Buy Best Term Insurance Plans & Policy Online In India 2024

What is term insurance?

Term insurance is a type of life insurance that offers financial protection to your loved ones by paying a specified sum assured as a death benefit in the event of the life insured's unfortunate death during the specified term of the policy. Term insurance plans act as a financial safety net for your family in times of need.

The primary purpose of term life insurance is to provide financial security to your family in your absence, to enable them to manage their expenses, repay outstanding debts, if any and meet their life goals without delay. The policyholder has to pay the specified amount as a premium for the chosen premium payment tenure to get the financial cover, which is called the sum assured in the term plan.

To understand “ What is term insurance”, let’s take the example of Mr Sunil, who is 25 years old and gets a ₹1 crore term life insurance plan for a tenure of 30 years. If he happens to die within the given policy tenure of 30 years, his nominee(s) as listed under the term plan, will receive the sum assured of ₹1 crore as a death benefit to provide financial assistance to his family in his absence.

Who Should Buy a Term Insurance Policy?

A term insurance plan may be purchased by anyone. However, it’s especially useful for certain people, such as those who are:

A . Parents

For parents, their top priority is to secure the future of their child. They work hard to ensure that their child leads a financially secure life and pursues his/her dreams. However, unpredictable events may strike at times, leaving your child deprived of the security you provide. Term insurance plan helps make sure that your children and family will have money for their needs and the support to continue living a financially secure life if something happens to you.

B. Working Women

As a working woman, you’re likely putting in your best effort to create a strong financial future for yourself. However, life is full of uncertainties and one must not overlook the future. Term insurance provides financial security for working women as well and provides much-needed support to their families in the event of their unfortunate demise. With a term plan in place, working woman can focus more on their present knowing that their family will be able to meet their living expenses without any financial strain even in their absence.

C. Newly Married Individuals

For every married individual, there is a large to-do list to tick off at the beginning of a new life together. Buying term life insurance for newly married individuals can be quite beneficial to ensure that your partner is financially protected even in your absence. Further, a term plan may also be considered important if one spouse is financially dependent on the other. The premiums for term insurance may be lower for young individuals.

D. Young Professionals

If you are just starting your career and/or have dependent members who rely on your earnings for living expenses, term insurance may be necessary for their financial protection and day-to-day expenses. It is often more affordable at a young age as younger individuals are considered relatively healthier than older individuals. Hence it is a good idea to opt for the best term insurance plan as early as you can, so that you can lock your premiums early!

E. Tax Payers

Taxpayers can benefit from term insurance plans, as these term plans offer substantial tax advantages that help reduce their taxable income while providing protection. One may claim a tax deduction of up to Rs 1.5 lakhs under Section 80C of the Income Tax Act of 1961 under the old tax regime⁵. One can also claim tax exemption under Section 10 (10D) of the Income Tax Act of 1961 on the maturity benefit payout from the return of premium term plans⁵subject to satisfaction of Section 10(10D) conditions. Plus, the death benefit is also tax-free⁶. However, the tax deductions and exemptions are subject to the satisfaction of the specified conditions mentioned therein

F. Retirees

For retirees, term insurance can still be useful if they want to leave behind a financial legacy for their spouse and children.

G. Self-Employed Individuals

For individuals running their businesses, buying term life insurance can help them to protect their business and family. If something happens to you, there is financial support to help manage your business and take care of your family's needs. Term insurance ensures any unpredictability or present instability does not affect the financial future of your family.

How Does a Term Plan Work?

Term Insurance plans pay death benefits on the death of the life insured during the specified policy term. If the insured individual dies during the policy term, the nominee(s) of the term insurance plan can file a claim with the insurer to get the sum assured as a death benefit under the term life insurance plan.

The standard term insurance policies are generally pure-protection plans with no maturity benefit. In other words, if the life insured outlives the policy term, no benefit will be payable under regular terminsurance plan at the end of the policy term, and the policy benefits will cease. However, in aTerm Plan with Return of Premium (TROP), the term plan premiums are returned as a maturity benefit on the plan's maturity.

When you purchase term insurance, whether online or offline, you will have to pay a pre-determined premium in exchange for life insurance coverage. Timely payment of the premiums keeps the policy in force and active.

