Term Insurance

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Term insurance is one of the most basic forms of life insurance which provides financial coverage to the nominee for a predefined policy term, in return for a fixed premium, in case of demise of the policyholder.

One of the key benefits is that it offers high coverage for a relatively low premium.

Highlights of Term Insurance Plans

Coverage for critical and terminal illnesses
Protection for accidental, total, and permanent disabilities
Monthly premium payment option
Insured up to age 100
COVID-19 related death coverage
Tax benefits under Section 80C

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Sahi Insurance

If you have any questions related to how to choose the best insurance company, you can connect with our IRDAI certified insurance advisors.

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Term Insurance

Everything you Need to Know

Who Needs to Buy a Term Insurance Plan

Term life insurance is crucial for anyone with dependents, particularly those responsible for their family's finances. It's designed to offer financial security to your loved ones. In case of the policyholder’s unfortunate demise, the sum assured is paid to them, helping them manage finances during tough times. Choosing the right plan ensures your family is cared for even after you are gone.

Examples for more clarity:
Sanjeev needs to buy a term plan
Sanjeev
31 years old Married Planning children in 2 years Have a home loan of ₹70 lakhs Retired parents
Nikita need not buy a term plan
Nikita
29 years old Single No financial dependents Parents are doctors & financially independent
Salman need not buy a term Plan
Salman
33 years old Married No dependent parents Spouse is employed and financially independent No loans

What are the Main Aspects of a Term Insurance Policy

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Death benefit

In case of the unfortunate demise of the insured, the family gets the sum insured as lump sum or instalments, or both, based on the chosen payout.

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Policy term

It's the duration your policy covers ranging from 5 years to over 60 years.

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Maturity benefit

Regular-term plans don't offer a maturity benefit; they provide a death or critical illness benefit. Some plans have Return of Premium options where premiums are refunded at maturity.

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Entry Age

You can buy term insurance at 18 years, with coverage typically not extending beyond 65 years.

How Term Insurance Plans Work

In term insurance, you pay premiums for a set time period to get coverage. In case of your untimely demise, your nominee gets the death benefit. If you outlive the policy term, there are no benefits.

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The policyholder needs to decide the following:

  • Coverage amount
  • Policy term
  • Premium paying term
  • Frequency of the premium payment
  • Benefits of the term insurance plan

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Premium Payment

The policyholder has the option of paying a lump sum amount or periodic payments - monthly, quarterly, half yearly or annually.

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Policy Term

Coverage begins as soon as the policy is active. In case of the policyholder’s unfortunate demise, the nominee receives the entire coverage and the policy is terminated.

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Survival

If the policyholder survives the tenure, there will be no benefits and the policy will be terminated.

How to Select the Best ULIP

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Analyse personal investment goals

Consider your short-term and long-term goals, to choose funds that match your needs and allow flexibility.

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Evaluate risk profile and financial stability

Assess your risk tolerance and financial stability to determine the right asset allocation.

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Solvency ratio

Ensure the insurer maintains a solvency ratio of at least 150% for financial security.

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Check features and benefits

Understand features like fund switch, premium redirection, partial withdrawals, top-ups, etc. for optimal benefits.

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Look for flexibility

Look for ULIPs that offer flexibility in fund choices (debt, equity or both to align with your goals and objectives.

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Choose your investment strategy

Choose a portfolio strategy that suits your investment style - wheel of life, auto-transfer, trigger-based, fortune gain, etc.

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Claim settlement ratio

Opt for insurers with a high claim settlement ratio (over 95%) for reliability.

Simple Steps and Assistance for Buying a Term Insurance Plan

At Paybima, buying a Life insurance plan is easy and you can opt for an advisor’s help anytime.

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Types of Term Insurance Plans Available in India

Level term plan

This is the most common term insurance in which a fixed sum assured is paid to the family in case of the policyholder’s demise during the tenure.

Increasing and decreasing term insurance plan

It can increase or decrease the coverage annually. A decreasing term insurance covers liabilities such as a loan, while increasing term insurance helps manage inflation.

