Term Insurance
Starting ₹10/day* for ₹50 Lakh cover
- No Spam calls. Promise
- Shield your family from unforeseen events
- Tax benefit** u/s 80C on premium paid
Life insurance policies are meant to cover the risk of premature death. The most basic and the essential form of life insurance is a term insurance plan. This is a plan which offers the highest coverage with the least premium.
Let’s have a look at a term plan in details.
What is Term Insurance?
Term insurance is a life insurance policy which covers the risk of premature death. When you buy a policy you choose the sum assured and the coverage duration. Thereafter, in case of death during the policy tenure the sum assured is paid to the nominee. Usually, term insurance plans do not have any maturity benefit. That means, there’s no pay-out, if the insured survives till the end of the policy duration.
For example, if you buy a term plan with a term of 25 years and a sum assured of INR 50 lakhs.
Scenario | With a Term Plan of | Without a Term Plan of |
|---|---|---|
| When the life insured dies during the policy tenure | Death Benefit of INR 50 lakhs is paid to the nominee | No benefit is paid |
| When the life insured survives the entire policy tenure | No benefit is paid | No benefit is paid |
Thus, a Term Insurance Plan covers the risk on the life of the insured as long as the policy is in force and all due premiums are paid.
Features of Term Insurance Plans
Here are some salient features of term insurance plans which differentiate the plan from other life insurance plans –
- Term plans offer the highest sum insured at the lowest cost as it is a pure protection plan
- These plans are offered for the long term. You can avail coverage up to 85 years in some term insurance plans
- If the insured dies within the policy tenure, the entire sum assured is paid to the nominee as death benefit and the policy terminates
- Term plans allow you optional riders which you can take to enhance your coverage. Many plans also have inbuilt riders more a more inclusive scope of coverage
Types of Term Insurance Plans
Term insurance plans come in different variants. These variants are as follows –
1. Level Term Plan
Level term plans are those which have a uniform sum assured throughout the policy duration. When the insured dies during the policy tenure, the sum assured is paid and the policy is terminated.
For example, if you choose a sum assured of INR 1 CR, the coverage of INR 1 CR would be available for the entire duration of the plan. Also, your nominee would get INR 1 CR as death benefit in case of your death during the policy term.
| Life Coverage | Sum Assured |
|---|---|
| Sum Insured for the entire policy duration | INR 1 CR |
| Death Benefit paid to the nominee IF the life insured dies within the policy tenure | INR 1 CR |
2. Increasing Term Plan
Under these plans the sum assured increases every year either by a fixed amount or by a fixed percentage. In case of death, the increased sum insured is paid to the nominee. The rise in sum assured usually stabilises once it becomes 200% of the base sum assured chosen at the beginning of the policy tenure.
For example, in a term plan of INR 50 lakhs, suppose the sum assured increases by 5% every year.
| Life Coverage | Sum Assured |
|---|---|
| Sum Insured chosen at the beginning | INR 50 lakhs |
| Increase in sum assured every year @ 5% p.a. | INR 2.5 lakhs |
| Sum Assured in Year 2 | INR 50 lakhs + INR 2.5 lakhs = INR 52.5 lakhs |
| Sum Assured in Year 3 | INR 52.5 lakhs + INR 2.5 lakhs = INR 55 lakhs |
| Sum Assured in Year 4 | INR 55 lakhs + INR 2.5 lakhs = INR 57.5 lakhs |
| Thus, Sum Assured in Year 20 | INR 95 lakhs + INR 2.5 lakhs = INR 97.5 lakhs |
| Sum Assured after Year 20 | INR 1 CR (and it stabilises at 200% of the original sum assured) |
| Death Benefit paid to the nominee IF the life insured dies in year 4 | INR 57.5 lakhs |
3. Decreasing Term Plan
Decreasing term plans are opposite of increasing term plans. Under these plans the sum assured decreases every year. These plans are usually taken along with loans and the decreasing sum assured coincides with the decreasing balance of the loan.
