What is Term Insurance:
Term insurance is a type of life insurance policy that provides coverage for a certain period or a specified “term” of years. If the insured dies during the period specified in the policy and the policy are active, or in force, a death benefit will be paid.
Term insurance is initially much less expensive when compared to permanent life insurance. Unlike most types of permanent insurance, term insurance has no cash value. In other words, the only value is the guaranteed death benefit from the policy.
There are various types of insurance policies available. Many policies offer level premiums for the duration of the policy, such as ten, 20, or 30 years. These are often referred to as “level term” policies. A premium is a specific cost, which is typically monthly, that insurance companies charge policyholders to provide the benefits that come with the insurance policy.
The insurance company calculates the premiums based on the individual’s health, age, and life expectancy. A medical exam that reviews the person’s health and family medical history might be required depending on the policy chosen.
Highlights:
- Term insurance is a type of life insurance policy that provides coverage for a certain period or a specified “term” of years.
- If the insured dies during the period specified in a term policy and the policy are active, a death benefit will be paid.
- Many term policies offer level premiums for the duration of the policy.
- Other term policies offer to decrease or increasing benefits over time.
Benefits Of Term Insurance:
1. Term Insurance offers high life covers at lower premiums
One of the major benefits of term insurance is its low cost, particularly if you buy online. When a policy is bought online, the benefit of cost saving is transferred to the customer. For example, Max Life’s Online Term Plan Plus offers a 28-year-old, non-smoker a life cover of Rs. 1 crore for a premium of just Rs. 563 per month.
Additionally, the premiums are lower when you buy it at a young age. Thus, the earlier you buy a term policy, the lower the premiums.
2. The simplicity of Term Plans
It is a pure life cover. This means that there is no investment component. One needs to simply pay premiums against which the insurer covers the life risk of the policyholder for a fixed duration. A term insurance policy can be bought through an advisor or directly online.
3. Tax Benefits of Term Insurance
Tax savings should not be the main reason to purchase a term policy; nevertheless, both the premiums as well as the payouts offer tax benefits and exemptions respectively as per prevailing tax laws.
4. Death Benefit Options
While term policies provide a lump sum maturity amount, you can get plans that combine lump sum and monthly incomes, and also those with an option of a lump sum with increasing monthly income. This helps your family manage regular expenses and also manage the inflation impact.
5. Riders of Term Policy
Policies come with optional riders that enhance the benefits of a basic term insurance plan on the addition of a nominal premium. For example, opting for a Waiver of Premium (WoP) rider allows the life assured to stop paying premiums if he or she suffers from critical illness or dismemberment. The policy will not lapse and the cover continues. Accident benefit rider and critical illness rider are other popular term insurance riders.
Types of Term Insurance:
There are various types of term insurance besides the level term policies we’ve outlined so far. Each policy has its pros and cons, depending on the needs of the policyholder.
- Convertible Term
Convertible term life insurance allows a term insurance policy, which has a limited number of years before expiring, to convert into whole life or permanent insurance. The major benefit of convertible insurance is that the policyholder doesn’t have to submit to a medical exam, nor are any health conditions considered when the term policy converts to permanent insurance.
- Increasing Term
Some policies allow you to increase the death benefit as time goes on. The premium increases as well, but it allows policyholders to pay lower premiums early on in life when they have a lot of bills and expenses. The increasing term prevents having to qualify for another policy at an older age to get the added benefit as would be the case with traditional term insurance.
- Mortgage Term or Decreasing Term
A mortgage term or decreasing term policy is the opposite of the increasing term because the death benefit amount decreases over time. The goal is to match the decline of the term benefit to the reduction of the policyholder’s outstanding mortgage. The idea behind this strategy is that you don’t need as much life insurance if you have less mortgage debt. However, although the premiums are smaller than term insurance, the premium payments remain constant even as the benefit declines.
