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Term Insurance

Life Insurance
  • Premiums as low as Rs.17/day for sum assured of Rs.1 crore
  • Claim up to Rs. 1,50,000 deduction under section 80C**
  • Choose between annual and monthly premium payment options

What is term insurance?

Term insurance is a type of life insurance that provides a large sum assured at affordable premiums. The catch to this kind of life insurance is that usually it does not carry any survival or maturity benefits. Term insurance plans are much cheaper compared to whole life insurance plans because these plans carry no cash value. The plan provides pure financial protection benefits. This means that if the life insured dies during the policy term, the beneficiary will receive the death benefit. If the person survives till the end of the policy term, no benefits are payable to anyone.

Why you need to buy term insurance?

For those who have dependents whom they look after, term plans are ideal as they provide a large payout for very cheap premiums. Individuals can choose high sums assured while paying a low premium. This way, if the breadwinner/policyholder passes on from this life, the people who relied on them will receive a substantial amount that will help them get by financially. These plans have a set duration limit and the cover will be offered only for this period. Once the plan lapses, the holder can choose to renew it or give up all benefits.

Term insurance plans available in India

Term Plan Entry Age Maturity Age Policy Term Premium Payment Option Minimum sum Assured Payout Type Claim Settlement Ratio(FY 16-17)
ICICI Prudential iProtect Smart 18 years to 65 years 23 years to 75 years 5 years to 40 years Single pay, duration of plan or 5-year limited pay. Payments can be made monthly, half-yearly or yearly Subject to minimum premium of Rs.2,400 p.a. (excluding taxes) Lump sum or monthly income for 10 years 99.96%
HDFC Life click2Protect Plus 18 years to 65 years 75 years 10 years to 40 years Single pay, duration of plan or 5-year limited pay. Payments can be made monthly, quarterly, half-yearly or yearly Rs.25 lakh Lump sum + optional monthly income over a period of either 10 or 15 years 99.89%
Max Life Online Term Plan Plus 18 years to 60 years 75 years 10 years to 40 years Equal to plan term Rs.25 lakh Lump sum + optional monthly income/increasing monthly income over a period of 10 years 100%
Aegon Life iTerm Plan 20 years to 65 years 75 years 5 years to 40 years (or up to the age of 80) Equal to plan term. Payable monthly, half-yearly or yearly Rs.10 lakh Lump sum + optional monthly income for 5 years 100%
PNB MetLife Mera Term Plan 18 years to 60 years 75 years 5 years to 40 years Equal to plan term Rs.10 lakh Lump sum + choose to receive monthly income/increasing monthly income or monthly income till child turns 21 years 98.41%
Canara HSBC OBC iSelect 18 years to 70 years 80 years 5 years to 40 years Equal to plan term. Payable monthly or annually Rs.25 lakhs Lump sum + optional monthly income 100%
LIC e-term Plan 18 years to 60 years 75 years 10 years to 35 years Annual Rs.25 lakhs / Rs.50 lakhs for non-smoker Lump sum 100%
SBI Life eShield Plan 18 years to 65 years 70 years 5 years to 30 years Equal to policy term, payable annually Rs.20 lakhs Lump sum 99.98%

ICICI Prudential iProtect Smart Plan

This plan offers life cover payable as a lump sum death benefit, or customers can choose to get a monthly income for 10 years after the demise of the policyholder. Anyone between the ages of 18 years to 65 years can apply for this plan with a minimum tenure of 5 years. Customers can choose to pay the premiums as monthly, half-yearly or yearly. The minimum premium required for this plan is Rs.2,400 p.a. (excluding taxes).

The minimum sum assured under this plan is subject to the minimum premium, with no limit on the maximum sum assured. This policy comes with four plan options, i.e., the Life option, Life Plus option, Life and Health option, and the All in One option. The policy provides varying benefits under different plan options, thus helping you opt for a plan option that is perfectly suited to your needs.

HDFC Life Click2Protect Plus Plan

This plan provides optimum coverage with options of either a lump sum benefit, or a lump sum benefit plus monthly income for the beneficiary after the demise of the policyholder. Customers can opt to pay premiums for the duration of the plan, for 5 years or in one single premium. The minimum sum assured under this plan is Rs.25 lakh.

Max Life Online Term Plan Plus Plan

This term plan is ideal for anyone between the age of 18 years to 60 years. With premium payments equal to the term of the plan, customers can opt for a minimum coverage of Rs.25 lakhs. In return, if the policyholder dies during the term, then the nominee will be entitled to a lump sum benefit and/or monthly income and/or monthly increasing income for 10 years.

Aegon Life iTerm Plan

Aegon offers its Life Term Plan to individuals who are 20 years to 65 years. This policy can be purchased online, and the minimum sum assured one can opt for is Rs.10 lakh. The payout upon the demise of the policyholder can either be a lump sum benefit, or a lump sum plus monthly income for 5 years. The maximum maturity age for this plan is 80 years.

This plan also comes with an Inbuilt Terminal Illness Benefit, thus providing the policyholder a guaranteed benefit in case he/she is diagnosed with a terminal illness. The insurer also offers preferential premium rates to women and non-smokers. A policy buyer can also opt for additional riders along with this plan to enhance the coverage of the base policy.

