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What is a Term Insurance Plan?

What is a Term Insurance Plan?

A term insurance plan is a pure protection life insurance plan. A pure term insurance plan provides a large sum of money to your nominees in case of your demise within the policy term. The financial benefit from the policy is the death benefit, which you can select at the time of buying the policy as the sum assured. In the event of an unfortunate death, the term life insurance cover will provide a large sum of money to the beneficiaries so that they can:

a) Look after their regular monthly living expenses.

b) Pay off any financial liabilities like a car loan or housing loan you had.

c) Invest money towards achieving important life goals like children’s education and marriage, a retirement fund for their spouse.

For example, you are 30 years old, a non-smoker male and want to buy a Rs 2 crore term life cover for your family. The cover should protect them for the next 30 years until your retirement. You will need to pay about Rs 2000 per month as a premium under the regular premium payment option.

You can also choose shorter premium payment tenures such as single premium, 5, 10 or 15 years, etc.

Read more about term insurance plan

What are the benefits of term insurance

Our Recommended Term Insurance Plans

Canara HSBC Life insurance offers online term insurance plans which helps to secure your family financially in your absence.

Types of Term Insurance Plans in India

There are different types of term insurance plans that you can consider buying. Here’s a list of term insurance plans to choose from that may help you to secure the dreams and aspirations of your loved ones. A term insurance policy allows you to choose any of the following term insurance cover options:

Standard Term Insurance Plan

A standard term insurance plan is where you pay a fixed sum regularly for a specific amount of life cover until your retirement age. A standard term plan is also called a level term plan because the sum assured and policy premiums do not change throughout the tenure of the policy.

For example, if you buy a Rs. 1 crore term insurance plan for 30 years at the age of 30, you may need to pay about Rs. 10,000 per year as premium. You will pay the same premium regularly for the next 30 years and your cover amount will also remain the same throughout the term insurance policy tenure. Once you complete the 30-year tenure the term insurance plan will simply expire.



Term Insurance with Return of Premium

This term insurance policy is the same as the standard term insurance plan, except that it returns all your premiums at expiry. Thus, whatever premiums you have paid through the tenure of the cover, the insurer will return it to you upon expiry.

For example, you have a 30-year smart term plan with a cover of Rs. 1 Crore that offers return of premium option. You will pay an annual premium of Rs. 20,000 for the next 30 years for the cover.

If you are 30 years old right now, by the time you touch 59 you would have paid Rs. 6 lakhs as premiums for the cover. If you survive till retirement, which is at 60, the term insurance plan will expire and the insurer will return Rs. 6 lakhs to you.

Read more about a term insurance plan with return of premium.

Whole Life Term Insurance

Whole life term plan allows you to use your term cover as a tool of wealth transfer to the next generation. The unique feature of the whole life plan is that the cover continues till the age of 99. Thus, benefit payout from this term life insurance plan is almost certain.

For example, you purchase a Rs 1 crore term insurance plan under whole life and choose to pay till 60. The term insurance plan will cover your family in case of your early demise during your working years, like the standard term insurance plan. After retirement, the plan will pay the benefit even in case of natural death. However, if you survive the term of the policy; i.e., you attain the age of 99, the policy pays the entire sum assured to you.

Read more about whole life term insurance plan.

Increasing Term Insurance Plan

An increasing term life insurance plan is similar to the standard term plan with one unique difference. The sum assured keeps growing every year by a fixed percentage of the base sum assured.

For example, assume that you buy an increasing term cover with Rs. 1 crore base sum assured. The life cover will grow at a rate of 5% per year. In the second year, your total life cover will be Rs. 1.05 crore, in the third it will be Rs. 1.1 crore and so on.

The growth only stops in the following three cases:

  • The term insurance plan expires, that is the policy tenure is over
  • A claim is made on the policy.
  • The total available sum assured becomes 200% of the base sum assured; i.e. the cover started with Rs. 1 crore and is now Rs. 2 crores.

This type of term insurance plan is very useful if you want your term insurance cover to keep up with the growth in your financial needs.

Decreasing Term Insurance Plan

Decreasing term plan is a term insurance where the life cover and sum assured continue to decrease over time. Such term insurance plans are usually linked to a long-term loan and protect the borrower’s family from the borrower’s early death. When linked to a loan scheme the tenure of this term insurance plan is also limited to the tenure of the loan. The sum assured declines as per the balance principal amount of the loan.

Joint Life Term Insurance Plan

This term insurance plan allows you to add your spouse under the same cover. This addition is also applicable to a homemaker spouse.

The biggest advantage of buying the best term plan – jointly, is that the surviving spouse may not need to pay the premiums to continue their life cover after a claim. If you are looking for a smart term plan that covers you and your partner, then iSelect Smart360 Term Plan is your go-to option as it allows you to add your spouse to the same policy. Another aspect is that you can manage a single policy far easily. You can select any of these plan options while searching for the best term insurance plan.

Convertible Term Insurance Plan

Convertible term plans are those term insurance plans which you can convert to another life insurance plan after buying it. Usually, you can convert this term plan to whole life or guaranteed savings plan. The conversion window could be limited to the first few years of purchase.

