What is a Term Insurance policy or Term Plan ? 

A term insurance policy provides a lump sum payout to nominees if the policyholder passes away during the term. Unlike other life insurance plans, term insurance is purely for risk protection, offering no investment returns.

Key benefits of a term plan:

• Low premiums: Term insurance comes with affordable premiums since it doesn't offer maturity returns and has a simpler fee structure.
• Fixed premiums: Once locked in, your premium remains the same throughout the policy term.
• Guaranteed claims: After holding a policy for 3 years, claim payouts are nearly guaranteed.
• Tax benefits: Enjoy deductions under Section 80C and tax-free payouts to nominees.

Ideal coverage for a Term plan: 

To calculate your term insurance cover, calculate your current annual expenses, multiplied by years of coverage & add the current outstanding loan amount . This ensures your family maintains their lifestyle in your absence. 

please read more Term Insurance Calculator

Riders for a Term Insurance plan: 

Enhance your policy with riders like Critical Illness, Increasing Cover, Top-Up, Terminal Illness, and Waiver of Premiums for comprehensive protection. 

Please read Term Insurance Riders blog

Premium Payment Options:

• Regular Pay: Pay premiums yearly until the policy expires. 
• Limited Pay: Pay all premiums upfront within a set period (e.g., 5 years) for a discount.
• Monthly Payment: Some insurers allow monthly premium payments, though missing a payment could lapse the policy.

While you can choose as per your own comfort, it is generally suggested to go with Regular Pay, want to know why? please reach out to us.

How to choose the best term insurance policy: 

1. Choose an insurer based on the volume of policies sold
2. An insurer with low volume of complaints
3. An insurer with high amount settlement ratio (>90% should be good) 
4. A good term plan should offer a smooth application process, necessary riders, and competitive pricing.

Tax Exemption on Term Insurance:

1. Section 80C: Premium paid up to ₹1.5 lakhs is exempt from tax.
2. Section 10(10D): Maturity proceeds, including death benefits, are exempt from tax, provided - Policy issued on or after April 1, 2003. If premium paid does not exceed 10% of the sum assured.
3. Section 80D: Additional exemption of ₹25,000 (₹50,000 for senior citizens) for critical illness riders.

Click here to know more about Taxation on Term Insurance

Best Term Insurance Plans for 2025 in India

• Max Life Smart Secure Plus
• Tata AIA Maha Raksha Supreme
• Bajaj Allianz Smart Protect Goal
• ICICI Prudential iProtect Smart

Thanks,

Honvest Team