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What Is 20-Year Term Life Insurance? Why You May Consider Buying One?

Financially insuring yourself against the increasing uncertainties of life is becoming one of the important aspect of financial planning. One of the affordable ways to do that is to buy term insurance. Every term life insurance policy has a specific period (or tenure) for which it provides coverage to the policyholder. Term plans are available in a variety of tenures, out of which, a 20-year period is one.

Investment plans also act as tax-planning tools, as many avenues help reduce tax liability. There are different types of investment plans, and by choosing the right one, you can invest according to your needs and grow your savings.Read Less

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 7th July 2024
Modified on: 7th July 2024
Reading Time: 15 Mins

Let’s take a deep dive into what a 20-year term life insurance policy is, its features, and more.


What does 20-year Term Life Insurance mean?


As the name suggests, a 20-year term life insurance policy is one that provides its policyholder with insurance coverage for 20 years. If during these 20 years, the policyholder was to pass away, their nominees would receive the sum assured, as specified under the policy.

A term insurance policy is a simple form of life insurance. It aims to provide the insured person with pure financial protection against risks to life. Hence, there are no components of savings or investment linked to term plans. This kind of plan is suitable for someone who is looking for a simple life cover. By opting for a 20-year term life insurance plan, you can enjoy a life coverage for two decades.

For example, 40-year-old Shilpa faced a near-death scare due to a road accident. This incident prompted her to insure her life and secure her financial dependents’ future, at least until she would be her family’s breadwinner. After consulting with an insurance advisor, she decided to go with a 20-year term insurance plan. This allowed her to get her coverage needs at affordable premiums, while opting for the suitable term until her retirement.


Features and Benefits of a 20-Year Term Life Insurance Policy


Now that you know what a 20-year term life insurance does mean, let’s take a look at its features and benefits for an even better understanding.

• Life Cover for 20 Years

Choosing a 20-year term insurance plan means you are covering your life against multiple risks as covered under the policy for a period of two decades. In this period, you have a sense of assurance that, if anything were to happen to you, the financial consequences for your family could be cushioned with the sum assured under the term plan.

• Optional Return of Premium Feature

Some people may be looking for more than a life cover with their term policy. They may want a maturity component with their term plan which can help them meet their different life goals. For this, you may opt for a return of premium option on your term plan. Along with term plans with return of premium, you can also get this feature with other plans like ULIPs, endowment plans, etc.

Opting for this feature makes you eligible to receive the sum of all the premiums paid till maturity if you outlive the policy end subject to applicable deductions. You must pay all your premiums on time during the term insurance tenure to be able to take advantage of the policy. The money received on maturity may be used to fund your children’s higher education, pay the down payment of a home loan, buy a private vehicle, travel, and so on.

• Increased Protection in the form of Riders

Suppose you were diagnosed with a critical illness, such as cancer. Even though you may get cured after extensive treatment, you may have to spend lakhs of rupees for the same. What’s more, you might lose your source of income in the interim, and dealing without regular income can be difficult.

Situations like these, can be better handled, at least in the financial sense, by opting for a rider such as critical illness cover. With a 20-year term plan too, you can opt for this rider. This rider provides a lump-sum pay-out, on payment of additional nominal premium, if the insured person were to get diagnosed with a covered critical illness. This pay-out can be used for any treatment and care costs.

Similarly, there are other riders, such as the accidental permanent disability riders, the accidental death rider, and the waiver of premium rider, amongst others. If you were wondering if the premium of 20-year term life insurance is affected when riders are added, then yes, it could increase slightly. Using a term insurance calculator can help in getting an estimate of the premium.

• Tax Benefits1

As per Section 80C of the Income Tax Act of 1961, a policyholder can claim tax deductions against the premiums they pay for the term insurance policy. Under this Section, you can get tax benefits of up to Rs. 1.5 Lakh for the premiums paid for buying the plan subject to provisions stated there in.

As a term insurance policyholder, you can claim this deduction on your annual premium payments. This makes a 20-year term insurance policy a good addition to your tax-saving plan. However, note that for you to claim this benefit, you must have opted for the old tax regime. The new tax regime, introduced in 2021, does not allow for Section 80C deductions2.


Should you Buy a 20-Year Term Life Insurance Plan?


After going through the above info, you may have an idea of what 20-year term life insurance is like, but is it suitable for you? Would it be a prudent decision for you to buy such a plan?

Some of the people who might get benefitted by purchasing a 20-year term insurance plan are:

• People with Matching Loan Tenures

Buying a term insurance plan with a tenure that corresponds to the tenure of a loan may be a wise decision.

For example, Dipesh recently took a home loan with a repayment tenure of 20 years. Since he was the main breadwinner of the family, he was solely responsible for paying off the home loan. What often worried him was what would happen to the loan repayment if he were to pass away in an untimely manner. Would his family be bereft of their precious home? He confided this worry to a friend who suggested him to opt for a term plan and explained what a 20-year term life insurance plan is.

Luckily, Mr. Dipesh found a policy for the specific tenure within his budget.

• People Who Have Just Started a Family

Some individuals may start looking for a term plan after they have children. That is quite understandable as the new responsibility of ensuring a happy financial future for one’s children often triumphs over other things. Buying a 20-year term insurance plan with Return of Premium benefit may be one of the positive steps in this direction.

By the time the plan matures, your child may be old enough to start their own financial independence journey. For instance, if you bought a 20-year term life insurance plan with return of premium option, when your child is 5 years old, the plan will go on till they are 25 years old. This means that your child has a financial security regardless of the situation for their pivotal growing-up years.


How to Select 20-Year Term Life Insurance?


Getting 20-year life insurance coverage in the suitable manner starts with choosing the right policy. Here are a few steps that may help you in the process:

1. Figure out Your Needs –

Start with understanding your coverage requirements. Do you need any riders? How much sum assured would you need? Find answers to these questions before you proceed ahead.

2. Understanding Budget Limitations -

Keeping your coverage needs in mind, arrive at a premium amount that you are sure you will be able to pay on a regular basis. If the budget is too high, consider adjusting your coverage. While securing your financial future is important, it should not come at the cost of compromising on your present needs.

3. Choose the Suitable Policy -

Once you have figured out what will work for you, go ahead and choose a policy that meets all your needs. You can either purchase it the traditional way, via a branch/agent or through an online mode.




Even though one may try their best to live a safe and secure life, an unpredictable event might topple things over quite easily. Dealing with such an event becomes a bit easier when one has a financial security. A 20-year term insurance plan may act as the required financial security, thus allowing the policyholder to have a deeper sense of reassurance about their family’s financial well-being.




1. Is the premium quoted by the term plan calculator for a 20-year term plan accurate?

The premium amount given by a term plan calculator is an estimate based on the information you enter, like age, gender, tenure, smoking habits, and so on. The actual premium for your policy can differ since it depends on other factors as well which include your medical history and occupation amongst other things.

2. What does the end of 20-year term life insurance mean for the policyholder if they outlive the policy?

If the policyholder has opted for the return of premium feature, then outliving the policy maturity could mean that they could claim the maturity benefits subject to policy terms & conditions. If it is pure term life insurance policy, then the coverage of the policy ends with no monetary benefits. The preferable step to take at this juncture would be to buy a new term insurance policy if you require one.

3. Is it better to buy term insurance online?

Buying term insurance online can help you save time to a considerable extent. However, if you do not feel comfortable with a digital approach, you can buy your term plan via the conventional way, too. What is more important is that you understand what a 20-year term life insurance does mean for you and that you select the suitable plan to secure your family’s financial future.





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~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.

The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. 

The views stated in this article is not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on carefully before concluding a sale.


*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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