In an unpredictable world, financial security is paramount. This is where term insurance comes into play. It offers you a way to protect your loved ones financially in case of an unforeseen event. But even with the plethora of options available, choosing the best term life insurance plan for you can be a daunting task.
In this blog, we’ll walk you through the key factors to consider and provide recommendations for some of the best term insurance plans in India.
What is Term Life Insurance?
Term insurance is a straightforward form of life insurance. You pay a premium, and in return, the insurance company provides a death benefit to your beneficiaries if you pass away during the policy’s term. The primary advantage of term insurance is that it offers high coverage at an affordable premium, making it a cost-effective way to secure your family’s financial future.
Term insurance policies are generally characterized by the following features:
- Affordability: Term life insurance is generally more affordable than other types of life insurance, such as whole life or universal life insurance. This makes it a popular choice for individuals looking to secure their family’s financial future without breaking the bank.
- Death Benefit: The primary purpose of term life insurance is to provide a death benefit to the policy’s beneficiaries in the event of the insured’s death during the term. This benefit is typically paid out as a tax-free lump sum.
- Fixed Premiums: Term life insurance policies usually have fixed premiums for the duration of the term. This means your premium remains the same throughout the policy, making budgeting and financial planning easier.
- Renewable: Many term life insurance policies are renewable, which means you can extend the coverage for an additional term without the need for a medical exam or proving insurability. However, the premium may increase upon renewal.
- Convertible: Some term life insurance policies offer the option to convert the policy into a permanent life insurance policy (like whole life or universal life) without the need for a medical exam. This can be valuable if your insurance needs to change over time.
- Choice of Term Length: Term life insurance policies offer flexibility in choosing the duration of the coverage. You can select terms that align with your financial responsibilities, such as the years until your mortgage is paid off or until your children are financially independent.
- Death Benefit Payout Options: Depending on the policy, beneficiaries may have various payout options, such as receiving the death benefit as a lump sum, in periodic installments, or as a combination of both. This flexibility allows beneficiaries to tailor the benefit to their needs.
- No Cash Value: Unlike permanent life insurance policies (e.g., whole life or universal life), term life insurance has no cash value or investment component. It is purely focused on providing a death benefit.
- Temporary Coverage: Term life insurance provides temporary coverage for a specific period. If the policyholder outlives the term, the coverage expires, and no death benefit is paid. However, this helps keep premiums lower compared to permanent policies.
- Level or Decreasing Coverage: You can choose between level term insurance, where the coverage amount remains constant throughout the term, or decreasing term insurance, where the coverage amount decreases over time (often used to cover a decreasing financial obligation like a mortgage).
Best Term Life Insurance Plans in India
If you are ready to buy a term life insurance policy, then consider the following options that are considered the best term insurance options in India, as of 2023:
|Best Term Plan in India
|Maturity Age (Max)
|SBI Life eShield Next
|SBI Life Insurance
|Rs. 2000 per month
|Aditya Birla Sun Life Insurance DigiShield Plan
|Aditya Birla Sun Life Insurance
|Rs. 27 per day
|LIC Tech Term insurance Plan
|Life Insurance Corporation of India
|Rs. 3000 per year
|HDFC Life Click 2 Protect Super
|HDFC Life Insurance
|Rs. 2709 per month
|Bajaj Allianz e-Touch Online Term Plan and Health Cover
|Bajaj Allianz Life Insurance
|Rs. 20 per day
|ICICI Pru iProtect Smart Term Plan
|ICICI Prudential Life Insurance
|Rs. 540 per month
|Max Life Smart Secure Plus Plan
|Max Life Insurance
|Rs. 700 per month
|Kotak e-Term Plan
|Kotak Mahindra Life Insurance
|Rs. 19 per day
|Reliance Nippon Life Insurance Plan
|Reliance Nippon Life Insurance
|Rs. 2000 per year
|Tata AIA Sampoorna Raksha Supreme
|Tata AIA Life Insurance
|Rs. 547 per month
Key Factors to Consider When Choosing Term Insurance
Before you go about buying your term life insurance policy, make sure you are mindful of the following aspects beforehand:
- Coverage Amount: Assess your family’s financial needs, including outstanding loans, daily expenses, and future goals. Your coverage amount should be sufficient to meet these needs.
- Policy Term: Choose a term that aligns with your financial responsibilities. It’s common to select a term until your retirement age to ensure your dependents are financially secure even after you’re gone.
- Premium Affordability: Ensure that the premium fits your budget. Remember that term insurance is a long-term commitment, so pick a premium that you can comfortably pay over the years.
- Riders: Some term insurance plans offer additional riders, such as critical illness cover or accidental death benefits. Consider adding these riders if they align with your needs.
- Claim Settlement Ratio: Check the insurance company’s claim settlement ratio. A higher ratio indicates the likelihood that claims will be settled smoothly.
- Company Reputation: Research the insurer’s reputation and financial stability. It’s essential to choose a company that you can trust.
Choosing the best term insurance plan for you is a crucial step in securing your family’s financial future. Evaluate your needs, compare different policies, and consider the reputation and reliability of the insurance company. It’s important to regularly review your coverage to ensure it remains aligned with your evolving life circumstances. Ultimately, term insurance is not just about financial security; it’s about peace of mind for you and your loved ones.