For example, you bought term insurance of Rs 50 lakhs at the age of 25. Before reaching 30 you decide that you can use whole life insurance as it has added benefits. When you convert the plan the premium and sum assured are adjusted to suit your need.

Group Term Insurance Plan

Group term insurance plans are those term plans which can only be availed for covering several people with homogeneous risk. For example, employees working in an organization, borrowers of a lending company, etc. Group term insurance is a popular employee benefits scheme for employers in India.

Know more about group term insurance plans.

Why Choose our iSelect Smart360 Term Plan?

iSelect Smart360 Term Plan is an online term insurance plan that provides enhanced protection options to secure your life goals. The term plan would pay a lump payment or a recurring income. It also provides additional coverage options so that you never have to worry about meeting the needs of your loved ones. This is a Non-Linked, Non-Participating, Individual, Pure Risk Premium, Life Insurance Plan that is an all-in-one policy allowing you to customise your coverage to meet your specific needs while also guaranteeing that your loved ones' dreams are not jeopardised.

1
Block your Premium

Policyholder can block the premium at inception for first 5 years. During this period the Life Assured or their spouse has the option to increase the Base Sum Assured on Initial Sum Assured without any additional underwriting.

2
Steady Income Benefit

You can avail steady income benefit on attainment of 60 years under Life Secure with Income option. A monthly survival income equal to 0.1% of Sum Assured at inception will be payable from the time of attaining 60 years of age till the earlier of death or end of Policy Term.

3
Critical Illness Cover

Option to augment cover with accelerated Terminal Illness or additional Critical Illness cover. 40 Critical Illnesses (CI) are covered in iSelect Smart360 Term Plan. CI benefit amount is payable only once during the Policy Term for Life Assured/Working Spouse (as applicable).

4
Special Exit Value

Get return of total premiums paid on voluntary exit with Special Exit Value. The Policyholder shall be returned the Total Premiums Paid, excluding the underwriting extra premiums and premiums paid for the Optional In-Built Covers (if any), if the Policyholder surrenders their Policy.

5
Increasing Cover

iSelect Smart360 Term Plan offers full flexibility on your premium and coverage. As you age, so do your responsibilities. You need more facilities and coverage that takes care of illnesses or accidents that come with aging.

6
Tax Benefits

Term insurance plans work in two ways. On one side, a smart term plan gives you tax benefits under section 80C and 80D, and on the other hand, term life insurance policies give lifetime security even after your death.

Features of a Term Insurance Plan

The best term policy helps you with plan for a better financial safety, and ease. Listed below are a few key features of a term insurance plan:

Affordability The premium cost of term insurance cover is quite affordable
Long Policy Term You buy a term cover at the age of 18 and continue the cover for up to 99 years of age
Easy Purchase You can buy a term plan both offline through an agency or online. Online purchase is usually paperless
Flexible-Premium Payment Options You can pay term insurance premiums with a single instalment, within a few years, i.e., 5, 10, 15, etc. or pay throughout the policy term. Long term policies allow the pay-till 60 option.
Add-on Covers You can add multiple added insurance covers and benefits to the policy. Such as accidental death and disability cover, critical illness cover, child support benefit, etc.
Benefit Payment Modes The best term insurance plans offer death benefit payments as:

- Lump-sum
- Regular monthly income
- Lump-sum + Regular Monthly Income
Premium Block Option Online term insurance like iSelect Smart360 Term Plan offers you the option to block your premium for the first 5 years. Within this period you can increase your sum assured for:

- Marriage
- Childbirth
- Home purchase
Retirement Income Support iSelect Smart360 Term Plan also provides an option to receive the sum assured as a regular monthly income after the age of 60. Thus, helping you into your retirement life.

Benefits of Buying a Term Insurance Plan

Be protected by buying the best term insurance plan to cover you and your family members. It is never too late to cushion your financial interests with a term insurance plan.

Financial Protection

Term Insurance provides can help your loved ones stay financially secured in case of your untimely death. Your dependants will find it beneficial as the death benefit received by them can be used to bridge the gap in the expenses.

Protection against Critical Illnesses

Term life insurance plan offers additional payouts in case of critical illness like kidney failure, heart attack, cancer, etc. Term life insurance policies offer different riders that you can add to your plan as per your financial requirements and goals. Before buying the best term insurance policy, check whether the plan offers protection against terminal or critical illnesses.

High Coverage at Affordable Premiums

In case of your early demise, your family will need a sum equal to 10 to 15 times your annual income to maintain their lifestyle and meet their financial goals. With a term life insurance you can have this kind of life cover at nominal prices. Term insurance policies are known for affordable premiums. However, start early to pay less premium.

Financial Support for Disability

You can add accidental total and permanent disability cover to your term life insurance. This add-on cover helps you financially if you sustain a life-long disability due to an accident. It may also offer a premium waiver for the base life cover option. So that your life cover remains unaffected even if disability hurts your prospects of earning.

