Term Life Insurance: Protecting Your Loved Ones

Term life insurance provides coverage for a specific period, offering financial protection to your family in the event of your untimely death, ensuring their financial stability and peace of mind.

What is Term Insurance?

Term insurance is a type of life insurance policy that provides financial coverage for a specific period, known as the “term.” During this term, if the life assured passes away due to any unfortunate event, the designated beneficiary will receive the financial protection provided by the policy. The term insurance plan offers life insurance coverage against a fixed premium paid by the insured for the specified duration.

One of the significant advantages of a term insurance plan is that it offers high life coverage at affordable premiums compared to other life insurance policies. For instance, a premium as low as Rs. 411 per month can provide a coverage of Rs. 1 Crore. This makes term insurance an excellent choice for those seeking substantial protection for their loved ones at a reasonable cost. Additionally, term insurance can serve as a financial tool to fulfill future needs, such as funding a child’s education or marriage.

It is essential to note that if the life insured survives the entire policy term, the coverage at the earlier rate of premiums is not guaranteed upon expiration. The policyholder can opt for extended coverage with different payment conditions, if available, or choose to forgo the coverage entirely. Term insurance plans bought from a reputed online insurance provider like Aapka Policywala provide a valuable safety net for individuals and their families, ensuring financial security during the policy term and peace of mind for the future.

Why Purchase a Term Plan?

Protection To Your Family: A term insurance plan provides financial support to your family members in the event of your untimely demise. It ensures that they can meet their daily expenses and maintain their standard of living even when you are not around.

Secure Your Children’s Future: With a term insurance policy, you can financially plan for your child’s significant life events, such as higher education or marriage. The death benefit can be utilized to fund their aspirations and secure their future.

Safeguard Your Valuable Possessions: The term insurance payout can help your family members manage or repay any outstanding loans, such as home loans or car loans, allowing them to retain valuable assets like a house or a car without financial burden.

Protection Against Critical Illnesses: Some term insurance plans offer critical illness coverage, providing financial protection against life-threatening illnesses like cancer or heart attack. The policyholder receives a lump sum amount on the diagnosis of a covered critical illness, ensuring that medical expenses are adequately covered.

Flexibility in Plans: Term insurance plans are highly flexible, allowing you to choose from various options, such as online or offline purchase, and customize the plan as per your specific needs and financial goals.

Massive Coverage, Low Premiums: Term insurance offers substantial life coverage at affordable premiums, making it accessible to a wide range of people. Online purchase further reduces the premium costs as it eliminates agent commissions.

Riders Benefit: Additional benefits, known as riders, can be added to the term insurance policy at a nominal extra cost. These riders provide additional coverages such as accidental coverage, critical illness coverage, or return of premium, enhancing the overall protection of the policy.

Benefits of Term Insurance

Financial Security: The primary benefit of term insurance is providing financial security to the insured’s family in case of their untimely demise. The policy’s death benefit ensures that the designated beneficiaries receive a lump sum amount, offering financial stability to meet daily expenses, outstanding debts, and future financial goals.

Affordable Premiums: Term insurance offers substantial life coverage at lower premiums compared to other types of life insurance policies. This affordability allows individuals to secure higher coverage without burdening their budget.

Flexibility: Term plans are highly flexible, allowing policyholders to choose the policy term, sum assured, and premium payment frequency based on their financial needs and life stage.

Customizable Coverage: Term insurance can be tailored to suit individual requirements. Additional riders or add-ons can be included to enhance the policy’s scope, such as critical illness coverage, accidental death benefit, or waiver of premium.

Income Replacement: For individuals with dependents, a term plan acts as an income replacement tool, ensuring that the family’s financial needs are met even if the primary earner is no longer around.

Tax Benefits: Premiums paid towards term insurance are eligible for tax deductions under Section 80C of the Income Tax Act, providing additional savings on income tax.

No Maturity Value: Term insurance policies do not have any maturity value, making them pure protection plans. This means that if the policyholder survives the policy term, there is no payout, and the premiums paid are not returned.

High Coverage Amount: Term insurance allows individuals to avail substantial coverage, enabling them to secure the financial future of their loved ones adequately.

Ease of Purchase: Term plans can be easily purchased online, saving time and effort. Online purchase also often results in lower premiums due to reduced administrative costs.

