Term Insurance
Some things about life are unpredictable—one day you’re busy making travel plans, and the next day, you’re worried about your family’s security. All of this is to say that buying a term insurance Policy is truly smart, if not wise.
If you have been thinking about why term insurance is necessary or if it has been difficult for you to differentiate between term insurance and whole life insurance, do not worry any further. Let’s simplify things, and by the end, you will know exactly why term insurance could be one of the finest gifts you could give to your family.
Table of Contents
What Are the Term Insurance Benefits?
Term insurance provides only life protection; that is to say, in the event of your death during the policy period, your family receives a lump sum.
Some standard benefits of term insurance are:
- Low-cost premiums for high-value coverage.
- Financial protection for your loved ones.
- Additional riders for added protection.
- Tax benefits under Section 80c and 10(10d).
It’s like creating a safety net your family can always fall back on.
Importance of Term Insurance
Think of term insurance as a financial guardian.
The term insurance is to make sure that your family does not have to compromise on their lifestyle, kids’ education, or home loan payments in your absence.
It’s not merely a policy; it’s your way of saying, “I’ve got your back,” regardless of whether you are around.
Term Insurance vs. Whole Life Insurance
- In sticker price, term insurance is comparatively less and covers for a given time.
- Whole life insurance is expensive and covers the whole potential life with a savings element.
Therefore, if you seek pure death coverage without paying the heavy premium, you would consider term insurance.
Term Insurance Premium Calculator: Your Best Friend
Ultimately, always do a term insurance calculator to measure your premium according to age, sum assured, period of insurance, and health conditions.
The calculator gives you fairness in weighing coverage against affordability, without any hidden surprises!
Term Insurance Tax Benefits
Tax savings will not be loved by anyone. You may claim up to ₹1.5 lakh under Section 80C for premiums paid in and also additional tax exemptions on death benefits under Section 10(10D). Hence, term insurance tax benefits become a full double boon – protection and savings. Don’t you think that it’s the most prominent reason why you Should purchase term insurance?
Term Insurance for Family Protection
There is no doubt about it. A term assured for the family protection states that spouse, children, or even dependent parents would not have to struggle financially when something unfortunate happens. It will be like having an invisible shield around them.
Term Insurance for Loan Protection
You have a home loan worth Rs. 50 lakh. Would your family be able to settle it if something goes wrong with you? Term insurance for loan protection ensures that your family is free from the burden of EMIs after you’ve gone. Pro tip: Tie your sum assured with your most significant financial liabilities.
Term Insurance Riders
Want to customise your policy? Opt for term insurance riders such as:
- Critical illness rider
- Accidental death benefit rider
- Waiver of premium rider.
Consider riders as toppings on a pizza, customised according to your specifications to meet your own needs!
Term Insurance Claim Process
The term insurance claim process is quite simple when documented well:
- Notify the Insurer by submitting a death certificate along with a claim form.
- Submit additional documents.
- After which, the insurer assesses and then processes the payout for the claim.
At times, award nominations may cause confusion as to the policy; hence, keep them informed about the policy details.
Term Insurance Policy Features
Salient Features of Term Insurance Policies:
- Fixed Sum Assured
- Flexible Term of Policy (10-40 years)
- Premium Payment Instructions (Regular, Limited, One-time)
- Riders Available for Extra Protection.
- Online Purchase Available Straightforward
Simple, No Frills Life Coverage.
Term Insurance Policy Exclusions
There are exclusions.
Some of the common exclusions in term insurance policies are as follows:
- Death due to suicide within one year of policy inception
- Death occurring while a person is engaged in hazardous activities (not disclosed)
- Death occurring due to criminal activities
Read the fine print all the time!
Term Insurance Policy Renewal
Most of the plans are renewable annually after the original term.
Term insurance policy renewal only provides you with extended coverage, but premiums are increased according to your age by the time you hit the next renewal
Term Insurance Policy Surrender
Do you think of halting your policy halfway? Well, generally, pure term plans come without any surrender value against a term insurance policy, which means if you stop your payments, there is no way to get any money back.