So, the sum assured decreases every year by 5% from INR 1 CR.
| Life Coverage | Sum Assured |
|---|---|
| Sum Insured chosen at the beginning | INR 50 lakhs |
| Decrease in sum assured every year @ 5% p.a. | INR 2.5 lakhs |
| Sum Assured in Year 2 | INR 50 lakhs - INR 2.5 lakhs = INR 47.5 lakhs |
| Sum Assured in Year 3 | INR 47.5 lakhs - INR 2.5 lakhs = INR 45 lakhs |
| Sum Assured in Year 4 | INR 45 lakhs - INR 2.5 lakhs = INR 42.5 lakhs |
| Thus, Sum Assured in Year 10 | INR 30 lakhs - INR 2.5 lakhs = INR 27.5 lakhs |
| Sum Assured after Year 10 | INR 25 lakhs |
| Death Benefit paid to the nominee IF the life insured dies in year 4 | INR 57.5 lakhs |
4. Income Benefit Term Insurance Plan
These term plans are also called monthly income plans. Under these plans the sum assured is paid in instalments rather than in lump sum. So, in case of death, the sum insured is paid in monthly or annual instalments which create a source of income for the family after the breadwinner’s demise.
For example, say a term plan of INR 50 lakhs, pays the death benefit @10% of the sum assured every year for 10 years after the death of the insured.
| Life Coverage | Sum Assured |
|---|---|
| Sum Insured chosen at the beginning | INR 50 lakhs |
| Death Benefit payout after the death of the life insured | INR 5 lakhs for 10 years = Total INR 50 lakhs |
Thus, INR 5 lakhs would be paid to the family as death benefit.
5. Term with Return of Premium (TROP)
These term plans are those which have a maturity benefit. Under these plans the premiums paid during the policy tenure are refunded back if the insured survives till the term of the policy. In case of death of the insured, on the other hand, the sum assured is paid.
For example, say you buy a TROP with a sum assured of INR 50 lakhs and a premium of INR 20,000 payable every year for 25 years.
| Life Coverage | Sum Assured |
|---|---|
| Sum Insured chosen at the beginning | INR 50 lakhs |
| Premium payment | INR 20,000 for 25 years |
| So, total premium payment | INR 20,000 * 25 years = INR 5 lakhs |
| If the Life Insured dies anytime between Year 1 and Year 25 | INR 50 lakhs is paid to the nominee as Death Benefit |
| If the Life Insured survives for 25 years, amount paid as Maturity Benefit | INR 5 lakhs (total premium amount) to the policyholder |
6. Joint Term Plan
Under a joint term plan, two or more lives are covered under a single policy. This policy can be taken by married couples or business partners. If any insured member dies during the term of the policy, the sum assured is paid and the policy is terminated.
For example, say you and your spouse invest in a joint term plan on your lives with a sum assured of INR 50 lakhs and a term of 25 years. Some term plans pay on first claim basis and some pay for both lives.
| Life Coverage | Sum Assured |
|---|---|
| Sum Insured chosen at the beginning | INR 50 lakhs |
| For Joint Term Plan is on first claim basis | |
| If any one of the 2 life insured dies within the period of 25 years | INR 50 lakhs is paid to the other and the policy terminates |
| For Joint Term Plan is on both claim basis | |
| If any one of the 2 life insured dies within the period of 25 years | INR 50 lakhs is paid to the other and the policy continues |
| If the second life insured also dies within the period of 25 years | INR 50 lakhs is again paid to the nominee and the policy is terminated |
However, there are many variants of a Joint Life Term Plan where income benefit could be paid to the surviving spouse, in-built riders could be added, etc.