PNB MetLife Mera Term Plan

Customers can opt for a term plan from PNB MetLife for 5 years up to 40 years. The minimum age at entry is set at 18 years to 60 years. Customers can secure financial protection for their loved ones for a minimum sum assured of Rs.10 lakh. With PNB Metlife, customers have an array of payout options that include: Lump sum / Lump sum + monthly income / Lump sum + monthly increasing income / Lump sum + monthly income till the child attains the age of 21 years.

Canara HSBC OBC iSelect Term Plan

The iSelect Term Plan from Canara HSBC OBC Life Insurance is a non-participating, non-linked, term insurance policy that is available to those between the ages of 18 years and 70 years. The maximum maturity age under this plan is 80 years. Customers can opt for terms of 5 years to 40 years with a premium payment term that is equal to policy term. Customers will benefit from a minimum sum assured of Rs.25 lakhs.

This plan offers the policyholder a cover against death and also against terminal illnesses. Further, a policy buyer can choose to enhance this policy by purchasing the Accidental Death and Accidental Total and Permanent Disability rider, which will provide an additional benefit in case the life assured meets with an accident. Lower premium rates are offered to women and non-tobacco users.

LIC e-term Plan

LIC offers its e-term plan to those between the age of 18 years and 60 years. Customers are required to pay the premium annually and in return will receive a death benefit of Rs.25 lakhs if the policyholder dies during the policy term. When purchasing this policy, the policy buyer can opt for a policy term between 10 and 35 years. The maximum maturity age for this plan is restricted to 75 years. The policyholder will have to pay the due premiums on a yearly basis, for the duration of the policy tenure.

SBI Life eShield Plan

SBI Life’s term plan, eShield, is an individual, non-participating, non-linked, pure term insurance plan that is available online on the insurer’s official website. This plan offers a minimum sum assured of Rs.20 lakhs as a lump sum benefit payable to the nominee upon the demise of the policyholder. Anyone between the age of 18 years to 65 years can apply.

How does it work?

If you apply for a term insurance plan, you will be required to pay a premium. If the life insured dies during the coverage period, then the person nominated will receive the death benefits. There are a variety of term plans in the market ranging from 1-year coverage up to 40 years. Term plans are usually renewable once the policy term ends.

Types of term insurance plans in India

There are different types of term insurance plans. Some of the major plans are:

  • Renewable - These term plans can be renewed once the policy ends. The insured will be able to skip the medical examination. At the most, the insured will have to provide evidence or a declaration of good health in order to renew the plan.
  • Convertible - Customers have the option to exchange their policy for a cash-value policy. However, if the customer chooses to convert the term plan to a standard life insurance plan, the premiums will be higher.
  • Level - These term plans provide a fixed sum of coverage through a certain period of time. The premiums also remain stable.
  • Decreasing Term Insurance - With one of these plans, the sum assured will decrease over a period of time at a set percentage rate. This is usually at around 5% p.a. Premiums for these types of plans usually remain constant even though the sum assured decreases. These plans are suitable for those who want to secure loans.
  • Increasing Term Insurance - Working in the opposite direction of a decreasing plan, the sum assured under these plans increase by around 5% p.a. Premiums will remain constant through the plan. The sum assured increases taking into consideration rising costs of living and inflation.
  • Return of Premium - These plans are rare, but in certain cases, insurers offer a return of the premium if the policyholder survives till the end of the term. Usually, term plans do not have any survival benefits. Under these plans, the insured person will receive the premiums paid minus any fees, administrative charges, and so on.

Key features of term insurance plans

Term Plans have distinct features that separate them from regular life insurance plans.

  • Survival benefit - This is a distinct feature of term plans. Most term plans do not offer a survival benefit. Only in certain cases, if you survive till the end of the plan term, you might receive a survival or maturity benefit.
  • Plan term - Term plans have a wide range of policy terms available for customers to choose according to their needs and requirements.
  • Premium payment term - This duration may be the same or lesser than the plan term depending on the insurance plan. Premium payment term is the number of years you need to pay premiums towards the policy. Sometimes, you will only need to pay for 10 years and the life insurance will cover you for 20 years.
  • Renewal - Upon the maturity of the plan, you will be given the option to renew your plan and continue to be covered under the policy.
  • Lapse - If you fail to pay your premium, after the insurer has sent reminders and the grace period is over, your insurance policy will lapse.
  • Reinstatement - If you want to reinstate or revive your old lapsed policy, you can do so by paying up all the unpaid premiums plus interest. Usually insurers allow you to reinstate your policy within 2 or 3 years from the due date of the first premium you didn’t pay.
  • Exclusions - These are the events under which the life insurance company will not pay any benefits. Usually suicide is an exclusion for the first year of the policy. Other exclusions include death due to dangerous activities, dangerous sports, and so on.
  • Free-look period - This is a period of 15 or 30 days granted to the buyer of the policy. The buyer can read the plan, review the terms and conditions. If they are not satisfied, they can return the policy and receive a refund of the premium. The insurer will deduct any charges borne to issue the policy in the first place.

Benefits of term insurance plan

Term plans have a number of benefits. The main benefit is that the premiums are cheap while the financial protection offered is much larger than regular plans.