Term return of premium plan

Premiums are refunded if the insured survives the policy tenure.

Single-life and joint-life term insurance plan

Both have same benefits; however, a single-life plan is for individuals while a joint-life plan is best suited for couples with children.

Term Insurance Plan – Inclusions

What is covered in a term insurance plan?

Depending on the cause of death or disability, the amount is paid to the nominee or policyholder respectively.

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Natural Death

The complete sum assured is paid to the nominee.

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Accidental Death

An additional sum assured is paid to the nominee.

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Terminal Illness:

A part of the sum assured is paid to the policyholder for medical expenses.

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Critical Illness

A lump sum amount is paid to the policyholder if it is covered in the plan.

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Disability

A part of the sum assured is paid to the policyholder who is disabled post an accident or illness.

Term Insurance Plan – Exclusions

What is not covered in a term insurance plan?

Term insurance policies typically come with exclusions that limit coverage for certain events or circumstances. The specific exclusions can vary depending on the insurer and the policy's terms and conditions. However, some common exclusions are:

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Suicide

If the policyholder’s death occurs by suicide within a certain period of policy issuance (usually two years).

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Death due to drug or alcohol abuse

If the policyholder dies due to any kind of substance abuse.

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Criminal act

If the insured’s death occurs through any illegal/criminal activities.

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Death from a pre-existing illness

A death that occurs due to a condition/illness that already existed before policy commencement.

How to Select the Best Term Insurance Plan

Selecting the best term life insurance plan in India is vital for you and your family’s future. That’s why one must consider several factors before choosing the right plan.

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Buy early

Premiums are lower when bought early in your earning life.

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Sum assured

Calculate the amount based on family income, liabilities, and expenses using a term insurance calculator.

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Coverage

Look for joint life (for spouse), whole life benefits (till age 99), and Return of Premium (ROP) options.

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Tenure of the policy

Choose a tenure that matches your financial responsibilities.

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Riders

Consider options like accidental death, critical illness coverage and premium waivers.

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Payout options

Choose between lump sum or monthly payments or a combination of both.

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Insurer

Check for claim settlement ratio, customer care process and overall reputation.

How to Calculate the Term Plan Premium

How Does a Term Plan Premium Calculator Work?

The calculator asks for your basic information and the amount of life cover you want. It considers factors like your finances, dependents, lifestyle, and inflation cost to help you choose enough coverage for your family. You can also see premiums for different payment frequencies and customize the plan to fit your needs. The calculator quickly and accurately shows the premium amount you need to pay.

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Cover amount

Choose enough to meet your family's financial needs in your absence, considering a 4-6% annual inflation.

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Age

Younger individuals generally have lower premiums due to lower health risks.

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Gender

Some policies charge lower premiums for women than men.

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Lifestyle

Regular consumption of tobacco or alcohol may increase your premiums.

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Policy tenure

Longer terms may have higher premiums but offer better benefits.

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Payment tenure

You can choose between yearly, quarterly, monthly, or single payment tenure.

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Payment frequency

Usually, monthly and quarterly payments are higher; annual and bi-annual are lower.

Term Insurance - Premium Calculator

The Earlier You Buy, Lesser the Premium

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Term Plan of 1 Cr for a 25 years male starts at
₹575*/ mo

Price is calculated for salaried, annual income 10 Lacs & education is graduate and above. The premium can vary with premium paying tenure, frequency and adding riders

How to Claim a Term Insurance Policy

Follow this procedure to make claims seamless.

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Step 1

Claim intimation
The first step involves reporting your claim. You can report your claims online, at the insurance company’s branches, Mahindra Paybima website, central office, etc., with the physical documents mentioned below to start the process.

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Step 2

Claim processing
Once all documents are arranged, submit the same to the insurance company. The company’s special claim care team will assess your claim and inform you if any further documents need to be submitted. Post receiving all the necessary documents, the insurance company will process your claim request.