7. Convertible Term Insurance Plans
Convertible term plans are those which can be changed to another type of policy after a specified duration. Convertible term plans usually allow you to convert them into endowment plans with a maturity benefit. This conversion option is allowed after the completion of specific coverage duration and if you choose the option, the policy is converted. If, however, you do not exercise the conversion option, the policy continues without changes.
For example, say a term plan allows you to convert it into an endowment plan after 10 policy years where the premiums are refunded on maturity. So, if you buy this plan you can choose to convert it into an endowment plan and get maturity benefits or you can choose to keep the plan intact and receive a death benefit on death during the term.
8. Group Term Insurance Plans
Group term insurance plans are available for a group of individuals. These groups can be employer-employee groups, banks and their account holders, clubs and their members, trade unions and labourers, etc. A single master policy is bought which covers all the group members. The policy is issued for one year after which it can be renewed. The premiums of the policy can be paid by the group, its members or jointly by both.
Benefits of Term Insurance
A term insurance policy is said to be the most important coverage which you should take. It should be an important part of your financial portfolio after which you can invest in other avenues for wealth creation. The reasons why term insurance plans are a must are as follows –
1. They provide financial security
The primary benefit of a term insurance policy is the financial security that the policy provides. The policy covers the risk of premature death and secures the family against possible financial repercussions which might incur if the breadwinner dies prematurely. So, if you invest in a term insurance plan, you can ensure financial security of your family members even in your absence or in case of an eventuality.
2. They help in the fulfilment of your life goals
Term insurance plans have the lowest premium rate since they cover only the risk of premature death. These low rates help you opt for high sum assured levels which would be sufficient to take care of your financial goals. Thus, in your absence, the considerable coverage amount can give your family funds needed for your child’s future, their lifestyle needs, paying home loan, buying a home or even for retirement planning.
3. They provide an all-round protection
Gone are the days when term plans provided coverage only against death. Today’s term insurance plans have evolved and allow you different rider benefits to enhance your coverage. Some benefits are inbuilt while some are available at an additional cost. These riders help in providing an all-inclusive coverage so that your loved ones have financial assistance in emergencies other than death. For instance, you can opt for a personal accidental death to enhance the base term plan coverage.
4. They give tax benefits
Term insurance plans, like other life insurance policies, offer tax benefits on the premiums that you pay. Premiums paid are allowed as a deduction under Section 80C of the Income Tax Act, 1961 up to a maximum of INR 1.5 lakhs. The death benefit paid by the plan is completely tax-free. Moreover, if you opt for return of premium plans, the premium refunded on maturity would also be a tax-free income under Section 10 (10D) of the Income Tax Act, 1961.
What is Covered?
Term insurance plans primarily cover premature death. Whether you die in an accident or due to an illness within the policy tenure, the death would be covered under the policy and your nominee would receive a death benefit.
What is Not Covered?
Term plans do not cover
- Suicidal death of the life insured within 12 months of buying the policy or reinstating it. Only 80% of the total premium paid for the term plan would be refunded on suicidal death of the life insured within the 1st policy year
- However, suicidal deaths after the completion of 12 months from policy inception or revival date would be covered
- Death under intoxication or self-inflicted injury
- Death due to homicide or any other criminal activity
- Death due to illegal activities or as a result of war or terrorism
- Death due to pre-existing lifestyle habits like smoking or participation in hazardous or adventure sports, if not declared at the time of policy inception
Some term plans have additional exclusions like death due to childbirth and pregnancy, sexually transmitted diseases like HIV, etc. but it varies from company to company. You must read the exclusions well before purchasing the policy.
How to Compare Term Insurance Plans Online?
Since term insurance plans are quintessential for financial security, all life insurance companies offer one or more term insurance policy for your coverage needs. Amidst more than two dozen term plans you have to choose one policy which gives you the best benefits. How can you do so?
