• 20 Year Term Insurance Plans in India - Pros and Cons Explored

    Life Insurance
    • Reduce taxable income by up to Rs. 1,50,000 deduction under section 80C**
    • Convenient payment options - annual, half-yearly, quarterly or monthly premium payments
    • Do more with plans that offer pure protection, retirement planning and investment options

    Life is unpredictable and one cannot foresee what can happen in future. Death, despite being inevitable is as unpredictable as it gets and you never know when it can strike you. Hence, it is important to be prepared and secure your loved ones’ future so that regardless of whether you are around or not, they are able to achieve their dreams.

    A 20-year term life insurance policy is one of those many plans that you can purchase keeping in mind your long-term goals. This type of plan provides you a cover for over two decades and helps you secure your loved one’s future for the said period of time.

    Features and benefits of availing a 20-year term life insurance policy

    A 20-year term life insurance policy provides you with various features and benefits. Some of them are given below:

    • Premiums- Premiums payable for this type of policy are cheaper in nature and are flexible in nature. You can choose the mode of premium payment as per your convenience.
    • Cover- You get to enjoy an extended cover for 20 years i.e., you get to live your normal life without having to worry about your family’s future.
    • Tax benefits- You get to enjoy various tax benefits under the Income Tax Act, 1961.
    • Death benefit- In the event of your unfortunate death, the nominee will receive a lump sum called the death benefit provided the policy is still in force. This means that you don’t have to worry regarding the future of your family and they will be financially secure regardless of whether you are around or not.
    • Surrender benefit- In case you feel the policy is not suitable for you and decide to surrender it, you receive a certain lump sum of money called the surrender benefit.
    • Riders or add-on plans- Various 20-year term insurance policies provide you with a rider or add-on plan. These plans provide an extra layer of protection for you and your family and are extremely beneficial in case you are not around in the future.
    • Premium paying modes- 20-year term insurance plans provide you the option of paying your premiums as per your convenience. You can choose to pay your premiums either on a yearly, half-yearly, quarterly or on a monthly basis depending on your financial capabilities.
    • Loans- Some of the insurers offer you the option of availing a loan against such policies.

    These benefits and features might vary depending on the insurance company and the plan provided. It is always advisable to check the policy first before purchasing.

    Who can purchase this plan?

    This plan is perfect for you if you have long-term dreams to fulfill. You can purchase this type of plan if you want to cover your family members especially your children, until the time they are completely independent. This kind of policy also helps you in clearing your long-term financial liabilities and ensures that your family members do not have to bear the brunt of any monetary difficulties in case you are not around in the future. This type of plan is also recommended if you cannot afford to buy permanent life insurance policy due to its high premiums.

    How does this plan work?

    This type of plan works in a very simple manner. As you purchase a 20-year term insurance plan, you will have to pay premiums as per your convenience. You can pay your premium on a yearly, half-yearly, quarterly, or monthly mode. In case of an unfortunate event of your death, the nominee will receive a lump sum amount called the death benefit provided the policy is still in force. No benefits will be provided whatsoever if you die post the policy attaining maturity. Since it is a term insurance plan, you won’t be eligible for any maturity or survival benefit in case you survive the term.

    Advantages of buying a 20-year term insurance plan

    • This type of plan covers you for a long period of time and allows you to take care of your long-term financial liabilities. It is ideal to avail this plan till the time your children are independent and good enough to take care of themselves. You can enjoy peace of mind knowing well that your family’s future is secured regardless of whether you are there or not.
    • This type of plan is cheaper as compared to other long-term insurance plans. It is easier for you to pay your premiums without compromising on your financial requirements and needs.
    • Since you are covered for 20 years which allows you and your family members to take care of their goals. You are mentally at ease knowing that your family is secured and nothing can prevent them from achieving their dreams whether you are there with them or not.

    Drawbacks of buying a 20-year term insurance plan

    • Premiums will rise as your age increases, since the insurance company may not be willing to sell you a policy at such low premiums if you are old.
    • As mentioned earlier, the insurance company may not be willing to sell you a term insurance at low premiums as your age increases. You might have to pay 5-10 times more than the premium you would have paid in your younger days. The part of the reason is that as you grow older, you may tend to suffer from various health implications as compared to the time when you were young, which might prompt the insurer to sell you a term insurance plan at a higher rate.

    Some of the 20-years term insurance policies

    Some of the 20-year term insurance policies that you can avail are:

    • LIC e-term plan- This plan provides a minimum cover of Rs.50 lakh.
    • Aegon Life iTerm plan- This plan comes with a minimum cover of Rs.10 lakh. You can choose your cover depending on your financial needs. The premium rates are also extremely cheap in nature.
    • SBI Life eShield plan- The cover for this plan ranges from Rs.20 lakh and upward with affordable premium rates.
    • HDFC Life Click2Protect plan- This plan has sum assured ranging from Rs.10 lakh to Rs.10 crore which you can choose as per your long-term goals and other financial requirements.

    Frequently asked questions

    1. Can an insured extend the period of a term insurance?

    2. No, the insured cannot extend the period of his/her term insurance policy. The policy will be active for a definite period of time, in this case for 20 years, post which its completion, it will lapse. The individual will then have to purchase a new policy for himself/herself.

    3. Can an insured cancel the policy?

    4. The insured can cancel the policy within a given period of time which is generally 30 days. Post the activation of the policy, if he/she wants to cancel the policy, then he can surrender the plan. A policy can also be cancelled if it lapses due to non-payment of premiums.

    5. Do premiums for this plans differ from person to person?

    6. Yes, the premium payable will depend on the cover chosen by the insured and will also depend on his/her age and health conditions as well.

    7. Will the premium change every year?

    8. The premium rates might get altered and this completely depends on the insurance company if it chooses to do so. Some of the policy offers fixed premiums. Hence, it is important to check with your insurance provider regarding the premium rates before signing on the dotted line.

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