Buy Term Insurance Plan & Policy Online in India in 2024

What is Term Insurance?

Types of Term Insurance Plans in India

How Do Term Insurance Plans Work?

Features and Benefits of Term Life Insurance

What are the Payout Options in Term Life Insurance?

How Much Term Insurance Coverage Do You Need?

Age Approx HLV
18-35 25 X Annual Income
36-45 20 X Annual Income
46-50 15 X Annual Income
51-60 10 X Annual Income

For example, for a 30-year-old earning 10 lac annually, the ideal life cover would be 25 x 10,00,000= 2,50,00,000.

How Term Insurance Calculator Can Be Helpful?

Benefits of Using a Term Insurance Calculator

When is the Right Time to Buy Term Insurance?

How to Choose the Right Term Insurance Policy Period?

How to Choose the Right Term Insurance Plan?

What are the Eligibility Criteria for Term Life Insurance?

Eligibility Criteria Details
Age Term insurance is available for individuals aged 18-65. You can still buy a policy at 65 with coverage up to 99. Age significantly affects the premium.
Citizenship Residents of India are eligible for term insurance, even if they later move abroad for study or work.
Medical Tests Purchasing term insurance may require medical tests to assess the premium based on your health accurately. Some policies bypass medical tests but offer lower coverage.
Lifestyle Smoking, high-stress levels, and poor sleep habits can increase your premium. Jobs or hobbies that are considered risky can also lead to higher premiums.

Documents Required for Buying Term Life Insurance

Residence / Identity Proof Documents for Term Plan

Applicant Category Documents
Salaried, Self Employed Applicants and Housewives
(Any one of the following)
  • Passport (front and back)
  • Voters ID
  • Aadhaar card
  • Driver’s Licence
  • Letter issued by UIDAI or NPR containing name, address and Aadhaar number
Other Valid Proofs:
  • Utility bill not older than 2 months
  • Property or Municipal tax receipt
  • Bank A/c or Post Office Savings A/c statement
  • Pension or family pension payment orders (PPOs)
  • Letter of allotment of accommodation from employer
  • Rental agreement on stamp paper of minimum Rs. 100
  • Company’s letterhead with address
NRI Applicants
(Any one of the following)
  • Passport (front and back)
  • Aadhaar Card (front and back)
  • Voters ID Card (front & back)
  • Driver’s License (front & back)
  • Letter issued by UIDAI or NPR
    Proof of Aadhaar number
    International address proof

Age Proof Documents Required for Term Insurance

Document Type Documents
Age Proof
(Any one of the following)
  • Passport (front and back)
  • Aadhaar Card (front and back)
  • Driver’s License (front and back)
  • Birth Certificate
  • PAN Card
  • Election Commission ID Card
  • Bar Council ID Card
  • School leaving certificate (Class 10th or 12th)
  • Central/State Govt. Employee ID

Income Proof Documents Required for Term Insurance Policy

Applicant Category Documents
Salaried Applicants
(Any one of the following)
  • Latest Form 16
  • Latest 6 month’s bank statement showing salary credit
  • Form 26 AS of the last financial year
  • Last year’s ITR (all pages) with Computation of Income (COI) with salary from the employer
  • Appointment letter with the latest month's salary slip (for freshers or recent job changers)
Self-Employed Applicants
(Any one of the following)
  • The latest 2 assessment years’ ITR (Income Tax Return), along with the Computation of Income (COI)
  • Audited Business accounts for the last 3 years with shareholding patterns and/or partnership deed
NRI Applicants Any one of the documents mentioned under the “Salaried Applicant” or “Self-employed” section above
Housewife Applicants Any of the husband’s income proof documents mentioned above can be submitted.
Alternative documents may also be provided as proof of income:
  • Self-attested copy of the latest six months’ savings bank account statement
  • SIP statement in the name of the housewife for the last 12 months
  • Credit card statement of last six months showing credit limit
  • Last 12 months’ home loan repayment statement along with bank statement showing debit for the same period
  • The Latest Insured Declared Value (IDV) of the car
  • Policy document of husband’s term life policy.