To find the best term plan, you should compare the available policies on different parameters. These parameters include the following –
1. Coverage offered
The first thing which you should check is the coverage offered by the term insurance plan. Though term plans usually cover only premature death, modern day plans provide a holistic scope of coverage by adding riders into the scope of the coverage of the policy. Thus, you can find term plans with additional inbuilt benefits which cover accidental deaths, disablements, critical illnesses, etc. So, compare the plans on their coverage and choose a policy which provides the most comprehensive scope of cover against all possible contingencies.
2. Policy tenure
Term plans come to your aid in case of death during the policy tenure. So, when buying term plans, choosing the maximum possible coverage tenure is better as it allows longer coverage. So, check the maximum policy tenure offered by the policy. Some plans might also offer lifelong coverage which is better since you can enjoy coverage till 99 or 100 years of age and get complete financial security in case of premature death.
3. Premium rate
The premium of the term plans should be reasonable to the coverage that the plan offers. So, compare the premium of different policies vis-à-vis the coverage that they offer. The policy offering the widest coverage at the lowest cost would be the best term plan.
4. Claim Settlement Ratio of insurance company
Claim Settlement Ratio (CSR) of an insurer shows the percentage of claims settled by the company against the total claims made on it in a financial year. If the ratio is high it shows that the company settles maximum of its claims. Thus, when comparing term plans, you should compare the CSR of the insurers and choose a company which has a high CSR so that your claims would have a higher probability of being settled.
Term Insurance Premium Calculator
Term insurance premium calculator is an online calculator which helps you calculate the expected premium of a term insurance policy.
To use the calculator, you should enter in the following details –
- Coverage needed (The maximum coverage is limited based on your age and annual income)
- Age and gender
- Term of the policy
- Premium payment term and frequency
- Riders needed
- Lifestyle habits like smoking
- Country of Residence, whether India or not
Once the details are provided, the calculator would calculate and show the premium of different term insurance plans. You can compare the premiums and coverage and then choose the best policy.
Usually, the maximum coverage any one would get is approximately 20 to 25 times of the annual income. However, this may vary from insurer to insurer. The percentage also varies with age. As you get older, it reduces to even 10 to 15 times of the annual income.
If you are wondering how the premium is calculated, here are the factors which affect your term insurance premium calculation –
- Age – the older you are the higher would be the premium rate
- Sum assured chosen – the higher the sum assured, the higher would be the premium
- Term of the plan – the longer the tenure the lower the annual premium
- Premium payment term – the longer the premium payment term the lower the annual premium
- Premium payment frequency – premiums paid monthly or quarterly would be more expensive than premiums paid annually and half-yearly
- Medical history – if you have adverse medical history, your premiums would be higher
- Smoking habits – if you smoke, your premiums would be higher
- Gender – females are charged lower premiums than males
- Occupation – if you work in a dangerous occupation which increases the chances of death, premiums would be higher
Term Insurance Claim Process
In case of death of the insured during the policy tenure, a claim is said to take place. In case of a claim, the following process should be followed –
- The nominee should inform the insurance company of the claim
- The claim form and other relevant documents should be submitted to the insurance company so that the claim can be processed
- The company processes the claim and pays the sum assured to the nominee
Documents Needed for Term Insurance Claims
In case of term insurance claims, the following documents should be submitted for claim settlement-
- Claim form, filled and signed by the nominee
- Policy bond
- The identity proof of the nominee
- Death certificate of the insured
- Police FIR or Medico-Legal Certificate if the insured died in an accident
- Medical report, coroner’s report, panchnama, police inquest report, etc. in case of accidental death
- Bank account details of the nominee
Reasons Why Claims Can Get Rejected
Though term insurance claims get settled, sometimes the claims can be rejected. Following are the reasons for such rejection –
- The policy was lapsed due to non-payment of premium
- The correct claim process is not followed
- The relevant documents have not been submitted
- The insured hid important information when buying the policy which affected the mortality risk or there was misrepresentation or non-disclosure of material fact
- The claim is a fraudulent claim
- The insured dies due to any of the mentioned reasons for exclusion, then the claim would be rejected.