  • Financial Protection – Term insurance plans are a great way to ensure that one’s dependents are financially protected, in the event of an unfortunate eventuality. With a term insurance plan, if the life assured dies while the policy is in full-force, the nominee will receive the benefit in order to live comfortably in the absence of the life insured’s income.
  • Affordable Premiums - Term plans offer a bigger umbrella at lower premium rates compared to regular life insurance plans. The premium may be payable as a single one-time payment, annual, bi-annual, quarterly or monthly payments.
  • Flexible Payouts - Term plans usually have the option to get a lump sum or get monthly income, or even get both.
  • Grace period - Insurers usually grant a period of 30 days from the due date to pay the premium. Taking into consideration that people may have their own financial expenses that are of high priority than the life insurance, insurers grant this grace period.
  • Customisable Policy Tenure - Policy tenures for term insurance plans vary between 5 years and 40 years or more. Thus, you can purchase a term insurance plan for your desired coverage period, and continue to renew it as and when the date of expiry nears.
  • Availability of Online and Offline Purchase Channels - Several insurance firms offer term insurance plans that can be purchased through both online and offline channels. Thus, you can either choose to purchase a policy through the insurer’s official website, through third-party websites, or you can directly walk into the insurer’s branch and meet with an insurance advisor who will help you purchase the right policy.
  • Option to Purchase Riders/Add-Ons – Insurance providers also offer riders that a policy buyer can purchase with their base term insurance plan. The exact riders offered will vary from plan to plan and from insurer to insurer, but purchasing a rider is a smart way to enhance your plan’s coverage.
  • Choice of Plans– All leading life insurance firms in the country offer term life insurance plans to policy buyers. Thus, based on your requirements you can opt for a suitable term life insurance policy.
  • Tax Benefits - Premiums paid towards these plans are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. The benefits received from these plans are also eligible for tax benefits.
 
  • Benefits of purchasing a Term Insurance Plan at an early age

      Currently, term insurance plans are one of the most sought-after life insurance products, in the country. The popularity of these plans stem from the fact that they offer the policyholder a high sum assured at a comparatively low premium rate, thereby being easy on the pockets while guaranteeing financial security to one’s dependents. Most financial experts recommend purchasing a term insurance policy at a young age, in order for you to make the most out of these plans. Read on to know a few reasons and benefits of purchasing a term insurance policy while you are still young.

    • Premiums are linked to age: When quoting the premium rate, insurers take several factors into account, such as the sum assured opted for, the policy buyer’s age at entry, policy tenure, etc. A young policy buyer poses less risk to the insurer, since the chances of them being diagnosed with a critical illness or a lifestyle disease is relatively lower. Thus, an insurer is likely to charge you less as premium if you purchase the policy in your 20s or 30s, as opposed to buying it when you are older.

    • Financial security of dependents: There is nothing that can replace the loss of a loved one. However, an insurance policy, at the very least, ensures that your dependents have the means to carry on with their lives, in the event of an unfortunate eventuality. While a term insurance plan does not acquire a cash value, it does offer a high sum assured to one’s nominee in case of the policyholder’s untimely death. The lump sum amount your family receives, by way of the policy, can help them pay for immediate financial needs, plan for future milestones, and pay off any debts or liabilities that you may have, in a hassle-free manner.

    • Level premium rate: Under certain types of general insurance policies, the premium payable is likely to increase on an annual basis or whenever the policy is renewed. Since most life insurance firms offer term insurance plans with policy tenures ranging between 5 and 30 years, you can opt for your desired coverage period and pay the same premium amount for the duration of the policy tenure. Thus, you are assured of a level premium, which does not increase with age or inflation, for as long as your policy is active.

    • Helps in tax savings: Although not directly linked to your age, a key benefit of a term insurance plan is that it also helps you avail tax benefits. Thus, in addition to the policy benefits, you can also save on tax by purchasing a term insurance policy. You can claim tax benefits, up to specified limits, for premiums paid towards a term insurance plan under Section 80C of the Income Tax Act, 1961. Also, if a death benefit is paid out, your nominee can claim tax benefits for this lump sum amount under Section 10(10D) of the Income Tax Act, 1961.

    • Given the popularity of term insurance plans, all leading life insurance firms offer term insurance policies as part of their product portfolio. However, it is advisable that you compare various plans that are available in the market, request for premium quotes, and opt for one that provides you a suitable level of coverage at an affordable cost, before you purchase an insurance policy.

How to choose term insurance plan?

With a variety of term plans available in the market, it’s difficult to make a choice knowing that you made the right decision. When opting for a term plan, you need to ask yourself the following questions:

  • How much premium can I afford to pay?
  • How much cover do I want from the term plan?
  • How many dependents do I have?
  • What are the benefits I would like my nominee to receive?
  • What kind of lifestyle does my nominee have?
  • What is an optimum amount of cover in order to secure a comfortable future for my nominee?
  • What are the tax benefits I can avail?
  • Can I add riders to a term insurance plan? If yes, is the extra premium worth the extra cover?

How much term insurance do I need?

Ideally, your term insurance cover should be 10 times your annual income. Anything below this might not be sufficient to take care of your nominee in your absence. Any amount above this is a good option, however, it’s not advisable to take a higher sum, as the extra premium paid towards the plan can be diverted to better investment avenues that are profitable.

Eligibility criteria for term insurance

All insurance companies lay down certain requirements that individuals need to meet in order to be approved for a term plan. Some of the general requirements are listed below, however, this may vary between different insurers:

  • The minimum age at entry is 18 years.
  • The maximum age at entry is between 60 years to 70 years.
  • The maximum age at maturity is 80 years.
  • The minimum sum assured is around Rs.10 lakh.
  • The maximum sum assured is Rs.100 crore.
  • Premiums need to be paid either as a single pay, monthly, quarterly, bi-annually, or annually.