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Step 3

Claim settlement
The insurance company will then verify the claim by reviewing the documents submitted. They may also conduct an investigation, if necessary. Once the claim is verified and approved, the insurance company will inform the nominee about the approval of the claim and the settlement amount. The settlement amount is generally paid to the nominee's bank account directly.

Documents for Claiming Term Insurance Policy

The nominee has to submit the following documents in order to receive the death benefit:

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Claimant's statement form - download the claim form from Paybima.com

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Original policy document

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Copy of death certificate issued by the local municipal authority

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Copy of nominee’s identity proofs such as Aadhar card, PAN card, passport, etc.

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Cancelled cheque/copy of bank passbook of the claimant

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Copy of cause of death certificate

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Prior medical records of insured/life-assured

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Medical attendant's/ hospital certificate issued by a doctor - download format from the website

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Medical records as proof of cause of death, case papers, test reports, etc.

In addition, the below documents are required for accidental/suicidal death:

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Post-mortem report and chemical viscera report

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FIR/panchnama/inquest report and final investigation report

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Copy of driver’s license if the life assured was driving the vehicle at the time of the accident (applicable if 'accident and disability benefit rider' is opted)

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Post-mortem report and chemical viscera report

Term Insurance Plan Claim – How to Avoid Rejections

Here are some of the main reasons for claim rejection:

Non-disclosure or misrepresentation of information

The policyholder failed to disclose important information, such as a pre-existing medical condition or a dangerous hobby.

Lapsed policy

If the policyholder fails to pay their premiums on time, the policy will lapse and the insurance company may reject the claim.

Exclusions

If the policy specifically excludes certain causes of death, such as deaths resulting from drug use or extreme sports, the insurance company may reject the claim.

Unable to provide relevant documents

If nominee details are not provided or your claimant fails to provide relevant documents required at the time of claim, the claim might get delayed or rejected as per the company’s policy.

Suicide clause

If the insured takes their own life within a certain period of time after the policy is issued (usually two years), then the insurance company rejects the claim.

Guaranteed Claim Support

We will guide you from start till end in your ‘claim’ journey. Start your claim process with us to get our support.

How to Buy a Term Insurance Policy at Mahindra Paybima

Buying a term insurance policy online is very simple. You can follow these steps to buy a term insurance policy online at Mahindra Paybima.

1
Share personal details

Input basic details along with gender, age, coverage amount, annual income, occupation, etc. to begin the policy procedure.

2
Browse policies

Check the various plans offered by different insurance companies and shortlist the plans.

3
Compare shortlisted policies

Once you’ve shortlisted 2-3 policies that suit your requirements, compare them online.

4
Add riders

Select the appropriate riders or add-ons to the policy for additional cover.

5
Complete and review the proposal form

Enter proposer details for cKYC, medical information and nominee details.

6
Make payment

Pay for the policy online using credit/debit cards, UPI, wallets, or net banking.

7
Upload Documents

Provide documents for ID proofs, address proof and salary proof.

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Medical examination

The insurance company conducts a medical examination before issuing the policy.

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Get the policy

The proposal is submitted to the insurance company for approval. Once approved, you will receive the policy by email.

Documents Needed to Buy a Term Insurance Plan

To buy a term insurance policy, you will typically need to provide the following documents:
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Address proof: Driver’s license/bank statement or passbook with latest entries/passport/voter ID/Aadhaar card/ration card

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Identity proof: Aadhaar card/voter ID/passport/PAN card

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Age proof: PAN card/Aadhaar card/passport/voter ID card/marriage certificate/ration card/birth certificate/driver’s license

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Passport-size photographs of the individual

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Income proof:
1. For high sum assured cases, income proof is also needed.
2. Salary slips of last 3 months/Income Tax Returns/employer certificate/latest bank statement/latest form 16

Benefits of Buying Term Insurance Plans online on Paybima

It is important to compare the best term insurance plans, and here are some of the reasons why:

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Best coverage

In a term insurance policy, there are different types of coverage options available. You can easily compare and choose a plan that meets your specific requirements and offers the best coverage.