- Annual Renewable
As each year passes, the term insurance is renewed but for a higher premium since the policyholder is a year older. The benefit to annual renewable term insurance is that the coverage is guaranteed to be approved each year. However, it may not be the most cost-effective for everyone due to the increased costs over time.
Best Term Insurance Plans In India:
Insurance plans are offered by most of the insurance providers and these plans come with different term period such as 10 years, 20 years, 30 years, etc. Most of these best term insurance plans come with an in-built feature to get converted to permanent life insurance regardless of the insured’s health condition.
As there is a wide range of best term insurance plans available in the market, choosing the right one always seems to be a herculean task. To help you out, here we have given the list of top term insurance plans in India to invest.
1- Max Life Term Insurance Plan Plus
Max Life Term Insurance Plan Plus comes with 3 options in its plan. Below are the major features of this term insurance plan from Max Life.
- Minimum Entry age is 18 Years and Maximum entry age is 60 years
- Maximum maturity age is 70 Years.
- Policy tenure is between 10 years and 50 years.
- Minimum Sum Assured is Rs 25 Lakhs.
- Maximum Sum Assured – Rs 100 Crores.
The premium payment mode can be monthly, quarterly, half-yearly and annually.
Limited Premium payment option available where you can pay the premium for a limited period, however, enjoy term insurance plan for the entire tenure of the plan. You can save up to 30% of premiums if you opt for this.
Comprehensive Accident Benefit Rider is available in this plan.
This plan is available in 3 coverage a) Basic Life Cover b) Basic Life Cover+Monthly cover c) Basic Term Plan Cover + Increasing Monthly Income
The claim settlement ratio of FY 2017-18 is 98.26%, which is highest among all insurance companies.
Its Basic Premium is approx. Rs 8,378 per annum (Excl taxes) for a 30-year non-smoker for a 30-year policy for 1 Crore sum assured for basic life cover.
Its Basic Premium is approx. Rs 12,272 per annum (Excl taxes) for a 30-year non-smoker for a 30-year policy for 1 Crore sum assured for Basic Life Cover + Increasing monthly income option.
2- LIC Tech Term Insurance Plan
LIC is a trusted brand in the insurance segment in India that has been catering to insurance for several decades. One of the best term insurance plans that come from LIC is Tech Term Insurance Plan. LIC’s Term is a regular premium non-participating “Online Term Insurance Policy” which provides financial protection for the insured’s family in case of his/her unfortunate demise. This is an online plan and no intermediaries will be involved.
Here are the features of the LIC Term Insurance Plan.
- Minimum Entry age is 18 Years and Maximum entry age is 65 years
- Risk Coverage is up to 80 years of age.
- Policy tenure is between 10 years and 40 years.
- Minimum Sum Assured is Rs 50 Lakhs.
- Maximum Sum Assured – No limit.
It offers both the level sum assured and increasing sum assured. In level, the sum assured, the sum assured is fixed throughout the policy period. However in increasing sum assured, Sum assured would increase year on year from 6th year to the 15th year and from there, these are constant beyond that period. However, the premiums would be high for such level sum assured options.
LIC Policy offers accidental death benefit rider which is optional and comes with additional premiums.
The claim settlement ratio of FY 2017-18 is 98.04%.
All kinds of death, including accidental deaths, are covered under this plan except suicide during the first year.
One can propose on their name only and cannot take on spouse name who is not working.
LIC policy offers flexible premium options like regular premiums (monthly, quarterly, half-yearly and yearly), single premium and limited period premium options
The premiums are a little high in LIC. If you take LIC Tech Term Insurance plan for Rs 1 Crore and have opted for a regular annual premium, in a simple sum assured, the premium works out to be Rs 5,368 for 20 years individual and the 20-year policy term. It would be Rs 7,216 for 30 years individual and Rs 13,770 for 40 years individual. No discounts applied here. You can check LIC premium calculator to know the exact premium before opting.
NRIs can also apply when they are staying in India and term insurance plan is valid in the specified countries list.