Documents Required

ID Proof - You will be required to provide a valid ID to the insurance company. Some of the accepted ID proofs are:

  • Driving License
  • Voter's Identity Card issued by Election Commission of India
  • Passport
  • PAN Card
  • Job card issued by NREGA duly signed by an officer of the State Government
  • Aadhaar Card or Letter issued by the Unique Identification Authority of India

Proof of Residence

  • Utility bill which is not more than two/three months old of any service provider (telephone, electricity, postpaid mobile phone, gas, water bill)
  • Bank account or Post Office savings account statement
  • Property or Municipal tax receipt
  • Pension or family pension payment orders (PPOS) issued to retired employees by Government Department or Public Sector undertakings, bearing the address
  • Documents issued by Government departments of foreign jurisdiction and letter issued by Foreign Embassy or Mission lndia
  • Letter of allotment of accommodation from employer issued by State or Central Government departments, public sector undertakings, Statutory or Regulatory bodies, scheduled commercial banks, financial institutions and listed companies

Additional documents

  • Proof of age
  • Proof of income
  • Photograph
  • Any other documents as requested by the insurance provider

Riders for term insurance plans

There are a number of riders available with term insurance plans depending on your choice of the insurance provider. Some of the main riders available with these plans are:

  • Waiver of Premium – This rider helps safeguard policyholder against policy lapse if they are unable to pay the insurance premiums. In case of loss of job, income source, or other financial crises, the insured may not be able to pay the premium. In this case, the rider will come into force and ensure that the term plan stays in force and future premiums will be waived.
  • Critical Illness – When diagnosed with a critical illness, the financial requirements to treat the illness may skyrocket. With this rider, the life insured will receive a payout upon the diagnosis of a critical illness that is specified in the plan.
  • Accidental Death – Accidental deaths can leave family members scrambling for finance as the death maybe sudden and unexpected. High medical costs and funeral expenses may also take a toll on the family’s finances. This rider provides an extra sum assured to meet such costs.
  • Partial and Permanent Disability – If the life insured suffers partial or permanent disability due to an accident, then the rider will either pay out a lump sum or staggered payments which are a percentage of the total sum assured of the insurance policy. This will help compensate the loss of regular income that may arise due to partial or permanent disability.
  • Income Benefit Rider – In case of the death of the policyholder, this rider offers a regular income source for the family.

Exclusions for term insurance plans

There are a few exclusions under which the insurance company will not be liable to pay the death benefit or rider benefits. Some of the general exclusions have been listed below

  • If the life insured commits suicide within 12 months from the date of inception of the plan, whether sane or insane.
  • If death occurs due to abuse of drugs, alcohol, smoking and other substances.
  • If the life insured concealed information or misrepresented facts.
  • Aids and HIV related conditions.
  • In the event of war, civil unrest, invasion, terrorism or nuclear attack.
  • If the condition, injury or illness showed signs and symptoms within 48 months prior to the policy issue.
  • Hazardous sports and hobbies such as mountaineering, bungee jumping, racing, hunting and so on.
  • Self-inflicted injuries.
  • Service in air force, naval, military or paramilitary.
  • Strikes, riots and vandalism.
  • Criminal and illegal activities.

It is important to read the offer document carefully before purchasing the plan to ensure that you are aware of all the details and exclusions mentioned in the plan.

Term plan vs. Endowment plan vs. Unit linked insurance plan (ULIP)

Criteria Term Plan Endowment Plan Unit Linked Insurance Plan (ULIP)
Purpose Pure protection Protection plus investment Protection plus more investment opportunities in equity and debt
Benefits Death benefits Death and maturity benefits Death, maturity and withdrawal benefits
Returns on Premium No Yes Yes
Premium costs High sum assured at low premiums Premiums are higher for same sum assured Premiums are higher for same sum assured
Loans Loans are usually not available Loans against policy is available Partial withdrawals can be made after 3 years

Term Life Insurance vs Permanent Life Insurance

Life insurance offers the much needed financial security to the dependents of a person following his/her unexpected demise. There are different types of life insurance policies including term insurance, permanent life insurance, ULIPs, etc. Term life and permanent life are the two most common forms of life insurance available for customers. When it comes to choosing between these two, the decision must be made based on your personal needs, affordability, financial goals, dependents’ needs, etc. Let’s discuss the pros and cons of these two plans in detail to help you narrow down the choices.

Pros and cons of Term insurance

Term life insurance is simplest form of life insurance. It is also the cheapest type of life insurance you can buy. Term plans can be bought for a specific period, say 5 years or 10 years or even 30 years, depending upon your requirement. The cost of insurance gets higher with your entry age. For instance, a term plan for a 30-year old person is much cheaper than a term plan for a 50-year old person. Once entered, the premium amount for term insurance remains the same as long as the policy is renewed. Hence, it is better to enter a term insurance plan at a very young age.

There are a few limitations associated with term insurance plans. One of the major limitations of term insurance is that it does not offer any maturity benefits at the end of the policy term. If a policyholders outlives the policy term, the plan will come to an end and no payout of any sort will be paid to the insured person. If you need protection for a longer time, you must take a separate over after one expires or you need to convert your term plan into a whole life plan (a form of permanent life insurance plan). Lack of maturity benefit is one of the reasons why term plans are much cheaper than other varieties of life insurance.