Note: Each section requires one or two documents as proof for term insurance, depending on the insurer's requirements.

What is a Term Life Insurance Rider?

Benefits of Adding Riders to Your Term Insurance Policy

Who Should Buy a Term Insurance Policy?

Some Relatable Real-Life Examples

Why Should You Buy Term Insurance Online?

What are the Factors Affecting Term Insurance Premiums?

Why Do You Need Term Insurance?

Tips on Choosing the Best Term Plan

Terminologies Related to Term Insurance

FAQs about Term Insurance

Is there an age limit to buying a Term Insurance Plan?

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The age limit varies across insurance providers and plans. Most of the time, the entry age is 18+ years, and the maximum age is 65 years to buy a Term Insurance Plan.

What are the types of deaths covered in Term Insurance?

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The following types of deaths are considered valid by an insurance provider at the time of claim settlement:

a) Natural Death

b) Death due to any critical illness

c) Accidental Death

d) Death due to natural calamities like earthquakes, floods, etc.

e) Suicide is covered if it happens after 12 months of buying the policy. However, if it occurs within 12 months, a certain proportion of the sum assured is paid to the nominee. This depends from one insurer to the insurer.

Read more:

What types of deaths are not covered by insurance?

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a. Any Death that involves self-harm or self-infliction of injury like suicide is not covered under insurance.

b. Death due to driving under the influence of alcohol or drugs is not covered. 

c. Death due to participating in hazardous activities

d. Death due to the involvement in illegal activities when either the life insured was involved in any criminal activity or the nominee is criminal, and it is discovered that the life insured was killed with the nominee's involvement. 

Can I buy more than 1 Term Insurance policy?

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Yes. You can buy more than 1 Term Insurance Policy. It is beneficial to buy more than one Term Insurance Policy, owing to multiple factors, the foremost being reducing the risk of claim rejection.

Can I change the nominee in my Term Plan, and how many times can I do so?

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Yes. You can change the nominee during the term of your policy. And you can do this as many times as you want. But the change should be communicated to your insurance provider clearly in writing to ensure that the change is correctly incorporated and the nominee receives the payout hassle-free.

Should we take Riders along with Term Insurance?

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Yes, Riders enhance the effectiveness of a Term Insurance Plan with minimal additional premium. They are optional add ons but adding them to your base plan can be very useful, especially for specific circumstances otherwise not covered in your base plan, like critical illness, accidental Death, disability etc. 

Do we get any return in Term Insurance?

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Term Insurance mostly has no savings component and is designed to provide only the Death Benefit. However, some specific Term Insurance plans come with the Return of a Premium Option. In these plans, at the end of the policy tenure, if the policyholder survives, the complete premium is paid back to the policyholder, and in case of the policyholder's demise, the Death Benefit is paid to the nominee. 

Can I get Term Insurance if I'm not in a job?

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You cannot purchase Term Insurance if you are not earning. An Income Proof needs to be submitted for Term Insurance. Income can be from a job, profession or business.

Can husband and wife both take Term Insurance?

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Yes, husband and wife both can take a joint Term Insurance. In this case, the Sum Assured is paid out on the first claim basis. In case of the demise of both joint holders, the sum assured is payable to the nominee.  

What is the difference between Term Insurance and Accidental Insurance?

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Accidental Insurance provides Death Benefit only if the policyholder dies due to an accident, while Term Insurance provides Death Benefit in case of any death. 

Why should I buy Term Insurance when I already have Life Insurance from my employer?

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It's great if you have life coverage from your employer. However, in most cases, these covers are not enough. Analyse your financial cover requirements and decide if you need another insurance cover. In such cases, Term Plans, due to their affordability, can be a good choice as an addition. Also, the insurance plans provided by the employer cease to exist once you leave your company. 

What would happen if a person has two Term Insurance policies?

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If the policyholder has two separate Term Insurance policies, the second insurer must be made aware of the first policy, and the first insurer must provide acknowledgement. 