Best Term Insurance Plans in India (2020)
Here is a list of top 5 term insurance plans in India which give the best coverage benefits at the most competitive premium rates –
Term Plan Name | Salient Features | CSR of the Insurer |
|---|---|---|
| HDFC Life Click 2 Protect Plus 3D | · Comprehensive term plan with nine coverage options to choose from · Coverage for death, disability and disease · Whole life coverage is also available under the plan | 99.07% for the financial year 2019-20 |
| AEGON Life iTerm Plan | · Coverage can be availed till 100 years of age · You can choose from three coverage options · Death benefit can be taken in lump sum or in monthly instalments | 98.01% for the financial year 2019-20 |
| ICICI Pru iProtect Smart | · Coverage can be availed till 99 years of age · The premiums of the policy are low allowing you to easily afford the plan · Optional critical illness rider can be availed which covers 34 illnesses | 98.58% for the financial year 2018-19 |
| Max Life Smart Term Plan | · You can avail the refund of premiums on maturity of the plan · The plan allows critical illness rider which covers 40 illnesses · There are seven death benefit options to choose from | 99.22% for the financial year 2019-20 |
| LIC’s Tech Term Plan | · You can choose a level term plan or increasing term plan under the policy · The death benefit can be taken in instalments · You can pay the premium once, for a limited period of for the entire plan duration | 97.79% for the financial year 2018-19 |
Term Insurance Tax Benefits
Term insurance plans allow you tax benefits both on the premiums paid as well as the benefits received from the policy. The applicable tax benefits of term insurance plans are as follows –
| Tax Benefit Section | Tax Benefit Allowed |
|---|---|
| Section 80C | The premium paid towards a term insurance policy is allowed as a deduction from taxable income U/S 80C up to INR 1.5 lakhs per annum |
| Section 10 (10D) | If the term plan pays any maturity benefit in the form of premium refunds, such a benefit is allowed as a tax-free income in the hands of the policyholder provided the premium is not more than 10% of the sum assured. Death Benefit paid to the nominee is also considered tax-free except in the case of a Keyman Plan. |
| Section 80D | The premium paid towards health benefit along with term coverage is allowed as a deduction U/S 80D up to INR 25,000 per annum |
Term Insurance Riders
Term insurance plans allow riders with the base policy. Riders are optional coverage benefits which might also be inbuilt under many term plans. Riders are additional coverage clauses and they help in increasing the scope of the policy. If the rider is inbuilt in the plan’s coverage, no additional premium would be payable and you can avail the rider when you buy the plan. However, if the rider is allowed as an optional coverage benefit you would have to pay an additional premium and opt for the riders that you need.
A range of riders are offered with term insurance plans. Some of the most common and popular ones are as follows –
| Rider | Meaning |
|---|---|
| Accidental death and disablement rider | This rider covers accidental death or disablements suffered during the policy tenure and pays an additional benefit in such cases |
| Critical illness rider | It covers a range of critical illnesses and if the insured is diagnosed with any covered critical illness, a lump sum benefit is paid |
| Premium waiver rider | The rider waives future premiums if the policyholder dies but the insured is still alive. The plan, however, continues and premiums are paid by the insurance company on behalf of the policyholder. This rider may also be beneficial if the life insured suffers any disability and is unable to pay future premiums |
| Disablement rider | It covers accidental disablements and waives the premiums if the insured suffers permanent disability during the tenure |
| Surgical benefit rider | It covers major surgeries and pays a lump sum benefit if the insured undergoes a major surgery during the tenure |
| Term rider | It pays an additional benefit in in case of death during the policy tenure |
| Family income benefit rider | It pays regular incomes to the family for a specific period after the insured dies during the policy tenure |
Frequently Asked Questions
1. How much cover should I buy in a term insurance plan?
The thumb rule says that the cover of your term plan should be atleast 10-20 times of your annual income. However, there are various other factors that also play a key role here. Number of dependents you have, your investment needs, affordability, lifestyle you wish to provide to your family and various other living expenses. Thus, the exact cover varies from individual to individual, based on their specific needs.