Pros and cons of Permanent Life Insurance

Permanent life insurance is a kind of life insurance cover that remains active throughout a person’s life. This comes with an insurance as well as investment component to provide maximum benefit to policyholders. One of the major advantages here is that the death benefit is guaranteed to the dependents as long as the policy remains active. The cash value associated with the investment part grows steadily and matures at a guaranteed rate. Also, the premium amount remains the same throughout the life of the policyholder.

Among the downsides of permanent life insurance, it has been often stated that these plans are a little more complicated than term life insurance plans. Since there is an assured return, permanent life insurance is way more expensive than term plans. The cash value growth in this type of insurance is extremely slow, and it takes more than 10 to 15 years to accumulate a decent amount.

Choosing between Term or Permanent Life Insurance

When it comes to choosing between term or permanent life insurance, various factors such as age, health condition, financial requirements, family needs, retirement plans, debts and liabilities, etc. must be taken into consideration. Also, the cost of insurance determines the choice in many cases. Term plans are ideal for replacing your income and paying for your liabilities. Permanent life plans are most suitable for estate planning. Also, permanent life is ideal if you have to provide for lifelong dependents.

Conclusion

Both term life insurance and permanent life insurance policies come with their own set of advantages. Choosing between these policies must be done after understanding of your financial situation and determining the type of protection you need for your dependents. There are various life insurance companies in the market that offer both plans to their customers. Make sure that you do a thorough research on the available policies before choosing a life insurance plan that meets your expectations.

Term Insurance with return of premium

The most unique feature about term insurance plans is that there is no return on premiums in the event that the policyholder survives till the end of the term. Many people do not opt for a term plan because if they survive the term, then the money is gone. There is no return on investment with a term plan. However, there are a few insurance companies in the market that offer returns on premiums with their term plans. There are not too many of these plans available, but with research one can find a term plan that provides this benefit. Under these plans, if the life insured is still alive at the end of the plan term, then they will receive the premiums paid minus any fees, administrative charges, and so on. Some of the top Return of Premium Term Plans in India are:

LIC’s Jeevan Mangal Plan

The Jeevan Mangal Plan from Life Insurance Corporation of India is a micro insurance product that returns all premiums paid during the policy tenure, on the date of maturity.

Key Features of LIC’s Jeevan Mangal Plan:

  • Any individual between the ages of 18 years and 60 years can purchase this plan.
  • The maximum age at maturity under this plan is 70 years.
  • One can opt for a policy tenure between 10 and 15 years if it is a Regular Premium policy and a policy term of 10 years for single premium plans.
  • Since this is a micro-insurance plan, the premium rates are also extremely affordable. The minimum premium amount for this plan is Rs.15.
  • One can opt for a sum assured between Rs.10,000 and Rs.50,000.

Max Life Premium Return Protection Plan

The Premium Return Protection Plan from Max Life Insurance is a policy that guarantees the return of all premiums paid should the policyholder survive till the completion of the plan tenure.

Key Features of the Max Life Premium Return Protection Plan:

  • A death benefit is paid as a lump sum amount if the life assured meets with an untimely death.
  • One can opt for a policy tenure of 20 years, 25 years, or 30 years.
  • The minimum age at entry is 21 years and the maximum maturity age under this plan is 75 years.
  • Premiums can be paid on a yearly, semi-yearly, quarterly, or monthly basis.
  • The minimum premium payable for this policy is Rs.8,500 p.a.

ICICI Prudential LifeGuard

The ICICI Prudential LifeGuard Plan comes with three plan options – Level Term Assurance, Level Term Assurance with Return of Premium, and Single Premium. Policy buyers can opt for any plan option as per their requirements.

Key Features of ICICI Prudential LifeGuard Plan:

  • Policy buyers will have to be between the ages of 18 and 55 years to purchase this plan.
  • One can opt for a minimum policy tenure of 10 years and a maximum policy tenure of 30 years.
  • The maximum age at maturity for this plan is 65 years.
  • The minimum premium amount payable for this plan is Rs.2,400 p.a.

Tata AIA Life Insurance iRaksha TROP

The iRaksha TROP from Tata AIA Life Insurance is an online term insurance plan with a ‘Return of Premium’ feature. Thus, this plan provides a death benefit in the event of the policyholder’s untimely demise or a survival benefit if the policyholder survives till the end of the policy tenure.

Key Features of Tata AIA Life Insurance iRaksha TROP:

  • The policy can be purchased by any individual between the ages of 18 years and 65 years. The maximum maturity age for this policy is 75 years.
  • The minimum sum assured under this plan is Rs.50 lakh.
  • One can opt for a policy tenure between 10 and 30 years, when purchasing this plan.
  • Premiums can be paid on an annual or semi-annual basis.
  • Policy buyers who opt for a high sum assured are eligible to receive discounts.

MetLife Suraksha TROP

This plan is a non-participating term insurance plan which is offered at a nominal cost by the insurer. Under this plan, upon maturity of the plan, the policyholder will receive the sum of all premiums paid and the Guaranteed Additions.

Key Features of MetLife Suraksha TROP:

  • The plan pays a death/maturity benefit to the policyholder/nominee, based on the eventuality.
  • The policy can be purchased by any individual between 15 and 50 years of age.
  • The minimum sum assured for this plan is Rs.2 lakh.
  • One can opt for a policy tenure of 15 years or 20 years, at the time of purchasing the policy.