Survival Benefit

Term insurance plans with a return of premium option or a term plan with a regular income option after 60 offers a survival benefit to you. Under the return of premium option, you will receive the entire amount paid as premium for the policy at the expiry of the policy if you survive. Term plans with a regular income after 60 start paying the sum assured as a regular monthly income if you survive till 60 years of age.

Tax Advantages

Under section 80D and 80C, a term insurance plan provides tax benefits and additional tax savings. Under Section 10(10D) any sum received at maturity of a Life Insurance Policy, is exempted from tax. This exemption however, is not applicable to: the amount received Section 80DDA(3) or 80DD(3), maturity benefits received under a Keyman Insurance Policy, sum received under any insurance policy issued on or after April 1, 2003, during the term in which, premium paid is more than 20% of the sum assured.

Who should Buy a Term Insurance Plan?

A term insurance plan is one of the essential financial tools in your life. You must buy term life insurance coverage if you have dependents or relatives who would suffer financially who are dependent on you financially.

Parents

Parents bear the responsibility of providing for children until they grow and start earning by themselves. Loss of the earning parent early in life can be devastating for a child’s future. Thus, parents with minor children must have a term life insurance cover.

An adequate term insurance policy will protect children’s future and help them meet their education and other important financial goals.

Newly-Married Couple

Apart from the union of emotions, love and lifestyle, marriage is also a merger of responsibilities. Term insurance coverage is one investment towards this common responsibility as the couple builds their lives around each other.

Buying term plans prepares you for the future. iSelect Smart360 Term Plan allows you to block your premium for the first 5 years. You can increase the sum assured within this period for life goals such as childbirth and home purchase.

Working Women

When you are working and contributing financially it only elevates your status as a caretaker. However, financial support is not just about looking after the current and future financial needs of yourself and your family. It also means that you are a protecting umbrella for their future. Preserve your role as a financial contributor to your family’s wellbeing with a term life insurance plan.

Young Professionals

When you are young and have just started your career making good financial decisions means you can achieve your financial goals early and easily. Young professionals should buy term insurance at this age not only supports your parent’s survival and wellbeing, but it also means that – 1. You will have a term life cover at a much cheaper rate, and 2. You are better prepared for future responsibilities which will eventually arrive.

Self Employed

As a self-employed individual, you are independent with your financial matters and probably enjoy the freedom. However, you also need to protect your family from your business liabilities and ensure their well-being in your absence. A term life insurance plan helps you provide a large umbrella for your family. Adequate term cover will help your family retain control of the business even if something happens to you.

Taxpayers

Along with getting a life cover, taxpayers can gain the benefit of saving tax with a term insurance plan. The premium you pay for the term insurance cover is eligible for deduction under Section 80C of the Income Tax Act, 1961. Thus, term insurance can also help you get tax benefits up to Rs. 1.5 Lakhs on the premiums you pay every year.

Why should you Buy a Term Insurance Policy?

Looking to Buy a Term Insurance Plan?

Pros and Cons of Buying a Term Insurance Plan

It is important that you weigh the pros and cons of buying the best term insurance plan. Understanding the advantages and disadvantages of a term life insurance plan help you make an informed decision.

Pros of a Term Insurance Plan Cons of a Term Insurance Plan
It is one of the simplest forms of life insurance policy. So, you can easily understand the functioning of a term insurance plan. No maturity benefit is available in a term policy. The nominee will receive death benefits when the policyholder passes away.
Premiums of term life insurance plans are generally affordable. It is a budget-friendly financial instrument that is a “must-add” in your financial plan. As you age, the premiums of the term life insurance policy also increases. Because you are more susceptible to lifestyle diseases.
As you age, the premiums of the term life insurance policy also increases. Because you are more susceptible to lifestyle diseases. under Section 80C. The death benefit received by the nominee in a term plan is also tax-free under Section 80D. If the policyholder outlives the policy term, then no maturity benefit is offered to them. However, if opted for Return of Premium, the policyholder can get all the premiums back.
You can increase the Sum Assured as per your changing lifestyle and milestones. Term life insurance application can be rejected by the insurer if the policyholder has a significant health issue while applying for the term plan.

When is the Right Time to Buy a Term Insurance Policy?

The right time to buy a term insurance policy is the moment you receive your first paycheque. Buying a term life insurance early gives you a cost advantage. With term plans like iSelect Smart360 Term Plan, you can continue to increase your term cover as your life progresses. iSelect Smart360 Term Plan insurance policy allows you to increase your sum assured upon marriage, childbirth and your first house purchase.

You can increase your term cover without having to buy a new term plan and keep the safety umbrella growing with your family’s safety needs.

The premium cost for a male, non-smoking proposer under iSelect Smart360 Term Plan is given below, for a Rs 1 crore term cover of 30 years with regular premium payment mode:

Age in Years Monthly Premium Amount
25 Rs 712
30 Rs 915
40 Rs 1857
50 Rs 4254
60 Rs 10,921

As you can see the best age to buy a term life cover is 25. However, if you are yet to buy the term cover, now is the second-best option.

How much Term Insurance Cover do you Need?

