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Term Insurance

Life/Term Insurance

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What is term life insurance?

Term insurance is a type of life insurance that provides coverage for a specific period of time or years, i.e., a term. This type of life insurance provides a financial benefit to the nominee in case of the unfortunate demise of the insured during the policy term.

Term Insurance policies provide high life cover at lower premiums. For e.g., Premium for ₹ 1 Crore Term Insurance cover could be as low as ₹ 485* p.m. These fixed premiums can be paid at once or at regular intervals for the entire policy term or for a limited period.

Premium amount varies basis the type of the premium payment method opted by the buyer.

Who Should Buy a Term Insurance Policy?

Anyone with financial dependents should buy a Term Insurance Policy. This includes married couples, parents, business people and self-employed, SIP investors, young professionals with dependent parents, and in some cases, even retirees.

Life insurance premiums paid are deductible from taxable income under Section 80C and hence carry a double benefit for taxpayers – protection and tax-saving. The amount (maturity value) received under a term insurance policy is also tax-exempt subject to conditions under Section 10(10D) of the Income Tax Act, 1961. Term Insurance also has among the lowest premiums compared to the different types of insurance policies.

Hence, individuals who derive any of the three significant benefits associated with term insurance should consider buying such policies. The three significant benefits are – life protection, tax-saving and affordable premiums.

Parents

Parents are generally the primary source of financial support for their children. A term insurance policy ensures that in the unfortunate event of a parent’s absence, the family’s future plans and children’s education expenses remain financially secure and protected.

Newly Married Couple

Roses, chocolates and movies are thoughtful gifts, but a term insurance policy is a meaningful long-term gift for your spouse. It provides financial protection and ensures that your partner remains financially secure even in your unexpected absence.

Young Professionals

Young professionals are beginning their careers and may not yet have major financial dependents. Buying term insurance early helps secure lower premiums and builds long-term protection, ensuring financial stability as responsibilities and income grow in the future.

Working Women

Women today actively contribute to family income and financial stability. Term insurance helps secure their family’s future, protects long-term goals such as children’s education and loans, and may also provide coverage benefits against serious illnesses.

Taxpayers

Term insurance premiums are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. In addition, the maturity amount may also be exempt under Section 10(10D), helping taxpayers significantly reduce their financial burden.

Self Employed

Self-employed individuals often face uncertain income and financial risks. A term insurance policy provides financial protection for family members and helps ensure stability by covering essential expenses and liabilities even during unexpected situations.

SIP Investors

Investors in mutual fund SIPs commit to long-term financial growth through regular investments. Term insurance ensures that, in case of the investor’s absence, the nominee receives financial support to continue investments and maintain long-term wealth creation goals.

Retirees

Retired individuals with dependents may still require financial protection. Term insurance can support family members and provide financial security in case of unforeseen circumstances, while also offering potential tax benefits under applicable income tax provisions.++

Terms related to term insurance

Here are some terms you must know:

Key Terms in Term Insurance

Claim Settlement Ratio (CSR):Indicates how reliably an insurer settles claims the higher, the better.
Premium:The amount you pay regularly to keep your policy active.
Riders (Add-ons):Extra benefits like critical illness or accidental cover for wider protection.
Sum Assured:The guaranteed amount paid to your nominee.
Human Risks:Negligence, construction errors, strikes, riots, malicious damage, terrorism.
Death Benefit: The payout your family receives in case of the insured’s death..

Features of Term Insurance

Early Entry: Available from 18 years of age.
Long-Term Cover: Protection for up to 40 years.
Easy Purchase: Simple online buying and management.
Flexible Payments: Monthly, quarterly, or yearly options.
Adjustable Coverage:Increase or decrease cover as needs change.
Debt Protection:Helps your family manage loans and liabilities.
Financial Security: Ensures your family remains financially protected in case of unforeseen events.

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Life/Term Insurance