Generally, individuals who want to increase their sum assured have to buy a new term insurance plan with the additional sum assured. However, they can opt for an increasing sum assured where the sum assured would be increased during the tenure.
LIC Tech Term Insurance Plan is one of the Best Life Insurance Policy in India in 2019-2020 as it has brand value as well as trusted by Lakhs of people in India.
3- ICICI iProtect Smart Term Insurance Plan
Here are the key features of ICICI iProtect Smart Term Plan.
- Minimum Entry age is 18 Years and Maximum entry age is 65 years
- Maximum maturity age is 99 Years.
- Policy tenure is between 5 years and 40 years.
- Minimum Sum Assured – Based on minimum premium of Rs 2,400 per annum.
- Maximum Sum Assured – No limit.
There is an optional rider that it pays if diagnosed with any of the 34 Critical Illnesses.
It comes with 4 levels of protection 1) Life 2) Life Plus 3) Life and Health and 4) All in one.
Claim settlement ratio of FY 2017-18 is 97.88%
Premium is approx. Rs 8,279 per annum for a 30-year non-smoker for a 30-year policy for Rs 1 Crore sum assured. Accident death cover would cost Rs 2,803 additional premium for Rs 50 Lakhs Coverage and Critical illness cover cost Rs 15,569 for Rs 10 Lakhs coverage. These 2 are optional riders which you may consider based on your requirement.
4- HDFC Click 2 Protect Plus Term Insurance Plan
Below are the major features of HDFC Click 2 Protect Plus Term plan.
- Minimum Entry age is 18 Years and Maximum entry age is 65 years
- Maximum maturity age is 85 Years.
- Policy tenure is between 5 years and 40 years.
- Minimum Sum Assured is Rs 10 Lakhs.
- Maximum Sum Assured – No limit.
There are various options like Life Option, 3D Life Option, Extra Life Option, Life Long Protection Option, 3D Life long protection, Return of Premium Option etc. available in this plan.
The claim settlement ratio of FY 2017-18 is 97.8%.
The Basic Premium is approx. Rs 9,717 (Excl taxes) per annum for a 30-year non-smoker for a 30-year policy for Rs 1 Crore sum assured (Lumpsum payout option).
If you take 3D Life that covers waiver of premiums in case of critical illnesses or premium waiver in case of permanent disability, the premium works out to be Rs 10,134 for similar details.
This Term plan has several riders which make this as a unique term insurance plan for 2019-2020.
5- SBI Life eShield Term Insurance Plan
eShield is the SBI Term Insurance Plan, which comes with unique features.
It comes with two plan options 1) Level Cover Benefit 2) Increasing cover benefit.
- Minimum Entry age is 18 Years and Maximum entry age is 65 years for the level cover benefit and 60 years for increasing cover benefit.
- Maximum maturity age is 80 Years.
- Policy tenure is between 5 years and 30 years.
- Minimum Sum Assured is Rs 35 Lakhs.
- Maximum Sum Assured – No limit.
There is an inbuilt benefit “Accelerated Terminal Illness Benefit” available.
There are other riders available like 1) Accidental Death Benefit Rider 2) Accidental Total and Permanent Disability Benefit Rider.
The claim settlement ratio of FY 2017-18 is 96.76%.
The premium is approx. Rs 9,400 per annum (Excl taxes) for a 30-year non-smoker for a 30-year policy for 1 Crore sum assured for Level Cover Benefit.
The premium is approx. Rs 11,720 per annum (Excl taxes) for a 30-year non-smoker for a 30-year policy for 1 Crore sum assured for Increasing Cover Benefit plan.
SBI Life eShield Insurance plan is one of the best term insurance plans in India for 2019-2020 which comes with inbuilt benefits and riders.
Some Others Famous Term Insurance Plans Are:
SBI SMART SHIELD
AEGON LIFE I-TERM PLAN
AVIVA I-LIFE PLAN
BAJAJ ALLIANZ E-TOUCH ONLINE TERM PLAN
PNB METLIFE MERA TERM PLANB