Peace of Mind: Owning a term insurance policy provides peace of mind, knowing that one’s family will be financially protected in times of need, ensuring a secure and worry-free future.

Types of Term Insurance Plans

Level Term Insurance: This is the most straightforward type of term insurance, where the sum assured remains constant throughout the policy term. In case of the insured’s demise during the policy period, the designated beneficiaries receive the fixed death benefit.

Decreasing Term Insurance: In this type of plan, the sum assured decreases over time at a predefined rate. Decreasing term insurance is often chosen to cover specific liabilities like home loans, where the outstanding loan amount decreases over time. It provides a more affordable option for coverage.

Increasing Term Insurance: Unlike decreasing term insurance, increasing term insurance offers a rising sum assured over the policy term. This helps counter inflation and ensures that the policy’s coverage keeps pace with the increasing cost of living.

Convertible Term Insurance: Convertible term plans offer the flexibility to convert the term policy into a permanent life insurance policy, such as whole life or endowment insurance, without the need for a medical examination. This allows the policyholder to adapt to changing financial needs and goals.

Term Insurance with Return of Premium (TROP): TROP plans provide the option to receive the total premium paid during the policy term as a maturity benefit if the insured survives the policy period. If the insured dies during the term, the death benefit is paid to the beneficiaries as per the policy terms.

Term Insurance with Riders: Policyholders can enhance their term insurance coverage by adding riders or additional benefits. Common riders include critical illness cover, accidental death benefit, waiver of premium, and disability cover.

Joint Term Insurance: This type of term plan covers multiple individuals under a single policy, usually spouses or business partners. The death benefit is paid when either of the insured persons passes away.

Group Term Insurance: Group term plans are designed to cover a group of people, such as employees of a company or members of an organization. These policies offer cost-effective coverage to a large number of individuals under a single master policy.

Govt Term Insurance Schemes

In order to protect its residents and to provide for the future of the insured’s dependents or family members in the terrible event of his untimely passing, the government of India has also developed various term insurance programmes.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): Launched by the Government of India, PMJJBY is a life insurance scheme for individuals between the ages of 18 and 50 years. It provides a renewable one-year term insurance coverage with a sum assured of Rs. 2 lakhs. The premium for PMJJBY is subsidized and affordable, making it accessible to low-income individuals.

Pradhan Mantri Suraksha Bima Yojana (PMSBY): PMSBY is another government-backed insurance scheme aimed at providing accidental death and disability coverage. It offers a one-year term insurance cover with a sum assured of Rs. 2 lakhs for accidental death and permanent total disability. The premium is minimal, making it accessible to a large number of people.

Aam Aadmi Bima Yojana (AABY): AABY is a social security scheme targeted at rural landless households. It offers life insurance and disability coverage to the primary breadwinner of the family. The scheme also includes natural death coverage along with partial disability coverage.

Rashtriya Swasthya Bima Yojana (RSBY): While not a pure term insurance scheme, RSBY is a government-sponsored health insurance program that provides health coverage to below-poverty-line families. It offers a predefined health insurance cover for hospitalization expenses.

Consider buying one of these government term insurance schemes or go for group term insurance, 1 crore term insurance, or guaranteed return plans from Aapka Policywala. 

What is a Term Insurance Premium Calculator?

A Term Insurance Premium Calculator is an online tool provided by insurance companies or financial websites to help individuals estimate the premium amount they would need to pay for a term insurance policy. It assists users in understanding the cost associated with the coverage they desire. The calculator takes into account various factors such as age, sum assured, policy term, and other relevant details to provide an accurate premium estimate.

To use the term insurance premium calculator, individuals typically need to input specific information about themselves, such as age, gender, smoking habits, policy term, and the desired sum assured. Once all the necessary details are entered, the calculator processes the information and generates the estimated premium amount.

The term insurance premium calculator is a valuable tool for potential policyholders as it helps them:

Plan Budget: It allows users to adjust the sum assured and policy term to see how it impacts the premium amount. This helps in planning and budgeting for insurance needs effectively.

Compare Plans: By using the calculator, individuals can compare premium quotes from different insurance providers and make an informed decision about the most suitable policy.

Instant Estimates: The calculator provides instant premium estimates, saving time and effort in getting quotes from various sources.

Customize Coverage: Users can customize the sum assured and policy term according to their specific financial goals and protection needs.

