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Understanding Term Life Insurance in India

Finance Life Insurance

If there is one thing that the Coronavirus has taught us this year, it is – Life is uncertain. Should something happen to the breadwinner of the family suddenly, then the financially dependent members may suffer a massive monetary crisis in their absence. This is when term life insurance comes into the picture and helps shield a family with a financial cover.

Term insurance is a type of life insurance which an individual can buy, which offers coverage for his life for a specific duration of years. If the insured person dies during the term of the plan, the sum assured is paid to the family of the deceased. This death benefit helps the family to deal with financial losses. 

How Does Term Insurance Work? 

  1. Once you decide the policy term and the coverage amount for your term insurance, a premium amount is calculated based on factors such as age, health conditions, coverage amount, term, etc. 
  2. The premium can be paid at regular intervals or in a lump sum. 
  3. Once you purchase the policy, in the unfortunate case of your untimely demise, your family shall receive the sum assured as a death benefit. 
  4. If you survive till the end of the policy term, the coverage ends, and you do not receive any payment from the insurance company. However, if there are survival benefits in your policy, then you might receive a lump sum amount at the end of the policy term. 
  5. If the policy allows, then you can renew it at the end of the term. However, in the case of renewal, the premium amount is recalculated. 

Key Features of Term Insurance 

  1. Term plans demand a low premium because the policy only covers the risk of death. 
  2. As there is no limit on the coverage, you can always opt for term insurance plans with higher coverage as per your requirements for better financial security. 
  3. The coverage period can go up to 80 years of age which allows you to enjoy coverage till you turn old. 
  4. You are not entitled to pay any surrender value. If you stop paying premiums, the policy will lapse, and you would get no benefits. 
  5. A wide array of riders are also available for term insurance plans to enhance the scope of your coverage such as accidental death rider, critical illness rider, premium waiver rider and many more. 

You may like: What are the Benefits of Term Insurance

Types of Term Insurance 

Term insurance plans come in different variants. Some of them are described below: 

  1. Level Term Plan:
    They are the simplest form of term life insurance where the sum assured is fixed, and in case of death, the sum assured is paid to the beneficiary or the nominee of the policyholder.

  2. Increasing Term Plan:
    In this plan, the chosen sum assured increases by a certain percentage every year.

  3. Decreasing Term Plan:
    It is exactly the opposite of “Increasing Term Plan” where the sum assured drops every year by a certain percentage. They are usually offered for loan redemption plans where the objective is to pay the outstanding loan balance in case of death of the policyholder.

  4. Term Insurance with a return of premium:
    In this plan, if the insurer manages to survive the term of the policy, the premiums paid are refunded as maturity benefits apart from being covered during the policy tenure. 


In today’s world, term insurance has become a necessity more than a luxury. Some of the best term insurance policies in India also offer you a life cover up to 85 years of age (which can be extended up to 100 years), flexible and low premium payment options, and large sum assured discounts and much more. You should check different term life insurance plans online, compare the quotes first on a trusted comparison portal, and then buy term life insurance that best suits your needs. 

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