn’t offer any maturity benefits. But you must understand that life insurance comes in many forms and term insurance is one of them. Each product has its own features and benefits; term insurance acts a robust financial shield so your loved ones can live a comfortable life in your absence. The peace of mind and financial stability it gives out is no match for the low premiums. Term insurance is meant to create a financial cushion, and should not be considered an investment option.

  👉Myth 4: Term Insurance Doesn’t Offer Coverage For All Kinds Of Deaths
  A term insurance policy provides coverage for all types of deaths, with the exception of suicide in the first year of policy purchase. In this case, the nominee is given the paid premiums (minus taxes). Any exclusions have to be mentioned specifically in the insurance policy document. If they are not, you need not presume anything.

  👉Myth 5: My Employer-Provided Term Insurance Is Sufficient
  Typically, the term insurance coverage offered by your employer may not be adequate for your loved ones’ financial requirements. Your employer is the negotiator of the plan and has complete power over the features and customisation options, which means that the plan will not be tailor to your and your family’s needs. Plus, if you quit your job, retire, etc. your coverage will end too. You should ideally invest in individual term insurance to get continuous and customised coverage for your family.

  👉Myth 6: I Don’t Need Term Insurance Because I’m Unmarried
  Term insurance is meant to financially protect anyone who is dependent on you financially, whether it’s your spouse, parents, kids, siblings, etc. Even if you aren’t married yet, your parents may retire soon and your younger siblings may depend on you for their education and lifestyle. If something happens to you, term insurance will protect them financially for all their needs.

  👉Myth 7: My Wife Will Directly Get The Claim Payout If She’s The Nominee
  The law states that creditors have the first right over your term insurance plan’s claim amount. This legally backed right takes precedence over the nominee under your policy. So, if you have any unpaid debts or loans and you pass away, your creditors will get the claim amount first and not your wife or children. However, there’s a way to tackle this. If you’re a married male, you can sign an extra addendum under the Married Women’s Property Act (MWP) to make sure that your wife gets the claim amount first.

  Frequently Asked Questions (FAQs)

  1. How does term insurance help your family members?

  Term insurance is a financial safety net that safeguards your loved ones against the uncertainties of life in your absence. If you pass away during the policy period, the plan will pay them a fixed sum of money, which they can use to take care of big goals and unpaid debts, pay day-to-day expenses, and maintain a comfortable lifestyle.

  2. Who should buy term insurance?

  You should invest in term insurance if -

  • Your family members depend on your income for their financial goals and expenses.
  • You have unpaid debts or loans, which will shift to your family if you pass away.
  • You have unfinished financial obligations, like your kids’ education or wedding, enough savings for your spouse, etc.
  • You haven’t accrued sufficient wealth for your loved ones’ current and future needs.
     

  3. What types of deaths does term insurance not cover?

  Many individuals believe that term insurance doesn’t cover several kinds of death. But this simply isn’t true. Term insurance covers all kinds of deaths, with the only exception being suicide in the first year of buying the policy. In this case, all the paid premiums till then (minus taxes) are returned to the nominee.

  4. What term insurance coverage should I go for?

  Avoid using thumb rules like ‘20X your annual income’ for calculating your term insurance cover amount, because this may or may not suffice your family’s needs. You should consider your financial obligations, living costs, loans, current wealth, etc. to calculate the right cover amount.

  5. Are term insurance and life insurance the same?

  No. Life insurance comes in various forms, and term insurance is one of them. Term insurance is a pure risk cover, which means that it doesn’t have an investment component. On the other hand, other forms of life insurance like endowment plans, whole life insurance plans, ULIPs, etc. offer both investment and insurance components.

  6. Can I increase the duration of my term life insurance policy after it is issued?

  Unfortunately, you do not get the option of increasing the duration of your term plan once it is issued. If you want a longer time span, the only option you have is buying a new policy.

  7. Can I appoint a new nominee after my term life insurance is issued?

  Absolutely! You can alter, add, remove nominees how many ever times you want during the policy span. For this, you’ll need to reach out to the insurance company and enquire about the process. Typically, you’ll need to fill out the nomination form and submit it during policy renewal.

  8. What will happen if I survive the term insurance policy duration?

  If you outlive the term insurance policy’s time span, your coverage will end. You will not get anything, since term insurance provides only a death benefit and no maturity/survival benefits (except if you choose the return of premium option).