Claim process

In the event that you need to make a claim from the insurance company for the benefits of a term plan, the steps listed below is the general process to be followed:

Step 1

  • Procure a claims form either on the official insurance company’s website, at the branch or through your agent.
  • Fill and submit the form online, through email, at the branch or through post.
  • Any documents required will also have to be sent to the insurer. You need to send a duly-attested photo ID and address proof.
  • The claim will be formally registered once the written request for claim settlement is received at the insurer’s branch or Claims cell.

Step 2

  • The insurer or the claim’s team of the insurer will review the request submitted by you. All documents will be verified. If more documentation is required, the insurer will send you a request for the same.
  • You will receive SMS/Email updates or be informed of the status via phone.
  • You can also track the status of your claim online. Tracking the status can also be done through the customer care of the insurer.

Step 3

  • If everything is in order and the insurer approves your claim, the benefit will be paid out. Nowadays, most insurance companies use electronic modes of payment, so your money will be credited directly to your bank account.
  • If the insurer finds that your claim is not valid, you will be sent a rejection notice stating the reasons why.
  • The general timeline for claims settlements as stipulated by the IRDAI is:
  • You need to raise the claim within 15 days from the date of the death or the incident.
  • For cases where the claim is made after holding the plan for 3 years (non-early cases), the claim should be settled within 30 days of receiving the claims request along with all necessary documentation.
  • For cases where the claim is made within 3 years of holding the policy (early cases), the claim should be settled within 180 days of receiving the claims request along with all necessary documentation.

Term Insurance Premium Calculator

Term Insurance Premium Calculators are handy tools that are specially designed to help potential term plan customers to calculate their premiums for the cover they wish to opt for. The calculators are easily available online and are very simple to use. Customers can adjust the sum assured to see different premium rates. To use these calculators, you need to follow the steps given below:

  • Enter your details such as date of birth, annual income, gender, marital status, number of children (if any), life cover and so on.
  • You may be asked about your lifestyle habits like if you are a smoker or not.
  • You can then choose a sum assured you desire and for how many years you wish to be covered.
  • You will then have a choice of allowing your nominee to receive a lump sum or a monthly income, or both.
  • Once you hit “Calculate”, you will get a list of term insurance plans available in the market with the premiums required.
  • You can view and compare different plans.
  • You can make adjustments to the sum assured to see different premium rates for different coverage.

Term Insurance Guidelines

The most important step while taking a term plan is to determine how much coverage would be sufficient. Ensure you choose a sum that will help fulfill the needs of your loved one in your absence.

  • Choose a tenure that gives you optimum cover.
  • Always research, compare and then buy.
  • Take into consideration inflation and rising costs of living before you settle on the coverage amount.
  • Analyse your budget to see if you can accommodate a higher premium in order to get more cover.
  • Don’t ignore the riders. Check to see if the additional premium is worth the additional protection.
  • Read the policy brochure before buying a plan.

 Term Insurance FAQS

  1. How much cover should I opt for with a term plan?

    The ideal cover you should take is determined by the formula below:

    Minimum sum assured = Annual income x 10 (+ loans and liabilities, if any)

  2. If I am an occasional smoker, do I still fall under the “Smoker” category?

    Yes. You can declare yourself as a non-smoker only if you have not smoked in the last 12 months. Not declaring that you smoke can lead to your claim being rejected later for non-disclosure of important information.

  3. Why is the premium higher for smokers?

    Smoking is the cause of a number of health issues and cancers. The risk borne by insurers for smokers is much higher. Therefore, the premiums are higher for smokers.

  4. How long does it take to get a claim settlement from a term plan?

    Once you submit the request along with all the documentation, the insurer will usually take about 8-15 days. A claim settlement should not exceed 180 days for whatever reason.

  5. Is buying a term plan online cheaper?

    Yes, buying a term plan online is cheaper. If you buy a plan through an agent or a branch, the insurer incurs a higher cost to deliver the plan to you. Online, the plan is sold directly to the customer making it cheaper for the insurer. Therefore, premiums are lower on online term plans.

  6. What is a claims settlement ratio?

    The Insurance Regulatory Development Authority of India (IRDAI) publishes a report annually which details the claims status of every insurance company in the country. The public can view how many claims were made to a company and how many they settled.

  7. When purchasing a term insurance plan, what is the ideal policy term that I should opt for?

    Insurance providers offer term insurance plans with varying policy tenures, starting from a period of 5 years. Any policy that you purchase should be sufficient to meet your coverage needs. That being said, it is always advisable to opt for a long-term insurance policy since the premium rates will only keep increasing each time you renew your policy due to your advancing age.

  8. Are the same riders offered for all insurance policies?

    No, insurance providers do not offer the same riders under different policies, thus making it all the more important that you consider this factor when purchasing a policy.

  9. Can I purchase more than one term insurance plan? And in case of a death, will my nominee receive benefits payable by both plans?

    Yes, you can purchase more than one term insurance plan. Provided you have disclosed all facts to the insurer and have made your due premium payments, your nominee should be able to claim the payout from both policies.

  10. Do term insurance plans come with a free-look period?

    Yes, term insurance plans come with a free-look period. For most term life plans, the free-look period is usually either 15 days or 30 days. You can review the terms and conditions of your policy during the free-look period and return it if it doesn’t meet your expectations.