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Get the best rate

You can get a term insurance policy that offers the best value for your money.

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Understand the features

You gain a better understanding of the insurance market & learn about the different types of features available in policies.

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Safest Choice

While comparing the plans you can compare the claim settlement ratio of the insurance companies and choose the plan with the highest percentage.

Choose from India’s Top Insurers

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Ask Anything as We Have Answers to Everything in Insurance

Yes, you can buy a ULIP life insurance plan in the name of your minor child. ULIPs allow children aged 30-90 days and above to be covered under the plan. So, check the minimum entry age and if your child fulfils the minimum entry age criterion, you can insure him/her under the plan.

Usually, ULIPs are offered for a minimum period of 5-10 years and a maximum tenure up to 40 years. However, there are ULIPs which also allow lifelong coverage and continue till you reach 99 or 100 years of age.

ULIPs have a minimum lock-in period of 5 years before which you are not allowed to surrender. If you discontinue the premium after 3 years, the fund value would be transferred to a discontinued policy fund. Discontinuation charges would be deducted from the fund for the next 2 years. Once the lock-in period is over, you would be allowed to withdraw your fund value from the discontinued fund.

Enhancement of the sum assured depends on the plan’s terms and conditions. Some ULIPs allow enhancement of the sum assured during the policy tenure while others don’t. So, read your policy document to understand if an enhancement is allowed or not.

You can claim a deduction for the premium paid up to a maximum limit of Rs.1.5 lakhs under Section 80C. However, if your premium is more than 10% of the sum assured, premium up to 10% of the sum assured would be allowed as a deduction.

Yes, there is a minimum and maximum limit on the amount of partial withdrawals that you do. This limit depends on the policy. However, almost all ULIPs ensure that after the withdrawal, your fund value should be equal to at least one annualised premium.

Yes, you can buy as many ULIPs as you want. There is no restriction on the number of ULIPs that you can buy.

Yes, an additional premium is required for the rider. However, under ULIPs, you don’t have to pay the premium. The cost of the rider is deducted from the fund value as the rider coverage charge.

Some plans allow you the flexibility to avail of the death benefit in installments rather than in one lump sum. However, this benefit is plan specific and you should check your policy to find out if you can avail of the death benefit in installments or not.

No, on maturity, the fund value is paid even if it is lower than the sum assured.

Yes, some ULIPs allow coverage on a joint basis. So, check for plans which allow such coverage because not all ULIPs have this feature.

ULIPs allow different types of premium payment modes. You can pay a single premium, limited premium, or regular premium for the policy if the policy allows.

Under pension ULIPs, you are allowed to withdraw up to 60% of the accumulated fund value in lump sum. The remaining fund value should, then, be used to either buy a single premium deferred annuity plan or an immediate annuity plan.

No, the returns under ULIPs are not guaranteed. They depend on the market movement.

No, you cannot lower the charges associated with ULIPs. The charge structure is designed by the company and is applicable for all policyholders. However, if you look for plans that refund some of the charges on maturity, you can lower the effective charges deducted from your fund value.

Nomination is not mandatory. However, it is advisable to nominate an individual to receive the death benefit otherwise, if the insured dies, his/her legal heirs would have to make a claim by proving their legal status as the deceased’s heirs.

Yes, a loading is applicable if you pay monthly premiums, if you have an adverse medical history, if you smoke, etc. However, no additional premium is payable for the loading. The loading is adjusted as an increase in the ULIP charges.

If you are aged above 45 years, or if you opt for a high sum assured or if you have an adverse medical condition then you would have to undergo a health check-up before buying the policy.

Usually, ULIPs allow individuals aged up to 65 years to buy the plan. In some plans, however, the maximum entry age can be up to 70 years too.

Most ULPIs allow a sum assured of 1.25 times the top-up premiums if you are aged up to 45 years. For higher ages, the sum assured is calculated as 1.10 times the top-up premium.