The simplest and the least expensive form of life insurance, Term Insurance plans or protection plans provide coverage for a defined period of time, at a fixed rate of payment. If the insured expires during the relevant term, the death benefit is payable to the nominee. Unlike other life insurance plans, term insurance does not have any investment component or cash build up value. In simple terms, it affords insurance cover only and no maturity benefit is payable if the insured survives the term.
The family/nominees of the life insured are eligible for a lump sum amount in case of death or critical illness, if applied for, of the life insured.
- Policy Term: For single premium payment policies, the policy term ranges from 5 to 15 years.
- Plan Choice: You can choose the plan on single life basis or joint life basis.
- Entry Age: The minimum age of entry is 18 years, with a maximum age limit of 65 years with optional add on benefits.
- Death Benefits: On death of life assured during the term of the plan, the nominee or assignee, will receive the total/ assigned death benefit chosen at the time of commencement.
- Maturity Benefits: Term insurance plans do not carry any survival or maturity benefits.
- Additional Optional Benefits: Additional optional benefits such as critical illness and accidental death/ disability or Accelerated Sum Assured, are available for choice.
Though they vary from insurer to insurer, ordinarily the following are the eligibility criteria.
- Entry Age: Minimum 18 years / Maximum 65 years
- Policy Term: Minimum 5 years / Maximum 30 - 55 years
- Maturity Age: Maximum 75 years/ Whole of life
- Annual Premium: Minimum Rs. 2,000 / Maximum – Based on Sum Assured and age of applicant
- Premium Payment Mode: Single (on offer here)
Tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act, 1961 are available on premium for Term Plans. Additionally, the premiums paid for the Critical Illness Benefit also qualify for a deduction under Section 80D.
How to select the Best Term Insurance Plan
Of late, the Term insurance plans have become very popular. You can choose a plan based on the following factors.
- How much death benefit coverage do you need
- We recommend a life cover of 20 times the annual income.
- A married person with children should have higher life cover than a bachelor.
- Those with a long-term loan e.g., home loan, should have higher life cover.
- How long should be the term of your plan?
- We recommend that it should be based on the duration for which you will have financial dependents.