Term Insurance Policy Conversion
Certain policies allow for conversion from term insurance policies. Here is an example: You may convert your term plan later into whole-life or endowment plans without undergoing any medical examination. It works like an exit door when you change your mind!
Term Insurance Policy Portability
Dreaming of switching between insurance providers? As of now, you will not be able to port your term insurance policy like health insurance in India. Hopefully, with the regulatory changes that are soon going to come, this option too.
Term Insurance Policy Comparison
Never be the first person to even consider a policy.
The comparison between policies related to term insurance on factors like a claim settlement ratio, premium rates, rider options, and customer reviews is really important.
A little research today will save you a lot of headaches later.
Term Insurance Policy for NRIS
Yes, NRIS can also buy a term insurance policy in India!
Term insurance policy for NRIS is best suited if one actually intends to come back or if he/she has dependents in India.
There are exclusive plans for NRIS.
Term Insurance Policy for Senior Citizens
Earlier, term insurance was too tough for seniors.
This time, you have options for independent term insurance.
Term insurance policy for senior citizens provides coverage to individuals even uptil the ages of 65-70 years (and sometimes beyond).
The premiums will be higher, and usually a medical test is required.
Term Insurance Policy for Women
Now, let us end with a really interesting reminder:
There is a 29 years old lady, She is a corporate lawyer and is just married.
She thought “Term insurance? That’s a man’s thing.” A little research later, she found out it was possible for women to get lower premiums and special riders like maternity cover.
By getting in early, Riya locked in a 30-year policy for just ₹450/month.
Today, whether she intends to take a career break or raise a family or travel the world, insuring her financial security is sorted out.
Ladies, don’t be hesitant.
A term insurance policy for women is not just intelligent. It is empowering.
Also, Check – Term Insurance vs ULIP Which One Do You Need?
Final Thoughts
Term insurance is for living your life smartly, not scaring you into death. It is meant to keep dreams alive for your loved ones other than you, no matter what. Use a term insurance premium calculator go compare the best term insurance plans in India, check riders, read and study policy features and exclusions avidly. And remember: when you buy a term insurance policy, you are not just buying a policy but peace of mind. Also, remember, we at BFC recommed only term plan and not any kind of endowment or policy back plans.
Please share your thoughts on this post by leaving a reply in the comments section. Contact us via phone, WhatsApp, or email to learn more about mutual funds, or visit our website. Alternatively, you can download the Prodigy Pro app to start investing today!
What should I choose as an appropriate sum assured?
A simple rule: your term insurance cover should be around 10-15 times your annual income. Also include any current loans, possible future financial requirements such as those for children, and current lifestyle expenses.
Can I increase my term insurance cover later?
Yes, most companies have options for increasing the coverage or allowing buying extra coverage for more coverage during important life stages like marriage or kids.
What happens if I forget to pay the premium?
If you forget to pay your premium, your policy may lapse after the grace period, which is usually around 30 days. Some insurers offer revival of the policy within a few years, but it may involve medical check-ups and late payment fees.
Is a medical test necessary to get term insurance?
Usually, yes; especially if you are buying a higher sum assured and above a certain age (usually beyond 35 years). Medical tests help insurers assess your health threats to determine your premium amount.
Disclaimer – This article is for educational purposes only and does not intend to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme-related document carefully before investing.
Assistant Vice President – Research & Analysis
Akash Gupta heads the Research & Analysis department at BFC CAPITAL, where he combines in-depth market insights with strategic analysis. He holds multiple certifications, including:
- NISM-Series-XIII: Common Derivatives Certification
- NISM-Series-VIII: Equity Derivatives Certification
- NISM-Series-XXI-A: Portfolio Management Services Certification
- IRDAI Certification
With his expertise in equity, derivatives, and portfolio management, Akash plays a key role in providing research-backed strategies and actionable insights to help clients navigate the investment landscape.