Can Non-Resident Indians (NRIs) buy Term Plans in India?

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Yes, if the NRI is legally an Indian citizen, they can buy a Term Plan in India.

Does the premium remain the same throughout the tenure of a policy? 

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Generally, the premium of a Term Insurance remains the same throughout the tenure of the policy; however, if the policyholder develops some ailments or lifestyle habits like smoking, drinking etc., the premium would increase when the same is declared to the insurer. And it is essential to make this declaration to avoid any claim decline in the future. 

What if I do not want my Term Cover once I have taken it?

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Term Plans generally come with a Free-Look period of 15 days, 30 days in case the policy is purchased online during which you can check the complete details, accept certain terms or cancel the policy altogether. 

On maturity, can a fresh policy be availed at the rate of the old premium?

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No. Once the policy matures, it is considered closed and cannot be renewed. In such a case, if the policyholder wishes, they have to take a new policy as per the new terms and conditions. 

What is the Contestability Period in Insurance?

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The Contestability Period in Life Insurance is the time frame during which an insurer can contest or question the claim raised by the beneficiaries. This is usually 2 years from the date of policy purchase. 

If I stop smoking today, or maybe 6 months before taking a Term Insurance Policy, will I get a Non-Smoker rate?

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The cost difference between insurance premiums for smokers and non-smokers is significant. Smokers typically pay at least two to four times more than non-smokers. However, Digit offers non-smoker premium rates to individuals who have been tobacco-free for 3-5 years and have been smoke-free for a year.

What is the best kind of Life Insurance Policy?

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The best kind of Life Insurance is the one that suits your requirements. If you want high coverage at a low cost, go for Term Insurance. However, Whole Life Insurance should be the choice if you want coverage for the rest of your life.

What is the difference between term insurance and life insurance?

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The primary distinction between term insurance and life insurance is that term insurance offers only death and tax-saving benefits, while life insurance provides death, maturity, survival, and tax-saving benefits.

Under which sections of the Income Tax Act can policyholders claim term insurance tax benefits?

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Term insurance offers tax benefits under various sections of the Income Tax Act. 

Section 80C of Income Tax Act: Term insurance policyholders can claim a deduction of up to ₹1.5 lakh in premiums paid annually. This section also covers other investments like the Public Provident Fund, National Savings Certificates, ELSS, and tax-saving FDs.

Section 80D of Income Tax Act: While this section primarily applies to health insurance plans, term insurance policyholders with additional covers (such as Critical Illness or Surgical Care) can also save taxes on premiums paid

Is term insurance refundable?

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Term insurance is typically non-refundable. It is designed to protect for a specific period, and if the policy expires or is cancelled before the term ends, the premiums are not reimbursed. However, there are term insurance with return-of-premium policies available that do refund the premiums at the end of the term, although they come with higher monthly costs.

What is the policy term?

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The policy term, also referred to as “policy period”, is the duration or lifetime of an insurance policy. It’s the specific period during which your insurance coverage is active. It is when the policyholder is entitled to benefits or coverage under the term life insurance plan. Policy terms can vary from as short as 5 years to as long as 40 years, depending on the insurance provider and the policy chosen.

Does term insurance have maturity?

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No, traditional term insurance policies do not have a maturity benefit. These policies are pure protection plans designed to provide financial security to the policyholder's beneficiaries in the event of the policyholder's death within the policy term. No benefit is typically paid out if the policyholder survives the policy term. However, if a policyholder wants the maturity benefit, they can opt for a Term Return of Premium plan.

What expenses are covered in my term plan?

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The sum assured provided to the beneficiaries after the policyholder's death can cover various expenses, including outstanding loans, daily living expenses, children's education costs, and other financial obligations. Some term plans offer additional riders to cover critical illness, accidental death, and disability.

How long should be the term of the plan?

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Choosing the longest possible term insurance duration, depending on individual needs and responsibilities, is generally a good idea. Consider your current age, expected retirement age, your children's age, and any significant financial liabilities.

