In summary

Term life insurance provides financial protection for a chosen period and can help your family manage loans, living expenses and future financial goals. Its main trade off is that a standard term plan generally does not provide a maturity payout.

• Lower premiums: Term insurance generally costs less than life insurance products that include savings or investment features.
• High life cover: A common starting point is 10 to 15 times your annual income, adjusted for debts, dependants and future expenses.
• Fixed protection: Policy terms can be selected based on the period for which your family needs financial protection.
• Main limitation: Standard term insurance generally does not pay a maturity amount when the policyholder survives the policy term.

Assess your income, liabilities and family responsibilities before choosing your life cover. You can compare term insurance plans and get a quote based on the protection your family may need.

Term life insurance is a type of life insurance policy that provides death cover for a fixed period, such as 10, 20, 30 or 40 years. If the life insured dies during the policy term, the nominee receives the applicable death cover under the policy.

A standard term plan does not build cash value and generally does not provide a maturity payout when the policyholder survives the term. This makes term insurance different from life insurance products that combine protection with savings or investment features.

Policy terms can range from 5 to 40 years. You can choose a term based on responsibilities such as a home loan, children's education or the period for which your family depends on your income.

• Lower premiums: Term insurance generally have lower premiums than other life insurance plans that include savings or investment components. This can allow you to allocate more of your insurance budget towards life cover.
• Simple protection: A term plan focuses on financial protection for a selected period. You pay the required premiums, and the nominee can receive the applicable death cover if the life insured dies during the policy term.
• Flexible policy terms: The policy term can be selected according to your financial responsibilities. For example, you may align the term with a home loan, children's education or the period during which your family depends on your income.
• Substantial life cover: A commonly used starting point is 10 to 15 times your annual income. Your actual requirement should also account for outstanding loans, household expenses, future goals, dependants, existing savings and investments.
• For example, if your annual income is Rs. 10 lakh, 10 to 15 times your income gives a starting range of Rs. 1 crore to Rs. 1.5 crore. Your final cover may need to be adjusted after considering your debts, savings and family's future financial needs.
• Conversion option: Some term insurance policies allow you to convert the policy into another type of life insurance without a fresh medical examination. This feature is not available with every policy, so check the specific policy terms before relying on it.
• Tax benefit: Eligible premiums paid for a life insurance policy, including a term insurance plan, can qualify for a deduction of up to Rs. 1.5 lakh per tax year under Section 123 of the Income Tax Act, 2025, subject to the applicable conditions.

Explore affordable term insurance plans, starting at Rs. 14/day for 1 crore cover, through Bajaj Finance Insurance Mall. You can compare plans offered by trusted insurers and get quote easily online for a suitable through this platform to secure your family.

• No cash value: One of the significant term life insurance disadvantages is that it does not build cash value. Unlike whole life insurance, which has a savings component, term life insurance only provides a death cover if the policyholder dies during the policy term. There are no investment returns or cash value to borrow against or withdraw from.
• Coverage is temporary: Term life insurance coverage is limited to the term of the policy. Once the term expires, the coverage ends, and the policyholder must either renew the policy, usually at a higher premium, or seek a new policy. This temporary nature can be a drawback if long-term coverage is needed.
• Premium increases with age: If you decide to renew your term life insurance policy after the initial term, premiums will typically increase with age. Older policyholders may find the new premiums prohibitively expensive, making it challenging to maintain coverage.
• Potential for no payout: If the policyholder survives through the term, the beneficiaries may not receive any payout, and the premiums paid over the years do not result in any financial return. This outcome can be seen as a disadvantage compared to whole life insurance, where the policy accumulates value over time.
• Limited options for health changes: While many term policies offer a conversion option, this feature may come with restrictions and higher costs. Additionally, if a policyholder's health deteriorates significantly during the term, obtaining new coverage or affordable renewal options may become challenging.

Use these steps to assess your coverage:

1. Assess your income: Start with your current annual income and consider how much financial support your family may need if that income is no longer available.
2. Calculate a starting cover: Use 10 to 15 times your annual income as an initial reference point.
3. Add outstanding liabilities: Include home loans, personal loans and other debts that your family may need to repay.
4. Consider future expenses: Include children's education, household expenses and other major financial goals.
5. Account for existing assets: Consider your savings and investments when deciding how much additional life cover you need.
6. Choose the policy term: Select a term that covers the period during which your family is likely to depend on your income or when major financial responsibilities remain.

7. Review your cover: Reassess your life insurance when your income, liabilities, family responsibilities or financial goals change.

   
   

For instance, if you earn Rs. 10 lakh annually, the initial 10 to 15 times calculation gives Rs. 1 crore to Rs. 1.5 crore. You can then adjust this amount after considering your outstanding loans, existing investments, savings and expected future expenses.

You can also consider optional riders where available. These may include critical illness and accidental death riders. Availability, eligibility and cost depend on the selected policy. 

Explore affordable term insurance plans online and get quote now!

Before choosing a plan, consider your income, liabilities, dependants, required policy term and budget. Compare the available coverage and features to select a policy that matches your financial protection needs.