Here are 10 FAQs on Term Life Insurance in India:
1. What is Term Life Insurance?
Term life insurance provides financial protection to your loved ones in case of your unfortunate demise during the policy term. It offers a high sum assured at a relatively low premium compared to other life insurance plans. However, unlike other plans, it doesn’t offer any maturity benefit if you survive the policy term.
2. Who needs Term Life Insurance?
Anyone who has dependents financially reliant on them should consider term life insurance. This includes individuals with:
Spouses and children
Aging parents
Business partners with financial dependence on each other
3. What are the different types of Term Life Insurance plans available in India?
Level Term Plan: Offers a fixed sum assured throughout the policy term.
Increasing Term Plan: The sum assured increases periodically during the policy term, keeping pace with inflation and growing family needs.
Decreasing Term Plan: The sum assured gradually decreases over the policy term, aligning with decreasing liabilities like mortgage payments.
Convertible Term Plan: Allows converting the term plan to a whole life or endowment plan within a specific period, providing maturity benefits.
4. What factors affect the premium of a term life insurance plan?
Age: Younger individuals generally pay lower premiums than older ones.
Sum assured: Higher sum assured leads to higher premiums.
Policy term: Longer policy terms typically come with higher premiums.
Lifestyle habits: Smoking, alcohol consumption, or risky hobbies can increase premiums.
Medical history: Pre-existing medical conditions might affect eligibility or increase premiums.
5. What are the tax benefits of term life insurance in India?
Premiums paid towards term life insurance qualify for tax deductions under Section 80C of the Income Tax Act.
The sum assured received by the beneficiary is generally tax-exempt (subject to certain conditions).
6. Can I cancel my term life insurance policy?
Yes, you can cancel your term life insurance policy. However, this will result in losing the surrender value (if any) offered by the insurer. Review the policy document for specific terms on cancellation and surrender value.
7. What are the common exclusions in a term life insurance plan?
Term life insurance typically excludes death due to:
Suicide within the first few years of the policy
War, terrorism, or participation in risky activities
High-risk occupations
8. How do I choose the right term life insurance plan?
Consider your financial needs and dependents.
Compare different plans offered by various insurers.
Factor in your budget and affordability.
Understand the policy terms, exclusions, and benefits clearly.
Seek guidance from a financial advisor if needed.
9. What are some additional factors to consider when buying term life insurance?
Riders: Optional add-ons like accidental death benefit or waiver of premium rider can enhance coverage.
Claim settlement ratio: Choose an insurer with a good claim settlement ratio for faster claim processing.
Customer service reputation: Consider the insurer’s customer service reputation for resolving queries and assisting with claims.
10. How can I buy term life insurance in India?
You can purchase term life insurance online through the insurer’s website or app.
Contact a life insurance agent who can guide you through the selection process and application.
Banks often partner with insurance companies, enabling you to purchase a plan through your bank branch.