Insurance experts recommend buying term insurance plans covering 15-20 times of your total annual income. For example, if your yearly salary is Rs. 8 lakh, term insurance plan must include a minimum Rs. 1 crore life insurance. Buy a term insurance plan while considering these factors while calculating term insurance plan coverage you need. Human Life Value or HLV is a scientific method to calculate your life insurance need. You can use an HLV calculator to estimate your HLV based on your family’s financial goals and household expenses. This is called Need-Based-HLV. Your life cover should be equal to or higher than your Need-Based-HLV.

Age

Individuals in the younger age bracket can generally pay the premium for a long time with less chances of illness in order to keep the premium rate low. While those in the older age bracket are more susceptible to diseases but a lesser capacity to pay and thus they have to pay higher premiums. Buy a smart term plan that offers appropriate riders to enhance your current plan.

Current Cost of Family

Each family has its lifestyle and expenses. The amount needed to cover those regular expenses will vary from family to family. You don't want your family's lifestyle to suffer if something happens to you. Hence, you must consider the current cost of the family to make sure you buy a term insurance plan with the right sum assured.

Education

Your child’s future depends on the way you have planned and saved for it. The best term insurance plan allows you to protect your child’s future even if you are not around. You don't want your children's education to be interrupted due to financial problems. Calculate sum assured that covers children's education and buy the right term insurance plan.

Wedding

Financial issues may impact the way you have dreamt of your child’s marriage. If you are concerned about your children's wedding and want them to have it the best - no matter whether you are there or not - must consider it while calculating sum assured. The best term life insurance plan helps you to at your every life stage – no matter what.

Premium

At last, you should calculate your ability to pay the premium. Premium amount must be more comfortable to pay so that you won't think of not continuing with your term policy. Also, ensure to choose the right premium payment mode as per your finances. A term insurance plan offers multiple premium payment options that you can choose from

What should be the Duration of your Term Insurance Plan?

The term of the policy is the time period for which financial protection will be available to your family in case of an unfortunate event. Therefore, the duration of your term insurance plan should depend upon the time when you see yourself fulfilling all your financial goals. It is not necessary to opt for the maximum duration available. Besides, here are the following factors that you need to consider while deciding on the duration of a term insurance policy

a) Your Financial Liabilities

Your financial liabilities will help you decide the term of the policy. For instance, if an individual has a loan of 10 years, then the duration of the term insurance policy needs to be 10 years.

b) Dependents in your Family

Considering how long your loved ones will be financially dependent on you will help you decide the term of your policy. Term life insurance policies help your dependants pay for their lifestyle expenses in your absence. For instance, if you are the sole breadwinner of the family, then buying a term policy for long duration would be helpful.

c) Large One-Time Expense

It is the maximum one-time expense that can arise in future. Your family’s financial status also plays an important role in deciding the term of the policy. For example, if your child’s age is 10 years and you buy a term insurance to provide coverage till your child’s marriage or higher education, then the duration of your term insurance policy could be 20-25 years.

d) Your Age

For instance, your current age is 30 years and you opt for a 10-year plan, your term insurance plan will expire when you will turn 40. There are less chances that you will need coverage before this age. Moreover, if you even consider buying a term plan at this point of time, then it will cost you a lot. Therefore, it is advisable to buy the best term insurance plan at a younger age but for a longer duration.

How to Buy a Term Insurance Plan Online?

Buying an online term plan is now just a click away. It is an easy, simple and hassle-free process. Moreover, it hardly takes 30 seconds to complete the whole process. Here’s a step-by-step guide that will help you buy term insurance plan online:

  • 1Log on to the insurance company’s website. www.canarahsbclife.com
  • 2Click on Life Insurance Plans and select ‘iSelect Smart360 Term Plan’ present under the Buy Now category.
  • 3Fill in few details such as your name, gender, date of birth, email, mobile number, etc.
  • 4Choose policy term & filter sum assured
  • 5Now, select your premium payment option like monthly, quarterly or annually depending on your needs
  • 6Once you have filled in all the information, you will be redirected to the new page where you need to provide few more details like country, pin code, state of residence, educational qualification, your annual income, occupation type, etc.
  • 7Choose from the plan options which includes life, life with return premium, life plus. You can also choose your coverage options or any in-built optional cover like accidental death, accidental death & permanent disability
  • 8You will now see the premium amount basis your information. After filling all mandatory details and getting the premium amount, you can now click on ‘proceed’ button
  • 9This will take you to the payment section. Once the transaction is successfully done, the insurance company will verify all the details provided by you and will send you a soft copy of the policy via email if your term insurance policy request gets approved.
  • 10For more details on iSelect Smart360 Term Plan policy, please refer terms and conditions available at
    www.canarahsbclife.com/term-insurance/iselect-smart360-term-plan.html

How to Choose the Best Term Insurance Plan?

Claim Settlement Ratio

The claim settlement ratio includes the total number of claims the insurance company covers out of the claims filed when the insured individual dies. For example, if the insurance company has an 80 percent claim ratio, it means the insurer pays 80 out of every 100 claims filed. Canara HSBC Life Insurance has a claim settlement ratio of 98.57% FY 2021-22.