2. Can I get tax benefits under term insurance?
Yes, term insurance offers tax benefits of up to INR 1.5 lakh. The premiums paid towards a term insurance plan are exempted from tax under section 80 C of the Income Tax Act. Whereas, death benefits received by beneficiary are also tax-free under section 10 (10D) of the Income Tax Act. However, tax deductions of up to INR 25,000 (50,000 for senior citizens) can also be availed in some term plans under section 80 D of the Income Tax Act.
3. Can NRIs buy term insurance in India?
Yes, NRIs can also buy term insurance in India. While buying the plan, the NRIs have to complete the underwriting process of their policy. Just like any other policy bought by an Indian. However, NRIs can also buy a term plan from their home country by getting in touch with any Life Insurance Company in India. However, those purchased policies are further verified by a local notary (equivalent to an Indian diplomat or an Indian Embassy official).
4. Why should I buy term insurance?
There are numerous reasons that make term insurance a beneficial insurance as well as investment product. Thus, there various reasons that why you should avail it:
- It gives financial protection to your family in your absence.
- If you are sole breadwinner of the family and have dependents
- If offers wide coverage and that too in affordable premium
- It gives peace of mind by ensuring that your family will remain financial secure in future
- You can do a lot of savings as it also offers tax-benefits of up to INR 1.5 lakh
5. How can I buy a term plan?
You can buy a term plan either online or offline. However, buying a term plan online would be better as you can compare various plans easily and also the premiums are affordable online. You can grab lucrative deals online which is generally not the case in offline process.
6. Can I buy term insurance from two companies?
Yes, you can buy term insurance from two different companies. Both the companies are liable to pay a sum assured to the nominee, in case of an unfortunate demise of a policyholder during policy tenure. For better and wider coverage, usually the policyholder does that.
7.Does term plans offer maturity benefits?
No, term plans generally offer death benefits to the nominee/beneficiary of the policyholder. However, maturity benefit can only be availed in TROP, where total premiums are paid back to the policyholders, only if he outlives the policy term.
8. What is the maximum tenure available in a term plan?
A term plan can be availed with a maximum tenure of up to 75 years. However, different insurers offer different plans and a few plans are also available for up to 100 years of tenure.
9. Can I change the tenure of a term insurance plan?
Once you have purchased the policy, you cannot change your policy tenure. You can only change your policy term at the time of policy renewal.
10. Can premium amount be changed during the tenure of the policy?
Once the policy is issued, the premium remains constant throughout the policy tenure. However, you can change your premium at the time of policy renewal.
11. Why term insurance premium is higher for a smoker than that of a non-smoker?
Smoking has injurious effects on health, which ultimately puts you in a risk bracket. And, due to the higher uncertainty of life associated with smoking, the premium costs are higher for a smoker as compared to a non-smoker, who leads a healthy lifestyle.
12. I am an occasional smoker then also I need to declare myself as a tobacco user?
Yes, even if you smoke occasionally then also you need to disclose this information to your insurance company. In case any mishap happens to you due to smoking, and your insurer comes to about it later, your policy will become null and void. Thus, you won’t be able to gain the benefits and if you raise a claim, your insurance company will also reject the same.
13. What If I become an NRI after buying a term plan in India?
Your plan still continues even after you become an NRI. However, your term plan won’t be valid for the first 2 years, if you do not inform your insurance company about your new status. All policy documents should be updated and KYC formalities need to be done. In case of failure of the same, you won’t be able to renew your policy anymore.
14. Death due to terrorist attack covered under term insurance?
Yes, death due to terrorist attack is also covered under term insurance and death benefit will be given to the nominee or beneficiary. However, it is advisable to read your policy document for more clarity.