  11. Under what circumstances can a death claim be rejected?

    Most life insurance plans come with a suicide clause. Thus, if the policyholder, whether sane or insane, commits suicide within a year of purchasing the policy, the insurer will not be held liable to pay a death benefit. In this case, a percentage of the overall premiums paid will be returned to the nominee. Further reasons for claim repudiation are non-disclosure of key information at the time of purchasing the policy, misrepresentation, fraud, etc.

  12. Can term insurance plans be purchased by non-resident Indians (NRIs)?

    This will vary based on the insurer’s terms and conditions. Certain insurance providers will offer term insurance plans to NRIs, while other insurers might require you to be a resident of India in order to purchase the policy. Make sure to read through the eligibility criteria of the policy or reach out to an insurance advisor before purchasing a policy if you are an NRI.

  13. Do term insurance plans also provide a maturity benefit?

    Pure term insurance plans do not provide a maturity benefit at the completion of the policy tenure. However, there are a few term insurance plans that have a ‘Return of Premium’ feature, wherein you receive the sum of all premiums paid during the policy tenure at maturity of the policy.

  14. Will my premium amount change at the time of renewing my policy?

    For most term insurance policies, your premium amount will remain constant for the duration of the policy tenure. However, in most cases, you will have to renew the policy for a slightly higher premium rate. This premium will be decided primarily on the basis of your age at the time of renewing the policy and the sum assured.

  15. Will I get any benefit if I surrender my policy during the policy tenure?

    No, since term insurance plans do not have a cash value attached to them, you will receive no surrender benefit if you surrender this type of a policy. Since it is always good to have an active life insurance plan, ensure that you continue to pay the due premiums during the policy tenure.

  16. How long do insurance firms take to settle one’s claims?

    The exact claims settlement procedure varies from insurer to insurer. However, most insurers settle claims within a period of 7 – 30 days based on the timely submission of supporting documents and the prevailing conditions of the said claim.

  17. Can I change my nominee during the policy tenure?

    Yes, you can change your nominee any time during the policy tenure. You will, however, have to submit a request to the insurer for the same.

  18. Is it necessary to purchase riders?

    Riders are offered by insurance providers in an effort to help policy buyers customise their policy. However, you only have to purchase a rider if you are in need of it. Purchasing a rider can help you or your nominee receive an additional benefit, and thus increase the level of protection offered by the base plan.

  19. Is it safe to purchase a term insurance plan online?

    Yes, it is completely safe to purchase a term insurance plan online since policy payments are done via secure, authorised channels. However, when buying insurance, make sure to only purchase a policy from a reputed insurance firm or from a trusted third-party website.

  20. Do I have the option of availing a loan against a term insurance plan?

    No, since term insurance plans do not have a cash value attached to them, you cannot avail a loan against a term life insurance policy.

  21. Do term insurance plans offer tax benefits?

    Yes, policyholders and nominees are eligible to avail tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, 1961, for premiums paid and the death benefit, post the policyholder’s death.

  22. What are the benefits of buying a term insurance plan online?

    Purchasing an insurance plan online, as opposed to offline channels, has several benefits. Firstly, since there are no agents involved, the process is likely to be more hassle-free as you can purchase the plan right from the comfort of your house. Also, when you purchase the insurance plan online, you can compare various plans offered by different insurance providers, and opt for a policy that is best suited to your requirements. Insurance providers selling online plans are also likely to have a simpler documentation process.

  23. Can term insurance plans be purchased by individuals post their retirement?

    Insurance providers will mention the eligibility criteria for each plan in the policy brochure. Thus, if your age at entry falls within the insurer’s age limits, you will be eligible to purchase the policy.

  24. I am planning to purchase an insurance policy for myself. What is the better choice – term insurance plans or ULIPs?

    Both types of insurance products serve different purposes. A term insurance plan offers only protection. Thus, if the policyholder passes away during the policy tenure, a payout is offered to the nominee. However, if the policyholder does survive the policy term, no benefit is paid. A ULIP or Unit Linked Insurance Plan, on the other hand, offers customers the dual benefit of a savings cum investment option. Thus, in addition to the risk cover, you are also provided the option of investing in funds that match your appetite for risk. Before opting for a certain type of policy, make sure to consider our stage of life, needs of your dependents, financial goals, and liabilities to find the right insurance policy.

  25. Are term insurance plans a good savings/wealth creation option?

    A term insurance plan is a pure protection policy. Thus, they offer a risk cover with a large sum assured for a relatively low premium. Considering this, they do not serve as a savings/wealth creation option.

  26. Are premium quotes/rates fixed by the IRDAI?

    No, life insurance premiums are decided by the insurer. Insurance companies consider various factors to measure the premium. A few factors that could affect premium rates include the policyholder’s age at entry, the gender, previous medical conditions, smoking/tobacco use, nature and type of occupation, the type of policy, etc. Since the premium rates offered various insurers will differ, it is recommended that you compare premium quotes on a third-party website and opt for a policy that will provide you optimum coverage for a competitive premium.

  27. Do insurers provide any offers/discounts that can help one secure a lower premium?

    Discounts and offers provided by insurers will vary from company to company and time to time. Thus, you will have to check on the insurance website or consult an agent to know if any discounts are being offered.

  28. Can a term insurance plan be bought for a child?

    The minimum age at entry for most term insurance plans in the market is 18 years. Thus, if your child is under the age of 18 years, you will not be able to purchase a term insurance plan for him/her.