Solvency Ratio

The solvency ratio indicates the capability of the insurer to meet its debt obligations, which includes cases where the insurer has to pay the insurance cover to the beneficiary in case of death of the policyholder. It should be at least 1.5. Buy term insurance policy from life insurers who have a good solvency ratio.

Customer Experience

To know more about the company, one can enquire existing customers about their experience. Another way is to check online reviews and ratings of the company. Ensure that the customer experience is excellent to avoid any issues during the ongoing term insurance policy period.

Benefits Offered in the Term Plan

While choosing the insurance company, see the benefits they offer or enquire about it. Some of the most common benefits you must look out for when choosing the best term insurance plan are regular income payout option, critical illnesses cover, accidental death benefit, and premium waiver in case of disability.

Step By Step Guide to Buy a Term Insurance Plan

Step 1: Calculate your Term Insurance Cover Need and Decide Premium Payment Mode

If you are buying an online term plan, the process starts with your contact details and personal details. Your personal details give a clear idea about your maximum life cover eligibility. After the cover amount, you need to choose the policy tenure and premium payment tenure for the policy.

You can calculate your term insurance premium using a calculator to see a tentative figure for the amount you will pay. If you are salaried you can select a monthly mode of premium payment.

You should pay special attention to the e-mail ID you provide, as this will be used for all communications regarding the term insurance policy by the insurer. So, make sure that you regularly access the email you provide for receiving updates on your term policy.

Step 2: Provide Additional Details

The second step considers your occupation, location and education details. These details help determine your maximum cover eligibility.

Some of these factors like state of residence and occupation can influence your premium for the life cover.

Step 3: Customize your Term Insurance Plan

Once you have decided on the amount and tenure of the cover, it’s time to add more benefits and decide the pay-out options.

You can add the following add-on benefits to your basic term cover when you buy a term insurance plan:

a) The increased sum assured for accidental death
b) Waiver of premium benefit in case of permanent total disability due to an accident
c) Child support benefit to provide for the child’s education along with normal term insurance plan benefit

Apart from the additional benefits, you can also decide the following:

a) The ratio to divide your life cover benefit into a lump sum and regular income pay-out
b) Add your spouse to your term life cover You can divide your base life cover into two parts where one is paid as a lump sum and the other is converted to a monthly income. You can also opt to grow this income at a fixed percentage every year.

Adding the spouse doesn’t mean that they have to be an earning member. You can also add a homemaker spouse to your life cover. However, if the spouse is a homemaker the life cover will be limited to Rs. 25 lakhs.

Step 4: Pay the Premium and or Complete the Proposal Form

Once you have decided on the benefits and premium amount of the term insurance cover, you can review your choices and benefit amounts. After reviewing your plan details you can complete the proposal form and pay the term insurance premium.

You can use your credit or debit card, net banking, UPI or a Wallet account for online premium payment. Don’t forget to opt for auto-debit option, so that your term policy can continue even if you forget about making the premium payment later.

The proposal form contains more detailed questionnaire about personal, professional, lifestyle and medical history. Along with the proposal form you will need to submit supporting documents as well which will include the following (but not limited to):

  • KYC Documents
    • Identity & Address proof
    • Aadhaar details
  • Recent medical reports
  • Bank statements or salary slips supporting your income details

Step 5: Go Through the Medical Check-up

After the insurer has accepted your premium and proposal form, based on the details provided, you may have to go through either of the following:

  • Tele-medical examination
  • A medical check-up at a designated clinic nearby

However, if you are eligible for a term insurance plan without medical you can simply move to the next step.

If you need to undergo a medical check-up physically, you will be assigned a date and place for the insurer’s health check-up requirements. Health check-up is an important step as it ensures that your health status is understood by the insurer and there is no risk of an early demise.

Step 6: Revised Premium or Sum Assured

In case, you have a health condition, occupation or hobbies which may increase the risk of your early death, the insurer may offer any of the following choices:

  • Increased premium amount
  • Reduced sum assured

How much Term Insurance Coverage you Need?

Factors that Impact Term Insurance Premium

AGE

Low risk of death when young, allows insurers to offer lower premium rates to policyholders.

Gender

Insurers don’t discriminate on the basis of gender, but life expectancy cannot be ignored. Women tend to live longer than men, hence low risk, which allows insurer to offer lower premium rates to women.

Profession

Not all professions are the same. While working, a miner is exposed to more risks than a software engineer. The risk perception reflects into the amount of the term insurance premium.

Duration/policy term

A term insurance plan is a promise to pay your family in the case of an unfortunate incident. A longer policy term means the insurer will be covering the risk for a prolonged period.

Medical history

Some diseases are known to recur. If you have suffered from a chronic illness in the past, it may resurface in the future and that affects your term insurance premium. Considering the risk, the premium for people with a history of certain illnesses is higher.

Smoking/Drinking

Smoking increases the risk of lung-related diseases. Similarly, consumption of alcohol is harmful to the liver. If you are a smoker or drink alcohol, you will have to shell out more for your term insurance plan.