Here is a simple example to understand how a term insurance policy works –

A non-smoking male, aged 30 years, buys the Bajaj Allianz eTouch II with a sum assured of ₹1 crore and the plan option of Life Shield ROP (Return of Premium). He chooses a policy term of 25 years and a premium paying term of 25 years, and he pays the premium annually. The annual premium payable would be ₹17,373 for the first year and ₹20,479 from second year onwards

Case 1 – He dies in the 20^th policy year

In this case, the nominee would receive ₹1 crore as a death benefit of the Term Insurance Plan.

Case 2 – He survives the policy tenure of 25 years, and the policy matures

In this case, the premiums paid for the Term Plan would be refunded back. He would receive a maturity benefit of ₹5,08,869^^.

What is a Term Insurance Calculator?

A term insurance calculator, also known as Term Plan Premium Calculator, is an online tool which helps you estimate how much life insurance coverage you might need (based on different inputs and variables). A term plan calculator considers several factors such as your annual income, your intended working years, the percentage of anticipated income growth, and your expenses to provide you with a rough idea of the right amount of Term Insurance Plan coverage.

The calculator simplifies the process to find the right term insurance coverage so that you are adequately insured. It helps you to find out the premiums for standard Term Plans as well as Term Plans with a Return of Premium.

So, there is no thumb-rule to opt for a Term Insurance Plan. You need to choose the Term Insurance Plan that best suits your needs.

Benefits of Buying Term Insurance

Term life insurance is a simple and easy-to-understand life insurance plan. It offers several benefits and advantages, some of which are discussed below:

Family’s Financial Security

If you are the breadwinner in your household, your family members ideally may depend on your income for their well-being. In your absence, they might face financial challenges. A term insurance plan acts as a safety net and financial reserve, ensuring that your family receives the death benefits to secure their financial future and maintain their quality of life.

Long-Term Coverage

Based on your long-term financial planning, you can select the tenure of your term insurance plan. Many insurers offer coverage under term plans for the whole life, i.e. up to age 99 or 100, depending on the type of the plan. This extended coverage helps you secure your family's financial future throughout your life.

Affordable Premiums for Adequate Life Coverage

One of the major advantages of term insurance is its affordability. Since these term plans offer only life cover for a specified tenure without any savings or investment component, you can get optimum life coverage at a lower and affordable premium cost. This helps you to ensure that your family’s needs and liabilities are catered to in your absence.

Protection Against Liabilities

Term insurance plans protect your loved ones against your outstanding loans and liabilities and ensure that they do not strain them financially in your absence. You may have different forms of loans to address your financial needs. With a term insurance plan, you get the peace of mind your family can pay out the loans and liabilities in your absence with a sufficient sum assured without creating a financial burden on them. Hence, one must consider their liabilities at the time of choosing the right sum assured for the term plan.

Tax Benefits

Purchasing term insurance comes with several tax advantages. Under Section 80C of the Income Tax Act, 1961, premiums paid for a term insurance plan are eligible for tax deductions up to a maximum of Rs 1,50,000 per annum, subject to provisions stated therein⁵. However, the tax deduction under Section 80C is applicable only under the old tax regime⁵. Additionally, under Section 10(10D) of the Income Tax Act, 1961, maturity benefits received under a return of a premium term plan are also tax-free, subject to specified terms and conditions⁵. Moreover, the death benefit received under the term policy remains exempt in the hands of the recipient⁶.

Survival Benefits

While standard term plans do not offer survival benefits at the end of the policy term, Term insurance Return of Premium (TROP) plans do. With a Term Plan with a Return of Premium, if the life insured outlives the term policy, the total premiums paid for the term plan are returned as survival or maturity benefit to the insured when the term insurance plan matures. This gives you savings for your financial goals.

Enhanced Benefits with Add-On Riders

Term life insurance plans often come with optional riders which provide enhanced coverage and additional benefits for a nominal additional premium. You can choose optional riders such as accidental death benefit riders, critical illness riders, waiver of premium riders, accidental permanent total/partial disability riders, and family income riders based on your insurance needs and get additional protection from the policy.

In order to opt for the best term insurance plan according to your needs, you can choose a comprehensive term insurance plan and then customize the same with riders to suit your requirements!

How does a term plan secure the financial future of your family?

Term insurance is a protection-oriented life insurance policy. A term plan is meant to cover the risk of premature demise and pays a financial benefit which can help the family face the financial loss suffered in the absence of the breadwinner. Moreover, term insurance can secure the family’s financial future in different ways. Here’s a look at some of them –

Taking care of the family’s lifestyle needs

If the sole breadwinner of the family passes away prematurely, the family will suffer a financial strain. The death benefit from a term insurance policy can alleviate this financial strain. The term plan can give the family funds to meet their lifestyle needs even when the breadwinner is not around.