15. Why should I opt for an accidental death benefit rider, if accidental deaths are already covered under the base term plan?
It is true that accidental deaths are already covered in a base term plan but opting for an accidental death benefit rider is totally worth it. Yes, with this rider, the policyholder will get an additional sum assured over and above his base plan. Hence, it serves as a great benefit to the policyholder.
16. Can I insure my spouse or children under a term plan instead of me?
Yes, you can do that but for that you have to buy separate plans for them.
17. Can I change my term insurance company after buying the plan?
No, you cannot shift from one company to another after buying a term plan.
18. How much time does it take to settle a claim in term insurance?
Well, the exact claim settlement procedure varies from one company to another. But usually companies settle claims between 8-15 days, depending upon the prevailing conditions of your medical claim.
19. If death occurs within 1 year of purchasing the plan, will I still get the claim?
Usually, many insurers offer death benefits even within 1 year of purchasing the term plan. However, it is advisable to check the terms and conditions mentioned in the policy document and clarify it with your insurer.
21. What are the required documents to buy a term plan online?
Following documents are listed below to buy a term plan online:
- Proof of income/ employment
- Proof of age
- Proof of education
- Proof of address - residence and correspondence
- Proof of identity
- Photograph
- PAN Card copy
22. Can I change my nominee after marriage in term insurance?
Yes, in case after marriage you want to make your husband/wife your new nominee, term plans give you the provision to do that. However, a policyholder can also change a nominee, if his nominee passes away. In addition to this, you can also include an additional nominee into your term plan.
23. What is the best term insurance company?
It is difficult to say which company is best as each company has its own features and benefits that it offers via its term plans. However, while selecting a company take into account many factors such as-affordability, coverage, claim settlement ratio and market reputation to name a few. Evaluate your needs first and see which company fits into the criteria in meeting that. An online comparison is the easiest way to choose an ideal term insurance company.
24. Is it compulsory to add riders in term insurance?
No, it is not compulsory to add riders as they are optional, offering additional coverage benefit to the policyholder. Based on your specific needs, you can choose as many riders as you want. However, you have to pay an additional premium for riders hence your term insurance premium will increase.
25. Why is the claim settlement ratio important in term insurance?
With a claim settlement ratio, you can easily know how successfully an insurance company has settled all its claims in a particular year. The higher the ratio, the better a company in handling and settling the maximum number of claims raised in a year.
26. Will the insurance company pay the sum assured even if a policyholder dies outside of India?
Yes, the nominee of the policyholder will receive the sum assured even if the policyholder dies outside India. However, the policyholder has to inform his insurer about his migration to another country. Also, if an insured has moved to a country that is considered to be unsafe or a war zone such as Afghanistan, Syria, or Somalia, the company will not provide the sum assured.
27. What happens if I survive the policy tenure/term?
Since term plans do not offer maturity or survival benefit to the policyholder hence he won’t get anything. However, in the case of TROP(if opted), the policyholder gets the total premiums paid towards a plan on surviving the policy term.
28. How do insurance companies investigate death claims in term insurance?
If a claim occurs within the first 2 years of purchasing the policy, the insurance company does a thorough investigation. Well, it is easier to process a claim, where premiums are paid for a long time and policy runs for a longer time such as 10 years, 20 years and so on.
29. If a policyholder owns two different policies, how does the claim settlement process work?
In this situation, the policyholder needs to inform his second company about his already availed term policy from another insurer. And, collects acknowledgement form/certificate from his first insurer. While at the time of claim settlement, he has to submit the death certificate to the insurance company with whom the policyholder is associated for the longest time.
30. What about the claim settlement in case of an accidental death?
The sum assured will be paid to the nominee/beneficiary of the policyholder in case of his accidental death. However, the nominee has to furnish the complete documents in front of the insurer to avoid the claim rejection.