Personal health

There is no certainty on when an irregular pulse rate or high cholesterol turns into a serious illness. Insurers ascertain your personal health before issuing a term insurance policy. The level of fitness decides the premium.

Diabetic

A high level of blood sugar can have an adverse effect on your heart and kidneys. The premiums for diabetic people are higher as they are more susceptible to cardiovascular and kidney diseases.

How Age Impact Term Insurance Plan Premium?

When you're young, you're more likely to find cheaper premium insurance because your mortality risk is minimal. You may also have additional debts, liabilities, and financial obligations later in life. As a result, it is preferable to purchase a term insurance policy when you are young, preferably in your twenties.

As soon as you start your first job, you should purchase term life insurance plan. Premiums increase as you get older. As a result, the sooner you buy - the better. As you become older, you get closer to your life expectancy, which increases your insurance costs.

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Important Term Insurance Terminology

  • Policyholder
  • A policyholder is a person buying the policy. In other words, the policyholder fills the proposal form of the insurance plan and applies for the insurance cover. The policyholder is also responsible for paying premiums of the cover.

    For example, if a father buys a term life insurance policy covering all the family members, the father is the policyholder while the family members are the beneficiaries.

  • Life Assured
  • The person whose risk the policy covers is called the Life Assured. For e.g. when a son buys a life insurance policy for his father, the son is the policyholder whereas the father is the Life Assured.

  • Sum Assured/Coverage
  • Sum assured is the guaranteed benefit amount in case the covered risk or risks materialise. For example, in a term insurance policy, the covered risk is the death of the insured. If insured dies within the policy term, the policy is liable to pay at least the sum assured.

    If you buy a term insurance policy of Rs. 1 crore. Rs. 1 crore is the sum assured of the policy.

  • Policy Term (PT)
  • Policy term refers to the duration for which a policy remains in force. For example, if you buy a term plan online at the age of 30 and wish to continue the same till you reach 60, your policy term has to be 30 years.

  • Premium Payment Term (PPT)
  • Usually, you are supposed to pay a regular annual premium for any insurance policy until the claim or expiry. For example, if your policy term is 30 years you need to pay 30 annual premiums. Thus your premium payment term will be 30 years or equal to the policy term.

    However, your premium payment term or PPT can be shorter than the policy term. With a shorter PPT, you can pay the premiums of the entire 30-year term cover within five years.

  • Terminal Illness
  • Terminal illnesses are those diseases which are life-threatening due to their unpredictable and rapid growth nature. Few examples of such diseases are cancer, heart failure, renal failure, etc.

  • Surrender Value
  • Surrender Value, also known as cash surrender value, is the amount of money that the policyholder receive if they decide to surrender or terminate their life insurance policy before the maturity date or before the policyholder passes away.

      • Maturity Claim
      • Maturity claim is a claim procedure that the life insured is entitled to claim the maturity benefits of the life insurance policy or term life insurance policy if all the premiums have been duly paid.

      • Vesting Age
      • It is the age when the policyholder becomes eligible to receive the benefits as defined under the life insurance policy they have bought.

      • Payout Option
      • The policyholder can choose the frequency of receiving the Sum Assured at maturity of the term insurance policy, or any other life insurance policy. Usually, policyholders are given the option to choose from
        (i) Lump Sum
        (ii) Monthly
        (iii) Part Lump Sum and Part Monthly.

      • Free Look Period
      • A free look period is the buffer time given to the policyholder within which they can cancel their term life insurance policy, or any other life insurance policy without any penalties.

        Know more about Free Look Period.

      • Nominee
      • A nominee is registered by the policyholder while buying a life insurance policy. In case, the policyholder passes away, the nominee or the beneficiary receives the benefits of the policy.

        Know all about a nominee.

      • Riders
      • A rider is an add-on that can be opted by the policyholder to enhance the term life insurance plan. Riders provide additional coverage options like Accidental Death Benefit, Child Support Benefit, Waiver of Premium, Accidental Total and Permanent Disability Benefit.

        Learn what are term insurance plan riders and how it can benefit you.

      • Waiver of Premium
      • It is a rider that waives the premium payments when the policyholder becomes critically ill, injured or disabled.

What are Riders in a Term Insurance Plan?

Riders are optional in-built covers that you can opt for to enhance your term insurance plan. You have to pay additional cost to add riders to your term insurance plan. Listed below are a few common riders that are available with a term insurance plan:

Critical Illness

Critical illness benefit is an important health cover add-on to your term policy. This benefit supports you if you are diagnosed with a life-threatening disease such as cancer, kidney or heart failure, stroke, etc.

iSelect Smart360 Term Plan critical illness rider covers you from 40 such critical illnesses.

Accidental Death Benefit

Accidental death can bring an additional financial burden on your family. Thus, adding a little more to your base life cover for accidental death is helpful in such a situation.

Waiver of Premium

The waiver of premium option works on the base life insurance policy if you suffer from a critical illness or accidental disability. This option ensures that your family stays protected even if you are unable to pay premiums due to long-term hospitalization.

