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Term Life Insurance

The cheapest, purest life cover — a large sum for your family if you're not around.

Protection-first · low premiumPremium 80C · payout 10(10D) tax-free

What is Term Plan?

Term insurance is the simplest and most important insurance for anyone with dependents. You pay a small premium; if you die during the policy term, your family receives a large lump sum (the sum assured). There is no maturity payout if you survive — and that's exactly why it's so cheap. Its only job is to replace your income and clear your liabilities so your family's life isn't derailed. Buy protection first, then invest separately.

What it is
Pure life cover — pays a large sum only on death
Cover needed
Roughly 10–15× annual income (or by Human Life Value)
Cost
Very cheap — a healthy 30-year-old may pay a few thousand a month for ₹1 crore
Tax
Premium under 80C; death payout tax-free under 10(10D)
Best bought
Young and healthy — the premium is locked for the term

Term Plan — The Complete Guide

11 questions answered — everything from eligibility and HUF/NRI rules to tax, withdrawals and edge cases.

The basics

What is term insurance and how is it different?
Term insurance is pure protection: it pays out ONLY if the insured dies during the term, with no investment component and no survival benefit. This is why ₹1 crore of term cover costs a fraction of a ₹1 crore endowment or ULIP — you're paying only for the risk cover, not a bundled investment.
Why should I not mix insurance and investment?
Bundled products (endowment, money-back, ULIP) give you both a small cover and a modest return, and usually do neither well. The efficient approach is "buy term and invest the rest": take a large, cheap term cover for protection, and invest the money you save in mutual funds for growth. You get more cover AND better returns.

How much & how long

How much cover do I need?
Enough to replace your income and clear your debts so your family maintains its lifestyle. A common rule of thumb is 10–15 times your annual income, plus outstanding loans, minus existing assets. A more precise method is the Human Life Value approach — our calculators help you work it out.
What term should I choose?
Cover yourself until you expect to be financially independent — typically until around age 60, or until your youngest child is earning and your major loans are cleared. There's little point paying for cover into your 80s when you have no dependents and a built-up corpus.

Buying it right

When is the best time to buy?
As young and as healthy as possible. The premium is based on your age and health at purchase and is then LOCKED for the whole term — so buying at 28 locks a far lower premium for life than buying the same cover at 40. Waiting only makes it costlier (or harder, if health issues appear).
Should I take the medical test?
Yes — always opt for a fully medically-underwritten policy over a no-medical one. A policy issued after proper medical tests is far less likely to see a claim disputed later, because the insurer has already assessed your health. Disclose everything honestly.
What is the claim settlement ratio, and does it matter?
It's the percentage of death claims an insurer paid out in a year. A consistently high ratio (95%+) is reassuring, but it's not the whole story — honest disclosure at purchase matters more, since most rejected claims trace back to concealed information rather than the insurer's intent.

Riders & tax

Which riders are worth adding?
The most useful add-ons are: Accidental Death Benefit, Critical Illness (a lump sum on diagnosis of specified illnesses), Waiver of Premium (future premiums waived if you're disabled/critically ill), and Accidental Total & Permanent Disability. Add riders that fit your risks rather than every option offered.
What are the tax benefits?
The premium qualifies for a deduction under Section 80C (up to ₹1.5 lakh, old regime). The death benefit paid to your nominee is tax-free under Section 10(10D). This makes term insurance tax-efficient on both ends — though you should buy it for the protection, not the tax break.

Good to know

What is "return of premium" term insurance?
A variant that refunds your premiums if you survive the term — but at a much higher cost. The extra premium you pay, if invested instead, typically grows to more than the refund. For most people, plain term insurance plus separate investing is the better deal.
Should homemakers or non-earners be insured?
The primary need is to cover income-earners. But a homemaker's unpaid work (childcare, running the home) has real economic value, and some insurers now offer term cover for homemakers. The priority, though, is adequate cover on everyone whose income the family depends on.

Related tools & guides

Term Insurance calculator Human Life Value Term Plan + SIP

Educational information only, not investment advice. Interest rates for government small-savings schemes are set by the Government of India and reviewed every quarter; bank FD/RD rates vary by bank and tenure. Figures are indicative — confirm the current rate and rules with the bank/post office before investing. Calculator results are for illustration purposes only. Actual returns may vary based on market conditions, fund performance, and other factors.

AMFI Registered Mutual Fund Distributor and SIF Distributor; APMI Registered PMS Distributor | ARN-286886

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