  29. I am in my mid-40s. Would buying in a term insurance plan be a better option than investing in a pension plan?

    The decision of what insurance plan to buy will vary based on several factors, such as your liabilities, premium payment capacity, needs of your dependents, etc. The advantage of term insurance plans is that the policy buyer can opt for a high sum assured by paying a low premium. However, with increasing age, the cost of term insurance plans also rise slightly. On the other hand, a retirement/annuity/pension policy is best suited for those looking to secure their post-retirement years, by way of a steady source of income. Thus, make sure to consider these factors before purchasing any policy.

  30. Do life insurance providers offer the service of online premium payment?

    Yes, most insurance providers offer services like online premium payment, via the insurer’s official website.

News About Term Insurance

  • Kotak Mahindra Life reports satisfactory growth for all products

    Kotak Mahindra Life Insurance, which is currently the seventh largest life insurance firm among the 25 life insurance companies in India, has reported consistent and satisfactory growth for the last fiscal. Up to December 2017, the insurance firm reported a growth of 38% in the collection of new business premiums, while collection of renewal premiums increased by 27%.

    Mr. Murlidhar, the MD and CEO of the insurance company, has said that 60% of the premium collection comes from traditional insurance products, while 35% comes from ULIPs. It is also reported that business from the retail segment contributed to 48% of the insurer’s premium collection and business from groups contributed to around 43% of the premiums collected.

    22 February 2018

  • Merger of Public Sector Insurance Firms may lead to savings of Rs.3,000 crore

    The upcoming merger of three public sector insurance firms – National Insurance Company, United India Insurance, and Oriental Insurance Company – is likely to make a large number of staff redundant, thereby resulting in savings of around Rs.3,000 crore per year. The government has also said that it is likely that the merger of these three companies and the listing of the merged company will close by the end of the next fiscal year. The merger is expected to end any unhealthy competition between the insurance firms and reduce operation costs, in due time.

    16 February 2018

  • Insurers should transfer unclaimed funds to SCFW, says IRDAI

    The Insurance Regulatory and Development Authority of India (IRDAI) has asked all insurance companies to transfer deposits that haven’t been claimed by anyone for the last 10 years, as on 20 September 2018, to the Senior Citizens’ Welfare Fund (SCFW), by 1 March 2018. All insurance companies, including those coming under the life insurance, health insurance, and general insurance sectors, will have to comply with this directive that was issued by the IRDAI in a circular.

    The SCFW, which is a public fund created by the government, has been set up to promote the welfare of senior citizens within the country by way of certain schemes, promotion of affordable healthcare facilities, introduction of long-term savings options, etc.

    14 February 2018

  • Max Life’s Assets Under Management hits Rs.50,000 crore

    Max Life Insurance, which is one of the largest life insurer in India, has recently announced that their Assets Under Management (AUM) has touched the Rs.50,000 crore mark. The company’s AUM has grown at a CAGR (Compounded Annual Growth Rate) of 19.5%, over the past three years.

    Max Life’s growth can be accredited to growth of new business, strong investment performance, and increased retention of customers. The insurer reported a First Year Premium, including both retail and group segments, of Rs.3,666 crore in FY16-17. The Gross Written Premium for the same period increased by 17% to a sum of Rs.10,780 crore. The renewal premium, too, increased by 12% to a sum of Rs.7,114 crore during the same period.

    13 February 2018

  • PNB MetLife extends life cover for Mera Term Plan to 99 years

    Leading life insurance provider, PNB MetLife, has recently launched a humorous video campaign in effort to increase awareness of their protection products. The insurer recently increased the life cover limit for their online term insurance plan, the PNB MetLife Mera Term Plan, from 75 years 99 years.

    The campaign is designed to help viewers reassess their protection needs and to improve customers’ awareness of purchasing term insurance plans that are both affordable and provide adequate life cover for a long duration. The age limit for the Mera Term Plan was increased to 99 years in light of the increasing life expectancy of Indian consumers, who are also looking to stay protected beyond 70-75 years of age.

    8 February 2018

  • HDFC Standard Life’s New Business Premium increases by 33%

    HDFC Standard Life Insurance, which is the third-largest, private-sector life insurance provider in India, has reported a 33% growth in their new business premiums, for the period that ended in December 2017. The insurer’s new business premium rose from Rs.5,330 crore, which was collected last year, to Rs.7,070 crore.

    While the majority of the insurer’s product mix was made-up of market-linked insurance products, protection products, too, saw an increase of 27.3%, in terms of the new business premiums. As a result of the steep growth reported for all products, the life insurance firm’s assets under management (AUM) rose by 27%.

    24 January 2018

  • Forty applications for the post of new chairman of IRDA

    T S Vijayan, the chairman of the Insurance Regulatory and Development Authority of India, will leave office on February 21, 2018. Nearly 40 experienced personnel from the field of insurance have applied for the post.

    The initial notification stated that the applicants should have at least a 30- year work experience, should have been the secretary to the government of India or held an equivalent position at the Centre or the State. V K Sharma, the chairman of LIC and G Srinivasan, the chairman of New India Assurance are a few among others who have applied for the post of chairman of the IRDA.

    The revised notification by the department of financial services stated that chairmen of public sector general insurance companies and senior executives of LIC can also submit applications. CEOs of large financial institutions from the private sector can also apply. The term of the chairman is for a period of 5 years and he/she is authorised to a sum of Rs.4.5 lakh per month.

    18 January 2018