What is Term Insurance?

Term insurance is a pure life insurance product that provides financial protection to your family in case of the policyholder's untimely death. It is the most affordable form of life cover with high sum assured at low premiums.

• Pure risk protection plan with no maturity benefit
• Coverage for a fixed term (e.g., 10, 20, 30 years)
• Payout only in case of the insured's death during the policy term
• Riders available for critical illness, accidental death, disability

Benefits of Term Insurance

Term plans offer several benefits that make them a must-have in every individual's financial portfolio:

• High Cover at Low Premium: You can get a cover of ₹1 crore or more at a premium of just ₹500–1000/month (age-dependent)
• Peace of Mind: Ensures your family’s financial needs are met in your absence
• Customizable Riders: Add-ons like critical illness, income benefit, or waiver of premium increase protection
• Flexible Tenure: Coverage options from 10 years to whole life (up to age 99)
• Return of Premium (ROP) Option: Get premiums back if you survive the policy term (optional feature)

How Term Insurance Works

The working of term insurance is straightforward:

1. You choose a sum assured (e.g., ₹1 crore) and a term (e.g., 30 years)
2. You pay annual or monthly premiums for the policy term
3. If the policyholder dies during the term, the nominee gets the sum assured
4. If the policyholder survives the term, there is no payout (unless ROP is chosen)

This makes term insurance a simple and effective income replacement tool for family protection.

Tax Benefits under Section 80C & 10(10D)

• Section 80C: Premium paid up to ₹1.5 lakh/year is deductible from taxable income
• Section 10(10D): Death benefits are tax-free for the nominee
• Return of Premium Plans: The maturity amount is tax-free if conditions of 10(10D) are met
• HUF and NRIs: Can also avail 80C deductions for term plan premiums

Note: GST (18%) is applicable on term insurance premiums.

How to Choose the Right Cover

Choosing the right sum assured is critical. Underinsurance defeats the purpose of term insurance. Consider these factors:

• Current annual income (multiply by 10–15 times)
• Outstanding loans and liabilities (home, car, personal)
• Future goals (children’s education, marriage)
• Spouse’s retirement and living needs

Example: If your income is ₹10L, home loan ₹50L, and kids' education ₹30L → Ideal cover: ₹1.5–2 crore

Tools: Use online term insurance calculators for accuracy

Top Term Insurance Plans in India (2025)

• LIC Tech Term – Trusted brand, decent pricing, online only
• HDFC Click 2 Protect Super – Customizable with multiple rider options
• Max Life Smart Secure Plus – High CSR, offers return of premium
• Tata AIA Sampoorna Raksha Supreme – Whole life cover option and top-up
• ICICI Pru iProtect Smart – Covers 34 critical illnesses, flexible payout options
• Aditya Birla DigiShield Plan – Increasing cover, joint life, and other variants

Always check Claim Settlement Ratio (CSR), solvency ratio, and customer reviews.

FAQs for Clients & Taxpayers

• Can I have multiple term insurance policies?
  Yes, there is no restriction on the number of policies. Inform all insurers during proposal.
• Is term insurance necessary if I’m single?
  Not compulsory, but it helps cover debts and support dependents (parents/siblings).
• Can I increase my cover later?
  Yes, some plans allow step-up cover or top-up on milestones (marriage, child birth)
• What happens if I miss a premium?
  You get a grace period (usually 15–30 days). After that, the policy lapses and needs revival.
• Can I claim tax even if I buy online?
  Yes, all online term insurance premiums are eligible for 80C deductions.