Paying off liabilities

Term insurance can act as a shield against outstanding debts. If the borrower passes away, the death benefit from the term insurance plan can be used to clear off the outstanding debts. This would prevent the debts from falling on the family’s shoulders and become a burden for them.

Meeting financial goals

A family has different types of financial goals for which the breadwinner earns and saves. In the absence of the breadwinner, these goals might remain unfulfilled. However, with a term insurance plan, the family can fulfil its goals even without the breadwinner. Whether it is buying a home or a car or meeting the educational expenses of the children, a term policy can help the family meet its goals with the benefits that it provides.

Provides financial back-up to the spouse

The term life insurance can also provide financial security to the spouse, especially if the spouse is a non-earning member. The spouse can use the death benefit received from the term plan to meet their and their family’s financial needs.

How long should the term insurance policy period be?

When it comes to choosing the term insurance policy tenure, you need to assess your financial needs and requirements. The term insurance policy term should be optimal enough to cover you till the age you have financial responsibilities. Once your responsibilities are taken care of, you might not need the term plan coverage since your family’s financial requirements have already been met.

For instance, if, after retirement, you don’t have any financial goals and you created a retirement fund to meet your expenses, you might not need the term plan coverage. In this case, your policy tenure should cover you till the age you retire.

On the other hand, if you want to provide financial security to your spouse in your golden years, too, a whole-life coverage would be suitable. So, choose a term which suits your financial needs.

What Are the Factors That Can Affect Term Insurance Premiums?

Several factors can influence the premium that you pay for your term life insurance policy, including the following:

Age

The immune system may weaken as a person ages, and their health conditions may decline, increasing the risk of illnesses such as diabetes, heart disease and high blood pressure. This increases their mortality risk, leading to higher premiums for older individuals. Younger individuals benefit from lower premiums in their term insurance plans as they are less likely to raise a claim.

So, in order to avail the best term plan for the protection of your family, you should opt for the same as early as possible so that you can get a higher coverage with comparatively lower premiums!

Gender

Women may tend to live longer than men². Women have a longer life expectancy, leading to lower mortality risk and, thus, lower premiums. Hence, female policyholders buying online term plans or offline may incur a lower premium than male policyholders.

Smoking and Alcohol Consumption

Smoking has been linked to the cause of various health diseases, including oral and lung cancer³. Heavy alcohol consumption can also lead to harmful effects on the liver, the kidney, the digestive system, and even the brain⁴. Hence, smoking or drinking alcohol regularly may increase your mortality risk thereby increasing your term life insurance premiums.

Medical History

The medical history may be an indicator of future ailments and the mortality risk involved. Your medical history and that of your close family members can impact the premiums of your term insurance plan. A history of serious health conditions or genetic predispositions to illnesses may lead to higher premiums.

Current Health Conditions

In addition to medical history, the current health condition also impacts the premium. If you have existing health conditions, the premium for the term plan may be higher.

Occupation

Term life insurance premiums are higher for individuals involved in risky occupations such as jobs in hazardous environments like chemical plants or oil refineries or in professions such as pilots, stuntmen, firefighters, and so on. These occupations involve a higher risk of accidental death.

Policy Term

The tenure of your term insurance plan can also impact the premium. Longer coverage periods usually attract higher premiums for an extended coverage period. Shorter policy terms typically cost less.

Since everyone intends to opt for the best Term Life Insurance Plan for their family, it is a good idea to know the factors that affect the premiums, so that it is easier to choose the coverage amount based on the affordability!

Importance of sum assured when it comes to term insurance

A term insurance policy acts as a financial safety net against the risk of premature demise. The term insurance plan is aimed to provide financial security to your family in your absence. This financial security is possible if your term insurance coverage is optimal. In other words, an optimal sum assured is important in a term insurance plan so that the plan can compensate your family for their financial needs.

Term insurance policies usually do not restrict the choice of sum assured. You can choose a suitable sum assured based on your financial needs and goals. There are various ways to choose the right sum assured in your term insurance plan. Some of these ways are as follows¹ –

A. The basic rule of thumb:

This is a very simple method of calculating the right term insurance coverage. The rule states that your term insurance sum assured should be at least 10 to 12 times of your annual income.

B. Financial needs analysis

This is a subjective way of identifying your term insurance needs. In this method, you have to analyze your assets, liabilities, expenses, income, financial goals and needs and then find the sum assured to fulfill all your needs.

