Buying Term Insurance is not simply about finding the lowest premium. The right plan should provide enough life cover, remain suitable for your financial responsibilities over time, and offer terms you understand. Before you buy, check the:
- Cover amount
- Policy term
- Premium payment option
- Riders
- Exclusions
- Insurer's claim records
- Insurer’s financial track record
How much life cover should you buy?
Your first priority should be deciding how much your family would need if your income were no longer available. A practical approach is to consider:
- Your outstanding Home, Personal, or other Loans
- Your family's regular living expenses
- Future financial goals such as children's education or marriage
- The number of years your dependents may need financial support
- Existing savings and investments that can be used toward these obligations
You can then estimate the financial gap that your Life Insurance should cover. There is no universally correct figure such as ₹1 crore or ₹2 crore. The appropriate sum assured depends on your income, liabilities, family responsibilities, assets, and future goals. As these factors change, review whether your existing cover is still adequate.
How long should your policy term be?
Your policy should ideally cover the period when your family is financially dependent on your income. For many working individuals, this could mean choosing a term that extends through their primary earning years. Consider your current age, expected retirement age, outstanding liabilities, and the age at which your dependents are likely to become financially independent.
Choosing a very short policy term simply because it comes with a lower premium can leave you without adequate protection later, when buying a new policy may be more expensive because of your age or health.
How should you choose your Term Insurance premium payment tenure?
Term Insurance is a long-term commitment, so choose a premium payment term that you can comfortably maintain without putting pressure on your finances. You can generally choose from three premium payment options:
- Single Pay: Pay the entire premium in one lumpsum at the start of the policy. This can suit someone who has sufficient funds upfront and prefers to complete the premium payment immediately.
- Regular Pay: Pay premiums at regular intervals, such as monthly, quarterly, half-yearly, or annually, for the selected premium-paying period. This can make the cost easier to spread across your income over time.
- Limited Pay: Pay premiums for a shorter, fixed period while the life cover continues for the longer policy term. This can suit someone who wants to complete premium payments earlier or expects their income to change in the future.
Before deciding, compare the premium amount, the total premiums payable, the policy term, and your expected income over the payment period.
Which riders should you add to your Term Plan?
Riders are optional benefits that can provide additional protection for specific risks in exchange for an additional premium. Depending on the insurer and plan, these may include:
- Critical Illness Rider: Provides a benefit on diagnosis of specified critical illnesses, subject to the rider's terms and conditions.
- Accidental Death Benefit Rider: Provides an additional benefit in case of death due to a covered accident.
- Waiver of Premium Rider: May waive future premiums if the policyholder meets the conditions specified under a covered event, such as a qualifying disability.
Do not add every available rider automatically. Check whether the additional protection addresses a genuine financial risk for you and reads the rider's exclusions, waiting periods, and conditions before choosing it.
What exclusions and conditions should you check?
The headline benefit and premium do not tell you the whole story. Read the policy document to understand the exclusions, conditions, and requirements attached to the cover. Pay particular attention to:
- Suicide exclusion and its applicable terms
- Conditions relating to non-disclosure or misrepresentation
- Requirements for disclosing existing illnesses and lifestyle habits
- Rider-specific exclusions and waiting periods
- Premium payment and policy lapse conditions
- Terms governing nomination and claim settlement
How should you compare insurers before buying?
The claim settlement ratio (CSR) can be one useful metric. It indicates the proportion of claims settled by an insurer during a particular period. However, it should not be the only factor in your decision. Look at the insurer's claim settlement track record over past 3 financial years rather than relying on a single year's figure. You should also consider the claim process, policy servicing, financial strength, and the terms of the specific plan.
ABSLI’s individual or retail claim settlement ratio for the last 3 financial years, as per annual audited figures submitted to IRDAI are:
- FY 2025–26: 98.86%
- FY 2024–25: 98.74%
- FY 2023–24: 98.49%
That consistency over multiple years suggests a stable claims experience rather than a one-off spike in performance.
What is solvency ratio and why does it matter?
Solvency ratio measures whether an insurer holds enough capital, relative to its liabilities, to meet its claims obligations. As per IRDAI, every Life Insurance company operating in India must maintain a minimum solvency ratio of 1.5. Checking this figure, alongside the claim settlement ratio, gives a fuller picture of an insurer's financial capacity to pay claims when they arise.
How can an online Insurance calculator help you decide?
An online Term Insurance calculator lets you estimate the indicative premium for different cover amounts, policy terms, and rider combinations before you approach an insurer, so you can compare a few configurations on your own before deciding what to buy. Remember that the final premium may differ from the initial estimate after the insurer assesses your age, health, lifestyle, income, and other underwriting factors.
How can you compare Term Insurance Plans online?
Once you have assessed your life cover needs, policy term, premium payment option, and additional protection requirements, you can compare Term Insurance options based on what suits your financial needs. You can explore ABSLI Term Insurance Plans to compare the available options and understand their features, benefits, premiums, and applicable terms before making a decision.
September 9, 2026
5 mins read
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