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Why Term Insurance and How to Choose the Right Term Insurance Plan?

A pure term insurance plan is a simple protection plan. It involves the payout of the death benefit in lump sum or in instalments or both, in the event of the life assured’s death. This means the family of the life assured can continue to maintain their lifestyle and meet their life goals, even if the life assured is no more. The policy holder, in a typical term plan, gets nothing if s/he survives the term of the policy. 

Typically, a term insurance plan is the most affordable protection plan as it provides life cover for less premiums as compared to other life insurance products since term plans cover only death risk and do not provide maturity benefits like other life insurance plans.

Why Term Insurance?

  • Financial security for dependents, in your absence
  • Option to claim Sum Assured in lump sum, or lump sum plus monthly income
  • Instalment Claims can act as a tax-free income replacement (subject to prevailing tax laws) and help dependents meet their regular expenses without dipping into savings and thus meet their life goals without any hiccups
  • Tax benefits under sections 80C & 10 (10D) of Income Tax Act 1961. Tax laws are subject to change. Consulting a tax expert is advisable. 
  • Option to ringfence an asset (home) created on loan

How to choose a Term Insurance plan?

Depending on your life credentials (age, smoking status, habits, lifestyle etc.), the security of your dependents and your goals for the future, you should pick a plan and secure your family's financial future.

Certain factors that you could consider are -

  • Premium Rates

    – Term plans should remain affordable and one should compare premiums for the same premium payment term, same tenure and cover benefits. One often ends up comparing dissimilar benefits or tenures.
  • Medical Examination

    – Term plans require some form of medical examination. Plans require the Life assured to undergo medical checks, get full medical reports, and thus have little dependence on self-declarations with respect to health conditions. It is advised to disclose all medical conditions at the time of policy issuance, to avoid any claim settlement issues based on health declarations later.
  • Policy cover

    - Using digital tools and calculators or even seeking advice from a qualified financial advisor, you must calculate the amount of policy cover required. 
  • Policy Period

    –  Depending on how gainfully you plan to stay post retirement, it is advisable to choose cover for at least as long as you plan to stay economically productive. This ensures a relatively lower premium as compared to renewing your cover later in life.
  • Company credentials 

      • Claim Settlement Ratio

        - The claim settlement ratio of an insurer is the number of claims settled against the number of claims filed: the higher the ratio, the more preferred the insurer.
      • Solvency Ratio

        - A life insurance provider with a high solvency ratio is more likely to be financially stable and therefore, more equipped to pay out your insurance claims and survive for a long time. Higher the ratio, better is its ability to settle claims.
      • Customer Centricity

        - A company’s commitment to service excellence should hold top priority. The customer should, at all times, be at the core of the company’s operations, and should be dealt with, with empathy and understanding. Look for external rewards and recognition for customer centricity
      • Digital Strength - Access to online tools, literally at the click of a button, whether at the time of purchasing a policy, paying a premium, renewing the policy, resolving a complaint or settling of claims ensures the customer a easy, convenient and hassle-free experience.


To seek a detailed understanding of Term Insurance, please click here

A dedicated financial advisor will get in touch with you soon after.



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