Permanent Total Disability

This is a very useful benefit for you to consider. Permanent disabilities due to accidents or illnesses can affect your earnings. This benefit provides you with the financial assistance to get back on your feet and run your household smoothly.

Income Benefit

Income benefit is a unique option available with the iSelect Smart360 Term Plan. This option allows you to receive a regular monthly income if you survive the policy term till 60 years of age. This benefit is available on policies which will continue well beyond your retirement age.

How to Renew your Term Insurance Policy?

You can renew your term insurance policies online and offline. You can also renew the majority of term policies online even when you purchased them offline. The process is given below:

Renew your Policy Offline Renew your Policy Online
Go to the insurer’s website and login into your customer account Contact your insurance agent or visit the nearest branch office
Alternatively, you can also enter policy details directly into the online renewal form Provide details of the policy and verify your ownership
Once the verification is complete, select the payment mode Use a cheque or card to pay the premium
Pay the premium and download/print the receipt Collect the receipt of the payment

Frequently Asked Questions (FAQs) for Term Insurance Plans

Term insurance is a pure protection life insurance plan. So, while term insurance offers life cover, it does not offer any wealth-building or preserving qualities. Whereas, life insurance plans like endowment, money back and ULIPs offer wealth creation benefits as well.

Term insurance is a pure protection insurance plan. Whereas, whole life insurance offers wealth creation and distribution benefits too. Term insurance offers large protection benefits at affordable rates and does not acquire cash value over time.

Whole life insurance offers life cover and cash benefits at retirement. A term plan is a pure protection plan while whole life insurance will be an asset.

The policy conversion feature is not available in term life policies in India. So, you may not be able to convert your standard term life policy to whole life. But, you can check with your insurer if that option can be worked out.

Term life insurance is one of the essential investments in your financial life. The term insurance cover helps you provide adequate financial safety to your family and dependents for a long time. The best part about term insurance is the affordability. For example, if you are a 30-year-old non-smoking male, you can secure Rs 1 crore term insurance for less than Rs 1000 p.m.

Ideally, your term insurance policy should last a few years into your retirement. This ensures the financial safety of your spouse while you wind up your liabilities and settle into retired life. If you expect to have dependents even after your retirement you can also consider that in the policy term while buying. Policies like whole life term insurance plan iSelect Smart360 Term Plan can also help you leave a legacy.

No, the duration of life covered in a term policy cannot be changed after the policy has been issued. However, if you are still in the 15-day cooling-off period you can request a change in the policy term. If the insurer agrees you can return the current policy document and receive the new policy.

The best term plan for you would be the one which has all the necessary features and is easy to manage for you and your family both. A good claim settlement ratio of 95%+ means the family will receive the claim faster. So, you can look for the following for the right term plan for yourself:

  • Check claim settlement ratio
  • Lump-Sum + Monthly income pay-out option
  • Disability and critical illness riders
  • Premium waiver option
  • Monthly premium payment mode

You can also check for an electronic insurance account. This account makes policy management and claims filing a cakewalk as you can assign family members for the same.

Ideally, the term insurance cover for your family should last so far as you have a liability or pending family goal. Since you cannot extend the policy term after purchase, you should purchase the policy with a term lasting a few years after retirement. For example, if you are expecting to retire at 65 the term insurance cover can continue till 70.

Yes, you can buy a term plan in the 50s and even 60s. You can buy the iSelect Smart360 Term Plan till the age of 65. Buying a term plan after 65 will be difficult as fewer insurers offer such policies.

A standard term insurance policy will simply expire without any cash payments on maturity. However, if you had opted for term insurance with a return of premium the policy will return all the premiums you have paid upon expiry.

Yes, upon the demise of the insured within the policy term the insurer pays the full amount as a death benefit. However, if you had chosen lump sum plus regular income pay-out, the amount dedicated for regular income will be paid as a monthly sum. Thus, with the regular income option of death benefit release, the insurer will convert the sum to a regular monthly income. Monthly income can be fixed or growing as chosen while buying the policy.

The best term insurance plans including the iSelect Smart360 Term Plan allow you to have a term life cover up to the age of 99. However, in the case of single premium policies, the maximum age can be lower. For example, the iSelect Smart360 Term Plan offers to cover up to the age of 80 for single premium policies.

No, the policy term cannot be extended after the policy has been issued. However, if you are still in the 15-day cooling-off period you can request an extension of the policy term. If the insurer agrees you can return the current policy document and pay the additional premium to receive the new policy.

No, you cannot sell or mortgage your term life insurance policy. Term life policies do not acquire a cash value as these are pure protection plans. This means, you only pay the risk premium and nothing is accumulated as policy value. Thus, the policy will not have any sale value. Also, life insurance coverage cannot be transferred. A term life insurance policy can be assigned to a lender for repayment of a loan after your demise.

Yes, you can have two or more term insurance policies. However, your total life cover may not exceed 20 times your annual income. There is no restriction on the number of policies you can buy, but total life cover is limited by your financial status. Generally, the insurer will consider your annual income, but your net worth also plays a role in deciding your maximum insurance eligibility.

