What is term insurance?

You can buy a term insurance plan anytime between 18 years to 65 years of age. As one’s age increases, the premium for the policy increases too. Hence, it is better to start early and in good health.

Buying a term insurance plan is very easy. You can buy it online or offline. If you wish to buy term insurance online:

•    Go to the website of your chosen insurance provider. Select the plan that meet your requirements.
•    Fill up personal details such as name, gender, date of birth, policy term, smoking habit, city of residence, sum assured, mobile number, email id, etc
•    The insurer would generate a quote based on the details which will let you know about the monthly/annual premium to be paid to get the term cover
•    If you are satisfied with the quote, you would need to provide additional details such as nominee’s name, health and employment details, among others
•    Make payment online through any of the digital payment modes
•    Upload scanned copy of KYC documents and others as required
•    The soft copy of the insurance policy will be mailed to your registered email id

In case you get stuck, you can call the customer care who will provide the necessary assistance. Also, most insurers have chatbots on their website to guide you with the entire process.

On the other hand, if you wish to buy term insurance offline, you can do so from an insurance advisor. Fill up the proposal form and submit the relevant documents. Whether you buy term insurance online or offline, make sure to provide accurate details, particularly related to your health. Hiding information may lead to a claim rejection.

Also, before policy issuance, you may need to undergo a medical examination. Insurers do so for better risk assessment. Make sure not to skip it as it may reveal conditions that you aren’t aware of.

Yes, the premiums paid for the term plan as well as the pay-out received offer tax benefits. The premium that you pay for any life cover policy is eligible for deduction under section 80C of the Income Tax Act, 1961 up to a maximum of Rs 1,50,000. Moreover, the claim amount received from the life insurance policy (in the event of death) is exempted from the income tax under section 10(10D) of the Income Tax Act, 1961.¹

¹Tax benefits are subjected to changes in tax laws. You are advised to consult your tax advisor for the same

The term plans do not expire till the end of the policy term or if the claim is received, whichever comes earlier. However, to keep the existing policy in force, one must continue to pay premiums regularly.

Premium for a term plan depends on multiple factors including your age, gender, occupation and lifestyle habits, among others. Note that premium increases with age, and therefore it’s advisable to buy a term policy when you are young and healthy. Online term insurance calculators are available which help you compute the applicable premium.

The coverage that you get from the company may not be enough to meet the financial needs of the entire family in your absence. Also, one loses the life coverage in case of a job change or job loss. Calculate the ideal cover and then take additional cover to financially secure your loved ones.

For example, if the cover provided by your employer is Rs 10 Lakh, that may not be enough to keep your family secure for even a year. Hence, you may need to buy 75-80 % of your life insurance coverage personally through a term plan and ensure you & your family are covered under all conditions.

Talk to your parents and partner about the term insurance plan you have taken and how it benefits them. More importantly, describe the claim settlement process and how they must file the term plan claim when the time comes. One of your family members would have to intimate the insurance company about your death through a sales officer by providing them with a written intimation & a copy of the death certificate issued by the concerned government organisation. Keep the insurance documents in a safe place that these family members can access when needed.

The policy term offered by most of the term insurance plans ranges between 10 to 55 years. One must opt for the term of a policy according to his/her retirement age. The retirement age would differ from person to person basis the occupation. If a person purchases term insurance plan till age 60 years, then by that age most of his/her liabilities & responsibilities are cleared. You need term insurance to secure your family's lifestyle, until your dependents become financially independent. That means in your absence, they are still able to afford the rent, school / college fees, pay off the loans, and live a comfortable life.