C. Human Life Value (HLV)

This method aims to quantify the value of human life in absolute terms. Here, the financial value of human life is estimated, and the sum assured is equal to the estimated value. Here’s how this method works –

Suppose you contribute ₹50,000 every month to your family for their financial needs. This means an annual contribution of ₹6 lakhs. In your absence, your family would lose ₹6 lakhs every year. So, the sum assured should be such that it would contribute ₹6 lakhs to your family in your absence.

If you invest ₹1 crore and the risk-free rate of return is 6%, you will get an annual return of ₹6 lakhs. So, a term insurance sum assured of ₹1 crore would be optimal, which, when invested at 6% p.a., would yield ₹6 lakhs for your family’s financial needs.

D. Underwriter’s thumb rule

This method also helps determine the term insurance sum assured. Under this method, the sum assured is calculated as a multiple of your annual income. However, the multiple depends on your age. The number is high when you are young and keeps decreasing as you age.

You can use any of these methods to find the ideal term insurance coverage. Alternatively, you can use the term insurance calculator, which helps you find the right sum assured based on your financial details. Just enter your income, expenses, assets, liabilities, goals, etc., into the calculator, and you will be able to find the right sum assured for your term insurance plan.

What is the preferred time to buy a term insurance plan?

There is no specified time which can be called a preferred time to buy term insurance. However, it is better that you buy term insurance as soon as possible. There are three main reasons behind this –

Lower premiums

When you buy term insurance at a younger age, the premiums are low. Moreover, since the term insurance premiums do not increase over the policy tenure, you can lock in lower premiums when you buy the term insurance plan at a younger age.

Early coverage

When you buy a term plan early, you can get covered against the risk of premature demise from a younger age. Death is uncertain, and while you might have good health, any accident or infection can cause unforeseen eventuality. So, it's better to be prepared against contingencies, and a term insurance plan can help you do just that.

Wider coverage

When you are young, you might be free from health-related complications. As such, you can enjoy a wider and more comprehensive scope of coverage under the term insurance plan. As you age and medical complications set in, the term insurance plan can restrict the coverage. So, it's better to buy the term plan at a young age for all-round protection.

Given these reasons, a delay is not recommended when buying term life insurance. It is better to buy the term policy early on and get financially secured against unforeseen eventualities.

Documents required to buy term insurance

When buying a term insurance plan, you have to submit some documents. While the exact list of documents depends on the term insurance plan that you have chosen, some of the common documents for term insurance are as follows –

Identity proof, such as Aadhaar card, PAN card, voter’s ID card, passport, driving licence, etc.
Address proof – like an Aadhaar card, Voter’s ID card, passport, driving licence, rent agreement, utility bills, property deed, etc.
Age proof, such as birth certificate, Aadhaar card, PAN card, voter’s ID card, passport, etc.
Income proof – like past income tax returns, bank statements, financial statements of your business like balance sheet, profit and loss account, etc.
Medical reports if a medical check-up has been conducted
Any other document that the insurance company might need to issue the term insurance plan

You have to submit copies of these documents so that the insurance company can underwrite your term insurance proposal and issue the term policy.

Term insurance claim settlement process

A term insurance policy usually pays a death claim, i.e., a claim raised when the life assured passes away during the policy term. The claim process of the term insurance policy can be divided into three simple steps –

Claim Reporting

Under this step, the nominee has to report the claim to the insurance company. To do so, a claim form should be filled out and submitted. The nominee can fill out and submit the claim form online with Bajaj Allianz Life Insurance. The form can either be generated online through https://www.bajajallianzlife.com/life-insurance-claim-assistance.html or downloaded and filled.

Once the claim form is filled, it should be submitted with the relevant documents. The documents include the following –

Original policy documents
Attested copy of the death certificate issued by the municipal authority
Death claim intimation form
NEFT mandate form attested by bank authorities or a copy of a canceled cheque or bank passbook
Identity and address proof of the nominee

In case of an accidental death, the following additional documents would also be needed –

Police FIR, panchnama, or complaint
Post mortem report
Final investigation report, if any

In case of medical or natural death, the following additional documents would also be needed –

Copy of all medical records like test reports, discharge or death summary, etc.
Employer’s certificate, if applicable
Attending physician’s statement, if applicable

The claim form and the attached documents should be submitted online or to the nearest branch of Bajaj Allianz Life for claim processing.

Claim Processing

The next step in a term insurance claim is processing. In this step, the insurance company assesses the submitted documents and verifies them. If there are any missing documents, you will be alerted about them through SMS, emails and notifications. You will also get regular updates on your claim processing status.