Yes, term life insurance covers natural death or any other cause of death. Only in the case of suicide, the death is not covered for the first 12 months after policy commencement or revival. Also, in the cases of homicide (criminal activity), the death benefit may not be paid unless the nominees are exonerated by the court of law. Accidental deaths may require a police FIR.

A critical illness rider is a health insurance rider in the term insurance plan. It offers insurance cover for dangerous illnesses like cancer, renal and heart failures, stroke, etc. Critical illness rider of iSelect Smart360 Term Plan covers 40 critical illnesses and disabilities. It is an important add-on to your term insurance as it helps you get treatment for these illnesses. The rider also has features to support your household expenses while you recover.

Term insurance is a pure protection life insurance. Thus, does not have a cash value or maturity value. Only your nominees can use the term insurance proceeds to repay any ongoing loans. However, you can assign a term policy to a lender. In the case of assignment, the lender is the primary beneficiary of the policy benefits. Your nominee will receive the proceeds after the lender’s balance has been satisfied.

You can always change the nomination of your term insurance policies. So, if the nominee dies before you, you should immediately update the nomination details. In the case of the death of both nominee and policyholder, your legal heirs must claim the policy proceeds. In the case of zero nomination, the policy proceeds must be distributed as per the applicable succession laws.

You can change the nomination as many times as you want. The latest nomination update nullifies all the previous nominations. It’s better to nominate only your family members and blood relatives as beneficiaries in your term plan. Keep the nominee details updated so that the benefits reach only the intended party.

You should contact the insurer as soon as possible after the death or other claim event. You will need to furnish all documents to file a claim. The documents for any claim will vary as per the cause of the claim or death. Collect all the documents and submit them along with the appropriate claim settlement form. Insurers like Canara HSBC Life Insurance will assign a claims officer for you. The claims officer will help you in completing your claim process and receive the benefit amounts.

Generally, pure protection term plans only offer financial safety to your family, in case of your early death. Term insurance will not provide any wealth generation opportunities. However, the whole life term plan option of iSelect Smart360 Term Insurance offers wealth creation benefits as well. You can receive a sum of 60 equal to all the premiums paid or a regular income.

If you are salaried and have a steady cash flow, the regular pay option is better. However, if you are into business or self-employed, the limited pay option will work better. The limited pay option helps you maintain the life cover even during tight financial situations. So, a bad economy will not put your family at the risk of financial hardships if anything happens to you.

You should check the policy details within 15 days of receiving the policy document. Check your name, contact details, address and bank details. You can easily get them rectified within these 15 days. This period is called the cooling-off period and you can ask for corrections if any. After the cooling-off period expires you may not be able to change critical policy details like the name of the insured and other details. However, you can still ask to update your bank and contact details.

Yes, with term insurance plans like iSelect Smart360 Term Plan, you have two types of regular income options:.

1. Regular income payment of death benefit
2. Regular income payment after 60

In the first option, your family will receive a part or full death benefit as regular monthly income after your demise. In the second, you will start to receive a regular monthly income if you survive till the age of 60.

Yes, term insurance policy claims are not affected by the place of death. The life cover in a term insurance policy applies 24x7 and throughout the geography. Except for the excluded events such as suicide within 12 months of policy commencement or revival. Thus, if the insured dies in a foreign country the term cover will still offer the benefits.

Death by suicide within 12 months of policy commencement is not covered by term insurance. Also, if a lapsed policy has been revived, suicide within 12 months is not covered. This provision of term insurance is called the suicide clause. This is the only exclusion in the term insurance cover.

Yes, NRIs can buy a term insurance plan in India. You should not be a green card holder or hold citizenship in a foreign country. You should be healthy and work at a recognised organisation or professional. You can buy term insurance while visiting India and complete the formalities as NRI. This is the best option as all your formalities will be completed as a resident Indian. This process is faster. However, you can also obtain term insurance from your country of residence online. In such a case, you need to submit all the documents the insurer requires. You can submit the documents online or through the mail.

Standard term insurance policy will never acquire a cash value as you only pay the risk premiums. However, if you have bought a whole life term policy or term plan with a return of premium option, these policies will acquire cash value.

However, you should avoid cancelling older policies for their cash value. Instead, you can borrow up to 90% of the cash value of these policies.

If you have a standard term insurance plan which offers only a life cover you can cancel the term plan if:

- You have acquired enough wealth
- You do not have any dependent
- You have met all the financial goals of your family and dependents

If you believe that all these conditions apply to you, you can stop paying the premiums for your life cover. However, if you have a term plan with a return of premium or whole life cover you should continue the plan. The maturity benefits of these plans far outweigh any cash value you can receive by a cancellation.

You should keep the insurer informed about the change in smoking habits. This is important especially if you have started smoking after buying the policy. This will avoid claim rejection in the future. However, you can be assured that your premium rates will remain unaffected under such a lifestyle change.

Yes, the iSelect Smart360 Term Plan covers all types of deaths including accidental, natural or illness related, provided the death occurs within the active policy period. The only death that the policy does not cover is suicide within the first 12 months of commencement of the policy. The suicide clause also applies at the time of the revival of a dormant policy.

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