31. What will happen if the insured starts smoking a few later after purchasing the term plan?
If a policyholder develops habits like smoking or drinking later, he immediately needs to disclose the same to his insurance company so that his premium can be re-adjusted thus he won’t face any claim rejection in the future.
32. What happens if I discontinue paying the premiums in term insurance?
You should ideally pay all your premiums in term insurance on time. If premiums are due beyond due dates, a grace period is allowed to pay the premium. However, if the premiums are not paid even in grace period, your term insurance policy will be lapsed. As a result, your policy will become invalid hence you no longer reap the benefits and coverage of your policy.
33. Does the term insurance premium remain the same for everyone?
No, the premium amount varies in term insurance. Different individuals have to pay different premiums as premium is calculated on various factors such as age, gender, medical history, lifestyle habits, occupational hazards, etc. Thus, term insurance premiums can never be the same for everyone.
34. Is buying term insurance secure online?
yes, it is completely safe and secure to buy any term plan online. These days insurance companies use highly advanced technologies thus have made their online platforms highly secure for any transaction. Thus, you need not to worry at all.
35. How term insurance is different from life insurance?
Life insurance gives wider coverage as compared to term insurance. In life insurance, the policyholder gets death as well as maturity benefits which is not the case with term insurance. You only get death benefits in term insurance.
36. Can I avail loan against term insurance plan?
No, you cannot avail a loan against term insurance because term plans do not contain cash value and expire at the end of their policy tenure without offering any returns. Thus, banks do not consider term insurance plans as collateral against loans.However, a loan can be given only in case of TROP, which has a surrender value. Well, which means the due installment premium of the policy has been received in full for the first 3 policy years. Thus, under this plan, a loan can be given up to 85% of the surrender value. The minimum loan amount one can avail is up to INR 10,000.
37.Can a diabetic person avail a term plan?
Yes, a disbetic person can also get a term plan. But it is advisable that one should disclose his condition to his insurance company at the time of availing a term plan. And, based on the severity level of your diabetic condition, your term insurance premium is decided. However, in case you have additional health risks apart diabetic such as obesity, hypertension, or coronary heart illness, there are chances many insurance companies might reject you to avail insurance for a long term.
38. What are the exclusions of term insurance?
Though term plans provide death benefits, there are certain exclusions which are not covered which are not covered in term insurance. Following are the exclusions in term insurance plans in India:
- Suicide (excluded only for 1st first of policy purchase)
- Death due to self-inflicted injury
- Death due to sexually transmitted diseases like HIV or AIDS
- Death due to the pre-existing health conditions
- Death caused due to the involvement in illegal activities
- Accidental death due to driving under the influence of alcohol or drugs
- Death due to the participation in racing activities like bike racing or car racing
- Death due to the participation in adventure activities like bungee jumping, trekking, hiking, water sports etc.
- Death due to pregnancy and childbirth
39. Is it worth to purchase a term plan for over 60 years of age?
Yes, it totally makes sense to buy term insurance even after 60 years of age. In case, your children or grandchildren are studying and are financially dependent on you. Also, if you have a spouse who is dependent on your pension, which would stop after your demise, term insurance is helpful. Or in case you have some financial outstandings to repay such as a home loan or any other debt, term insurance can be used to pay off the same in case of your unfortunate death.
40. What is the minimum age to buy term insurance?
The minimum age of an individual should be 18 years to invest in a term plan.
41. How to get a duplicate copy of a policy document?
To get a duplicate of your term insurance policy document, you firstly need to inform your insurance company. And, submit your written application along with indemnity bonds. For more clarity, you can get in touch with your insurer.
42. Can I cancel my term insurance policy?
Yes, you will be given a 15 days free-look period to cancel your policy without any penalties.
43. Will adding riders increase my term insurance premium?
Yes, riders come at an additional cost and once you add them into your base policy, the premium of your term insurance will increase.