Buy Term insurance 2025 | Best Online Plan & Policy

• Dec 10, 2025
• Admin

In today’s fast-paced world, financial planning has become more important than ever. While there are numerous investment and savings tools available, term insurance stands out as one of the most effective and affordable ways to ensure financial protection for your loved ones in your absence. Whether you're a salaried professional, self-employed, or an entrepreneur, understanding how term insurance works and how it can benefit your family is essential.

In this in-depth guide, we will walk you through everything you need to know about term insurance, including how it works, key features, benefits, who should buy it, how to choose the right plan, and the most frequently asked questions around it.

What is Term Insurance?

Term insurance is a type of life insurance policy that offers financial protection to your family for a specific period or term. If the policyholder dies during the policy term, the nominee receives the death benefit or sum assured. It does not have any maturity or survival benefit unless additional riders are added.

Unlike traditional life insurance policies that combine investment with insurance, term insurance is a pure risk cover plan. Its primary purpose is to provide a large sum assured at a relatively low premium, ensuring your family's financial stability even in your absence.

Why Term Insurance is Important?

Life is unpredictable. An unfortunate event can drastically affect your family's financial health. Term insurance offers a financial cushion by ensuring that your loved ones don’t face a financial crisis if you're no longer around. It helps pay off debts, cover living expenses, fund children's education, and maintain their current lifestyle.

Term plans are crucial for:

• Replacing lost income
• Managing liabilities such as home loans or personal loans
• Ensuring children’s education
• Taking care of ageing parents
• Maintaining family lifestyle
   

How Does Term Insurance Work?

A term insurance policy is straightforward in its structure. Here's how it works:

1. You choose a policy term – usually between 10 to 40 years.
2. You choose a sum assured – the amount your family will receive if you pass away during the policy term.
3. You pay regular premiums – monthly, quarterly, or annually.
4. In case of death, the insurance company pays the sum assured to your nominee.
5. If you survive the term, there are no payouts unless it’s a Return of Premium (ROP) policy.

Key Features of Term Insurance

1. High Coverage at Low Premiums: You can get a significant cover amount for a relatively small premium.
2. Flexible Policy Term: Choose a tenure that suits your needs, from 5 to 40 years.
3. Multiple Payout Options: Lump sum, monthly income, or a combination of both.
4. Add-on Riders: Enhance your cover with critical illness, accidental death, or waiver of premium riders.
5. Tax Benefits: Premiums paid are eligible for deduction under Section 80C, and the death benefit is tax-free under Section 10(10D) of the Income Tax Act.

Types of Term Insurance Plans

1. Level Term Plan: The most common type, where the sum assured remains fixed throughout the term.
2. Increasing Term Plan: The sum assured increases annually to counter inflation.
3. Decreasing Term Plan: Ideal for loan repayments as the sum assured decreases over time.
4. Return of Premium Plan (ROP): If you survive the policy term, all premiums are returned.
5. Convertible Term Plan: Allows you to convert it into a permanent life insurance plan later.
6. Group Term Insurance: Provided by employers or groups for employees or members.

Benefits of Buying Term Insurance

Financial Security

The core benefit is providing financial support to your dependents in your absence.

Peace of Mind

Knowing your family is protected can bring you immense peace of mind.

Tax Savings

Premiums are eligible for tax deductions, making it a smart financial move.

Customization

With riders, you can tailor your plan to suit your individual requirements.

Affordable Premiums

Especially when bought early, premiums are low and locked in for the entire term.

When is the Best Time to Buy Term Insurance?

The earlier, the better. Buying a policy when you're young and healthy ensures lower premiums. Delaying may lead to higher premiums or rejection due to medical issues. Ideally, you should buy term insurance:

• After starting your first job
• When getting married
• After taking a home or personal loan
• When having children
• During major life transitions

Factors to Consider Before Buying a Term Insurance Policy

1. Adequate Sum Assured: Usually, 15–20 times your annual income.
2. Claim Settlement Ratio: Choose a company with a high CSR for trustworthiness.
3. Policy Tenure: Opt for a longer term, ideally till your retirement.
4. Premium Payment Term: Regular, limited, or single-pay – choose what’s convenient.
5. Riders: Evaluate if you need critical illness or accidental cover.
6. Inflation: Consider rising costs when deciding the coverage amount.
7. Insurer Reputation: Look into reviews, ratings, and financial strength.

Common Mistakes to Avoid

• Underinsuring your life.
• Choosing a shorter policy term.
• Not disclosing medical history truthfully.
• Ignoring riders that could be helpful.
• Not comparing policies across different insurers.

How to File a Term Insurance Claim

1. Inform the insurer immediately after the policyholder’s death.
2. Submit claim form along with death certificate, ID proof, and policy documents.
3. Verification is done by the insurer.
4. Claim settlement is processed within a specific time, usually 30 days.

Term Insurance Myths Busted

Myth 1: I’m young and healthy; I don’t need term insurance.
Reality: The younger you are, the cheaper your premium.

Myth 2: Term insurance is expensive.
Reality: It’s the most affordable form of life cover.

Myth 3: If I survive the term, I get nothing.
Reality: That’s how pure risk cover works; or choose ROP plans.

FAQs about Term Insurance

Q1. Is term insurance better than other life insurance policies?
Yes, if your goal is purely protection, term insurance offers the highest coverage for the lowest cost.

Q2. What is the ideal coverage amount for term insurance?
Generally, 15–20 times your annual income, but it also depends on your liabilities, family size, and future goals.

Q3. Can I have more than one term insurance policy?
Yes, you can buy multiple policies to diversify your risk or cover different needs.

Q4. What happens if I stop paying premiums?
The policy lapses, and your family won’t get any benefit in case of your death.

Q5. Is medical check-up necessary for term insurance?
Most insurers require a medical check-up, especially for high coverage or older applicants.

Q6. Are riders important?
Yes, riders like critical illness or accidental death add more comprehensive protection.

Q7. Can NRIs buy term insurance in India?
Yes, many Indian insurance companies offer term insurance to NRIs.

Q8. Will the claim get rejected if I die outside India?
If your policy is valid and you’ve disclosed everything correctly, your nominee can still claim even if death occurs abroad.

Conclusion

Term insurance is more than just a policy; it's a promise to secure your family’s future even in your absence. It’s a low-cost, high-benefit financial product that everyone with dependents should consider. With flexible terms, customizable options, and tax benefits, it fits perfectly into any financial plan. Whether you're starting your career or nearing retirement, term insurance can be a cornerstone in building a secure and stress-free future for your loved ones.

Take time to assess your needs, compare plans, and make an informed decision today—because tomorrow is never promised, but you can plan for it.