Term Insurance FAQs

-A term insurance provides substantial life insurance cover at an affordable premium

-The sum assured helps your family members to live the same standard of living in your absence.

-It gives you peace of mind by ensuring your family will have financial support even when you are not there.

-Term insurance plans provide a substantial life insurance cover at affordable premiums

-Premium paid towards term insurance provides tax benefits under section 80C up to Rs. 1.5 lacs.

-The sum assured your family receives is also tax free.

The thumb rule for deciding the cover of your term plan is that it should be at least 20 times your annual income. For example, a person earning ₹5 lakh annually must have a term policy of about ₹1 Crore for adequate support to his family after his death.

One can enjoy a tax benefit of up to ₹1.5 lakh under Sec 80C from the taxable income for paying the premium of the term insurance plans.

The proceeds received from a term insurance plan after the demise of the policy holder is also tax exempt under section 10(10D).

Yes. Non-Resident Indian can buy a term insurance plan in India.

You should buy term life insurance as it provides financial support to your family in your absence.

You can buy a term plan both online or offline.

Yes, you can always buy term insurance from two separate companies. Both the insurers from which you’ve purchased term insurance plans are liable to pay claim to the nominee in case of the policyholder’s demise during the policy period.

Yes, you should disclose the details of your existing term insurance policies at the time of applying for a new one.

The premium terms generally vary from a smoker to a non-smoker and these terms are generally higher for a smoker as she/he comes in a high-risk category.

For hassle free claim settlement kindly disclose personal habits of smoking or drinking.

An accidental insurance plan specifically provides the death benefit in case the policy holder dies in an accident. However, a term insurance plan includes death due to any reason, be it natural or accidental.

The Married Women’s Property Act or the MWP is a legal safeguard available to protect the financial interest of a dependent wife, children or both in case of sudden demise of the policyholder. The MWP Act is applicable on term insurance and life insurance policies to ensure that the sum assured is protected for use of only wife/child/children or both (wife and children) and no other liability (loan payoff, debt payoff, joint family rights etc. ) is attached to this sum.

At the time of buying the policy you need to fill a separate form for MWP. Once a policy issue under MWP Act, beneficiaries cannot be modified or changed.

If you have started earning and there are dependent on your income then you should not delay in buying term insurance.

Normally term insurance offers a level premium throughout the term. This depends on several factors like addition of riders or declaration of habits like smoking, drinking etc. or the declaration pertaining to a hazardous employment nature etc.

A life insurance policy includes maturity benefits while a term insurance plan includes no such benefits and simply entitles the nominee(s) of the policy holder to the sum assured in the event of the policy holder’s demise during the term of the plan.

Many insurance providers now-a-days include the clause for return of premium, which entitles the policy holder to receive the paid premiums in the event of plan maturity, although this increases the payable premiums substantially.

Yes. Term insurance, once in effect, entitles the nominee(s) of the person even if she/he has died outside India.

1. Natural disaster or war / war like situation.
2. Participation of criminal & hazardous or extreme sports activities.
3. Misrepresentation or suppression of facts at the time of signing.
4. Death occurred due to Drug, Alchol abuse or Sexually Transmitted Disease.
5. Death by Homicide if the perpetrator happens to be a nominee.
6. Suicidal death not covered within 12 months from the purchase of policy.

Corporate Insurance plans provided by the insurer can prove beneficial. However, these covers are often not sufficient and you need a higher sum assured for your family’s security. In addition, the corporate insurance cover from your employer is discontinued once you stop working for them.

The tenure of a term plan must ideally be selected up to the length of your total earning span. For instance, if you plan on retiring at the age of 60, opt for tenure up to that age. In case you’re looking for a whole-life coverage, choose an option which covers your entire life.

Many Term insurance plan offer riders to the policyholders. Opting for riders enhances the value of your coverage. It is an additional protection layer for your long-term security. Moreover, analyze your needs before investing in riders.

1. Level Term Plans.

2. Increasing Term Plans.

3. Decreasing Term Plans.

4. Return of Premium Term Plans.

5. Convertible Term Plans.