Simplify the Buying Process: Having a clear idea of the premium amount and coverage helps in the decision-making process when buying a term insurance policy.

Factors That Influence the Cost of Term Insurance

The premium for a term insurance policy is determined based on various factors that assess the risk associated with providing life coverage to the insured. Some of the key factors that affect term insurance premiums include:

Age: Age is a significant factor in determining the premium. Younger individuals typically pay lower premiums as they are considered less prone to health risks compared to older individuals.

Sum Assured: The sum assured or the coverage amount chosen by the policyholder directly affects the premium. Higher coverage amounts lead to higher premiums.

Policy Term: The duration of the term insurance policy also influences the premium. Longer policy terms often result in higher premiums due to the extended coverage period.

Health Condition: The health condition of the insured plays a crucial role in determining the premium. Individuals with pre-existing medical conditions or unhealthy lifestyles may have higher premiums as they pose higher risks.

Lifestyle Habits: Habits such as smoking, alcohol consumption, or engagement in hazardous activities can impact the premium. Insurers may charge higher premiums for individuals with risky habits.

Occupation: The nature of the insured’s occupation can influence the premium amount. Risky or hazardous professions may lead to higher premiums.

Gender: On average, women tend to have lower term insurance premiums compared to men due to statistical differences in life expectancy.

Family Medical History: A family history of certain medical conditions may impact the premium as it may increase the risk for the insured.

Riders and Add-ons: Opting for additional riders or add-on benefits to enhance the policy coverage will increase the premium amount.

Policy Features: The type of term insurance policy and its features, such as level term or increasing term, also affect the premium.

Who Should Buy Term Insurance?

Term insurance is a valuable financial product that provides essential protection to individuals and their families. It is an ideal choice for various groups of people, including:

Breadwinners: Anyone who is the primary earning member of their family should consider purchasing term insurance. It ensures that in the unfortunate event of their demise, their family will receive financial support to meet daily expenses, pay off debts, and maintain their standard of living.

Parents: Parents with dependent children should have term insurance coverage to secure their children’s future in case of any unforeseen circumstances. The policy proceeds can be used to fund their education, marriage, and other important life events.

Young and Healthy Individuals: Young and healthy individuals can avail term insurance at relatively lower premiums. Buying term insurance early in life ensures long-term coverage and cost-effectiveness.

Married Couples: Married couples should consider term insurance to protect each other financially. In the event of the death of one spouse, the surviving spouse can utilize the policy proceeds to maintain their lifestyle and achieve financial goals.

Debt-Holders: Individuals with significant financial liabilities, such as home loans, car loans, or personal loans, should buy term insurance to ensure that their family does not face the burden of repaying these debts in case of their demise.

Business Owners: Business owners should consider term insurance to safeguard their businesses and protect their family’s financial interests. It can be used to cover business loans and ensure the continuity of the business in case of the owner’s untimely death.

Single Parents: Single parents are the sole providers for their children and need to secure their children’s future. Term insurance offers a cost-effective way to ensure financial stability for their dependents.

Retirees: Though term insurance is more commonly purchased by younger individuals, some term policies can be extended into retirement years. Retirees who have financial dependents or outstanding debts may find value in having term insurance coverage during their retirement phase.

Steps To Buy Term Insurance

Buying a term insurance plan is a straightforward process, and it can be done both online and offline. Here’s a step-by-step guide on how to purchase a term insurance plan:

  1. Online Process:

    1. Research: Start by researching different insurance companies and their term insurance plans. Compare the features, coverage, and premiums to find the plan that best suits your needs.

    2. Visit the Website: Once you have selected a suitable insurance company, visit their official website.

    3. Choose the Plan: Browse through the various term insurance plans offered by the company and choose the one that meets your requirements.

    4. Calculate Premium: Use the term insurance premium calculator available on the website to calculate the premium amount based on your age, coverage amount, and other relevant details.

    5. Fill in Details: Fill in your personal information, contact details, and other necessary information as prompted on the website.

    6. Select Riders: If you want to enhance your coverage with additional riders, choose the relevant ones from the options available.

    7. Provide Medical Information: Answer the health-related questions honestly. In some cases, you may need to undergo a medical examination, depending on the sum assured and your age.

    8. Review and Pay: Review all the details entered and proceed to make the premium payment online through various payment modes available.

