Term insurance is a type of insurance that can be availed for a certain period of time or a fixed term (number of years). The key differentiating feature of term insurance against other insurance plans is that unlike other types of life insurance policies, a term insurance policy is less expensive since it does not have any cash value. The policy can prove to be useful only if the policyholder dies within the timeframe during which the term insurance policy is in force.

Term insurance policies are offered by most insurance providers and these come for different terms like 10 years, 20 years, 30 years etc. The key point about term insurance policies is that most of these policies have a built-in feature to get converted to permanent life insurance policies irrespective of the health status of the policyholder.

Why Buy Term Insurance

  • Financial security - Term insurance plans are one of the best ways to get a financial safety net. In today’s world, it is important to have the financial security of the policyholder’s dependents in the event of his/her demise.

  • Basic features - A plan that comes with a range of add-ons and charges a high premium may not be as beneficial as term insurance. Opting for a term insurance plan with a fixed, affordable premium for almost the same features makes sense for most investors.

  • Higher returns - Term plans tend to fit everyone’s needs. A term insurance plan is one where the benefit received is much more than the sum invested, resulting in higher returns without the hassle of having to manage investment funds. Regular plans, as well as Term plan with Return of Premium (TROP plans), offer as much as 105% return on premiums paid as a benefit upon maturity.

  • Appropriate coverage - Financial advisors often advise that sufficient cover is equal to 10 times your annual income. It should be noted that inadequate coverage defeats the purpose of being insured. Along the same lines, it is important that you review your insurance coverage and identify areas where you can cut down so that you are not over-insured.

  • Survival benefits - While a regular term insurance plan does not have any survival benefits, a number of insurers have designed plans, i.e., Term Return of Premium Plans (TROPs), that offer survival benefits in the form of premium refunds at maturity.

  • Policy term - Term insurance plans offer you coverage for a fixed term. This indicates that you can take term insurance for a fixed duration wherein your family is financially protected. Following this, you can retire comfortably.

  • Low claim rejection - Claim rejections are generally lower if a life insurance policy has been active for more than 10 years. Hence, it is ideal to buy term insurance to ensure that your claims are honoured.

  • Flexibility - Term plans come with the flexibility of buying the policy online or offline. Additionally, many insurers do not ask for health check-ups if the sum assured under the plan is Rs.50 lakh or less.

  • Riders - Term plans can be further enhanced with the help of riders that offer extra protection. These riders can be bought from the insurance company at nominal costs. Some of the riders available under term plans are accidental death benefit, critical illness, partial or permanent disability, waiver of premium, etc.

  • Low brokerage – For offline term insurance policies, you will be paying the lowest amount as broker commission. Brokerage is often calculated as a percentage of the premium paid. Since the premium for term insurance policies is usually low, the overhead of broker charges is also reduced. If you choose an online plan, there will be no broker fees as well.

  • Flexible payment options - Term insurance policies offer flexible premium payment options, allowing policyholders to choose a payment plan based on their convenience. Premiums can be either limited pay, single pay or regular pay. Policyholders who choose limited or regular pay plans can pay their premiums either monthly, quarterly, half-yearly, or annually.

  • Choice of plan - A number of insurers offer policyholders a choice when it comes to the type of plan they wish to opt for. Policyholders can choose between single or joint-life plans, depending on their need. They can thus choose to extend coverage for dependent spouses or choose a plan exclusively for the breadwinner of the family.

  • Tax benefits - Premiums paid on a term plan are eligible for tax benefits under Section 80C of the Income Tax Act. The death benefit received by the nominee under the plan is eligible for tax deductions under Section 10(10D) as well.

Top 5 Term Plans in India

  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.

    1. Minimum Entry age is 18 Years and Maximum entry age is 60 years

    2. Maximum maturity age is 70 Years.

    3. Policy tenure is between 10 years and 50 years.

    4. Minimum Sum Assured is Rs 25 Lakhs.

    5. Maximum Sum Assured – Rs 100 Crores.

    6. The premium payment mode can be monthly, quarterly, half-yearly and annually.

    7. 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.