For example, if you are 30 years old and think you will only need life insurance for the next 30 years, opting for a 40-year tenure is still recommended.

How to get low premiums on term insurance plans?

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First, compare various policies to secure a low premium on term insurance plans. Opt for a policy at a younger age, as premiums tend to be lower. Consider your health and lifestyle; non-smokers and those in good health usually get better rates. Lastly, choose a policy duration and coverage amount that accurately reflects your needs to prevent overpaying.

What happens at the end of the policy tenure?

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At the end of the policy tenure of a term insurance plan, if the policyholder has not made a claim (i.e., the insured person is still alive), the policy simply expires. There is no maturity benefit or payout as it is purely a protection plan designed to offer financial security to the policyholder's beneficiaries in the event of their death.

Is there any age limit to getting a term insurance plan?

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Yes, the minimum entry age is usually around 18; the maximum age at which one can buy a term life insurance plan varies between 60 and 65. The exact age limits can differ from one insurance company to another.

Why is term insurance essential at every stage of life?

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Term insurance provides a safety plan for your spouse and dependent children, ensuring they will be okay and helping them keep up with their lives even after you are gone. This invaluable protection offers peace of mind at every stage of life, ensuring that your family will not face financial hardships. With term insurance, you can take proactive steps to safeguard your family's future with confidence and certainty.

What is the rule of term insurance?

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The general rule of thumb is to purchase term insurance that is at least 15 to 20 times your current annual income.

Do you get your money back at the end of the policy term?

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No, you typically do not receive your money back at the end of a term insurance policy. But term insurance with a return of premium plan can receive a refund of your premiums at the end of the policy if you make all payments on time and have survived the term.

What are the advantages and disadvantages of each premium payment option?

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  • The Single Premium Payment Option entails paying the full premium upfront, avoiding monthly hassles. However, due to its size, it can strain budgets. 
  • Regular Premium Payment Option allows for periodic payments (monthly, quarterly, half-yearly, or yearly), making it budget-friendly, though it might incur extra charges. 
  • Automatic payments ensure timely contributions and help avoid missed payments by requiring enough funds in your account to prevent late fees or coverage lapses.
  • Lump-sum payments may attract discounts, benefiting upfront payers, but require careful financial consideration to prevent strain.

Which is the most common type of term insurance?

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Many people prefer to purchase level-term plans because they are affordable and provide a guaranteed death benefit as a fixed sum. If you are willing to pay a slightly higher premium, consider a term plan with a return of premium benefit, which is another popular option.

Who can be a nominee in term insurance?

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According to the Insurance Laws (Amendment) Act of 2015, immediate family members like your spouse, children, or parents can receive the claim amount as the beneficiary nominee. This means that they have priority in claiming the death benefit over any other legal heir.

How to claim term insurance after death?

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Please ensure that you remember the following steps to claim the assured sum as a nominee of the term insurance policyholder:

  • Step 1 - As a nominee, notify the insurance company about the claim
  • Step 2 - Keep your documents handy to ensure a smooth claim process.
  • Step 3 - The insurance company will carefully evaluate your claim.
  • Step 4 - Claim settlement

Do I need to buy term insurance even if I am covered under my company's group policy?

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Yes, Buying individual term insurance is recommended even if you are covered under your company's group policy. Company-provided covers are often insufficient, losing coverage when changing jobs, and group policies must be tailored to personal needs. Therefore, purchasing a separate term plan ensures your family maintains their standard of living and is well-provided for, ideally with a cover of 10-15 times your annual income.

What are the eligible investments and expenses under Section 80C for tax deductions in India?

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Under Section 80C of the Income Tax Act, you can claim a tax deduction of up to ₹1.5 lakhs for various eligible investments and expenses such as Public Provident Fund (PPF), Employee Provident Fund (EPF), Unit-Linked Insurance Plans (ULIPs), Equity-Linked Savings Schemes (ELSS), home loan, child education, etc.

Disclaimer

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  • This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
  • All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
  • Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.

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