    9. Receive Policy Document: After successful payment, you will receive the policy document and other relevant details on your registered email ID.

    Offline Process:

    1. Visit the Branch: Visit the nearest branch of the insurance company that offers the term insurance plan you wish to buy.

    2. Meet the Agent: Meet with a company representative or insurance agent who will guide you through the process and assist in selecting the appropriate plan.

    3. Provide Information: Fill out the necessary forms with accurate personal and medical information as required.

    4. Medical Examination: Depending on the sum assured and your age, you may need to undergo a medical examination as part of the underwriting process.

    5. Payment: Make the premium payment through the available payment options at the branch.

    6. Receive Policy Document: Once the premium is paid, you will receive the policy document and other relevant information.

How Do I Make a Term Insurance Policy Claim?

To claim for a term insurance policy, follow these steps:


  1. Inform the Insurer: In the event of the policyholder’s death or any other claimable event, inform the insurance company as soon as possible. Contact their customer service or claims department to initiate the claim process.

  2. Provide Necessary Documents: The insurer will require certain documents to process the claim. These may include the original policy document, death certificate (in case of death claim), medical records, and any other relevant documents as per the claim event.

  3. Claim Form Submission: Complete the claim form provided by the insurance company. You can get the form from their website or visit their branch. Ensure that you provide accurate and complete information in the form.

  4. Medical Records and Investigation (if applicable): If the claim event is related to a critical illness or disability, the insurer may request medical records or conduct an investigation to verify the claim.

  5. Nominee Details: If the policy has a nominee, ensure that the nominee’s details are provided correctly. The nominee is the person who will receive the claim amount.

  6. Settlement Process: The insurance company will evaluate the claim and verify all the submitted documents. If everything is in order and the claim is genuine, they will process the claim settlement.

  7. Claim Amount Disbursement: Once the claim is approved, the insurance company will disburse the claim amount to the nominee or the beneficiary as per the policy terms.

  8. Claim Settlement Timeframe: The claim settlement process typically takes a few weeks, depending on the complexity of the case and the submission of all required documents.

  9. Disputed Claims: In case of a dispute or rejection of the claim, the policyholder or the nominee can approach the insurance company’s grievance redressal department. If the issue remains unresolved, they can escalate the matter to the Insurance Regulatory and Development Authority of India (IRDAI).

To ensure a smooth claim settlement process:

  • Keep the policy document and other relevant documents easily accessible to the nominee or beneficiary.
  • Keep the insurer informed about any changes in your contact information or address.
  • Pay the premiums regularly to keep the policy in force.
  • Disclose all relevant information honestly at the time of purchasing the policy to avoid claim rejection due to non-disclosure.

Documents Necessary For The Settlement Of Claims

The required documents for the claim settlement process of a term insurance policy may vary depending on the specific claim event (e.g., death claim, critical illness claim) and the insurance company’s policies. However, here is a general list of documents that are typically required:

  1. Death Claim:

    • Original policy document.
    • Death certificate of the insured issued by the municipal corporation or local authorities.
    • Claimant’s statement providing details of the insured’s death, cause of death, date, and place.
    • Medical records (if applicable) related to the illness or treatment leading to death.
    • FIR or police report (in case of accidental death or unnatural cause).
    • Post-mortem report (if applicable).
    • Identity proof of the claimant (nominee or beneficiary) with photographs.
    • Address proof of the claimant.
    • Bank account details of the claimant for claim amount transfer.
    • Any other documents as required by the insurance company.
  2. Critical Illness Claim:

    • Original policy document.
    • Diagnosis report or medical certificate from a registered medical practitioner confirming the critical illness.
    • Medical records and test reports supporting the diagnosis.
    • Claimant’s statement providing details of the insured’s critical illness and medical history.
    • Identity proof and address proof of the claimant (nominee or beneficiary).
    • Bank account details of the claimant for claim amount transfer.
    • Any other documents as required by the insurance company.
  3. Disability Claim:

    • Original policy document.
    • Medical certificate from a registered medical practitioner confirming the disability and its nature.
    • Medical records and test reports supporting the disability diagnosis.
    • Claimant’s statement providing details of the insured’s disability and medical history.
    • Identity proof and address proof of the claimant (nominee or beneficiary).
    • Bank account details of the claimant for claim amount transfer.
    • Any other documents as required by the insurance company.