    8. 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

  2. LIC Tech Term Insurance Plan – LIC offers one of the best term insurance plans namely LIC Tech Term Insurance Plan. This is a regular premium non-participating “Online Term Insurance Policy” which offers financial protection for the insured’s family in case of his/her unfortunate demise. Key features of this plan include:

    1. Minimum Entry age is 18 Years and Maximum entry age is 65 years

    2. Risk Coverage is up to 80 years of age. 

    3. Policy tenure is between 10 years and 40 years.

    4. Minimum Sum Assured is Rs. 50 Lakhs. 

    5. Maximum Sum Assured – No limit.

    6. LIC Policy offers accidental death benefit rider which is optional and comes with additional premiums.

    7. This plan offers flexible premium options like regular premiums (monthly, quarterly, half-yearly and yearly), single premium and limited period premium options

  3. ICICI iProtect Smart Term Insurance Plan – Some of the key features of this plan include the following:

    1. Minimum Entry age is 18 Years and Maximum entry age is 65 years

    2. Maximum maturity age is 99 Years

    3. Policy tenure is between 5 years and 40 years.

    4. Minimum Sum Assured – Based on minimum premium of Rs 2,400 per annum.

    5. Maximum Sum Assured – No limit.

    6. There is an optional rider that it pays if diagnosed with any of the 34 Critical Illnesses.

    7. It comes with 4 levels of protection 1) Life 2) Life Plus 3) Life and Health and 4) All in one.

  4. HDFC Click 2 Protect Plus Term Insurance Plan – Some of the main features include:

    1. Minimum Entry age is 18 Years and Maximum entry age is 65 years

    2. Maximum maturity age is 85 Years

    3. Policy tenure is between 5 years and 40 years

    4. Minimum Sum Assured is Rs 10 Lakhs

    5. Maximum Sum Assured – No limit

    6. 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

  5. SBI Life eShield Term Insurance Plan – Some of the unique features of this plan are as follows:

    1. It comes with two plan options 1) Level Cover Benefit 2) Increasing cover benefit

    2. 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

    3. Maximum maturity age is 80 Years

    4. Policy tenure is between 5 years and 30 years

    5. Minimum Sum Assured is Rs 35 Lakhs

    6. Maximum Sum Assured – No limit

    7. The plan has an inbuilt benefit “Accelerated Terminal Illness Benefit” available

    8. There are other riders available like a) Accidental Death Benefit Rider 2) Accidental Total and Permanent Disability Benefit Rider

Addtional Reading: What Are the Different Types of Life Insurance Policies?

End Note

Today, most experts suggest that insurance must not be considered as an investment plan. An insurance policy is beneficial if the right plan is chosen that benefits your family after your death. Term insurance is a plan that provides financial protection to the family of the policy buyer after his/her demise. It is not repayable if the policyholder survives at the maturity date. It can benefit the buyer’s family only in the event of death.


  1. Are LIC premiums higher in term plans? If so, why?

LIC is a trusted brand and has a higher claim ratio as compared to other insurers. Owing to this, it charges higher premiums compared to private insurance companies.

  1. How much term insurance do I need?

While assessing the requirement for term insurance, you can take into consideration the factors that have the maximum impact on the sum assured. These factors include premium affordability, what is the sum assured that you think will be adequate for your family’s future expenses and is the sum assured you want available.

  1. Is term insurance a good idea?

Long-term care insurance is provided by a lot of insurers in the world. Their services are directed towards catering to the needs of individuals over a short or extended period of time. These services are provided to help make the person more independent and safer at a time when they are less able to cater to their own needs.

  1. How much does term insurance cost?

The premium rates for term insurance plans depend on your age, gender, income, and even your smoking habits. Based on these factors, the prices differ from one applicant to another. For instance, for a 26-year-old male applicant who smokes with an annual salary of Rs.7 lakh, the premium price for a sum assured of Rs.1 crore is Rs. 933 per month.

  1. Can a term insurance plan be converted into a whole life insurance policy?

Yes. You can convert a term policy to a permanent policy as long as the conditions of the policy have been understood and the premium payments have been timely. It also depends on whether the term insurance plan that you hold provides you with the option of converting it into a whole life plan.