Claim Settlement

The last step is claim settlement, wherein the term insurance benefit is paid. The company tries to settle your term insurance claim as soon as possible so that your family gets the financial assistance they need in times of emergencies.

Common term insurance terminologies

A term insurance policy can have some terms which might prove difficult for an average policyholder to understand. Understanding the different term insurance terminologies is important so that you can understand the term plan better. So, let’s have a look at some of the common term insurance terms –

Term	Meaning
Coverage	Coverage means the events that the term insurance plan covers. Usually, term insurance covers the risk of premature demise, i.e., the risk of the life assured dying during the chosen policy term. Moreover, under some term life insurance plans, there might be a refund of premium on maturity. So, coverage means the events in which the term insurance policy will pay a benefit.
Sum assured	Sum assured is the level of coverage under the term insurance policy. It is the benefit which is usually paid on the death of the life assured. You have the freedom to choose the sum assured under your term insurance policy basis your coverage needs.
Premium	Premium is the amount that you pay to the life insurance company to get the coverage. It is the cost of insuring your life against the risk of a premature demise.
Policy term	Policy term is the period for which term insurance provides coverage. It is the period over which the risk of premature demise is covered. If the life assured passes away during this period, the term insurance policy will pay the death benefit. However, if the term expires, the coverage stops. The term under term insurance can start from 5 years and can go up to your whole life, i.e., 99 or 100 years of age.
Premium paying term	Premium paying term is the period for which you are required to pay the premium under the term insurance policy. Many plans offer you a choice of the premium payment terms. You can choose – Single premium – pay a premium in one lump sum Limited premium – pay premium for a limited period Regular premium – pay premium throughout the policy term
Premium payment frequency	Premium payment frequency is the mode of paying the premium, i.e., annually, half-yearly, quarterly or monthly.
Nominee	A nominee is an individual whom you appoint to receive the death benefit from the term insurance policy after your demise.
Return of premium (ROP)	Term insurance doesn’t usually have a maturity benefit. This means that if the term expires and the life assured survives the tenure, no benefit is paid. However, if you have chosen the return of premium option, the premiums paid under the term life insurance policy would be refunded back on maturity.
Free-look period	The free-look period, also called the cooling-off period, is the time provided after the policy is issued to cancel the coverage if you have second thoughts. You can cancel the term insurance policy during this period and get a refund of your premium after deducting the applicable charges.
Grace period	Grace period is the additional time allowed to pay the outstanding premium after the premium payment due date. During the grace period, the term insurance coverage does not stop. You also don’t incur any additional interest on the outstanding premium. You can pay the outstanding premium and continue the coverage non-stop
Surrender value	If you surrender and exit the term insurance policy before the term expires, you will receive the surrender value if the policy has acquired it
Riders	Riders have additional coverage benefits available with term life insurance policies. Some riders might come inbuilt into the term insurance coverage, while others might be available on an optional basis. Riders enhance the term insurance coverage and are available at an additional premium if you add it to the policy
Life assured	The individual whose life is insured under the term insurance plan is called the life assured. The policy pays the death benefit if the life assured passes away
Claim Settlement Ratio (CSR)	The ratio measures the percentage of claims paid by the insurance company against the total claims raised on it. The higher the CSR, the better it is
Death benefit	The benefit paid on the life assured’s death is called the death benefit
Maturity benefit	The benefit when the term expires, and the life assured survives the chosen policy tenure is called the maturity benefit

Key takeaways

A term insurance policy is a protection-oriented life insurance policy which aims to provide financial security if the life assured passes away.
A term insurance policy is suitable for every individual looking to provide financial security to his family and get peace of mind.
A term plan pays a death benefit if the life assured passes away during the policy tenure. Usually, there’s no maturity benefit. However, under the return of premium plans, the premiums paid are refunded on maturity.
There are four types of term plans – standard or level term plans, return of premium term plans, increasing term plans and decreasing term plans ⁷ .
Riders are optional coverage benefits which are available as optional features with term plans. You can pay an additional premium and add suitable riders for enhanced protection.
Choose a suitable sum assured which covers your and your family’s financial needs.
Choose a suitable policy tenure to enjoy the maximum possible coverage.
Term insurance plans can offer the death benefit in a lump sum, instalment or a combination of both.
You can buy a term insurance plan online as well as offline.
To make a claim, inform the insurance company, fill and submit a claim form and attach the relevant documents.