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- Term Insurance
- What is Term Insurance?
- Why Do I Need Term Insurance?
- Term Insurance Calculator
- Why Buy Term Insurance?
- Who Should Buy Term Insurance ?
- How Does a Term Plan Work ?
- Experiences of term insurance buyers
- Features of Term Insurance
- Term Insurance Benefits
- Top Term Insurance Plans
- Hear from the experts
- What are the best term insurance plans in India 2025?
- Term Life vs. Whole Life Insurance: Key Differences
- Know about Term Insurance Riders
- How to Buy Term Insurance?
- Steps to buy term insurance
- What are the 5 important stages in life to buy a Term life insurance?
- Know more about Term Insurance
- When Should I Buy a Term Insurance Plan?
- Term Life Insurance Period
- How to choose the right term length for your term insurance?
- How to select the Best Term Insurance Plan?
- Importance of sum assured
- Choose best term insurance plan
- Some Common Queries on Term Insurance Answered
- How term plan secures family future?
- Which Factors Affect Term Insurance Premiums?
- Why Buying Term Insurance
- Why choose HDFC Life Term life insurance plan?
- What is not covered in a Term Insurance?
- Term Insurance Buying Guide
- Common mistakes to avoid while buying Term Insurance
- Eligibility Criteria for Term Insurance
- Documents & Eligibility
- Terms Related To Term Insurance
- FAQs on Term Insurance
- Term Insurance Related Articles
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Term Insurance
Term insurance is the simplest and purest form of life insurance that provides financial protection for a specific time period in exchange for a fixed premium. ...Read More
1 Crore Term Insurance@ Rs.21/day***
No Time for Regret!
Secure Your Family's Future with Term Insurance.
:1800-266-9777
Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
Written By:
Vishal Subharwal
Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.
Reviewed By:
What is Term Insurance?
Term Insurance is the simplest form of life insurance that only offers financial cover for a specific number of years. Term insurance plan provides a financial benefit to your nominee in case of your death during the term of the policy.
As term plan is a pure life insurance policy it offers the financial benefit only in case of death for the premiums paid. It does not return any financial value in case you survive the term of the policy. If you wish to get your premiums back after the term of the policy you can opt for term insurance with return of premium.
You can buy term life insurance plan by paying a premium amount at a desired frequency for the required financial benefit for your nominee.
For example, a healthy 25-year-old non-smoker male has to pay Rs.780 per month over 30 years for 1 crore term insurance.
...Read More
Why Do I Need Term Insurance?
There are several term insurance benefits that cater to your specific financial protection needs. Here are few of it’s benefits:
To Protect Your Family
As the main provider for your family, it's crucial to protect your spouse, parents, and children. Term insurance plan is a simple way to ensure their financial security if something happens to you. It helps cover their basic needs and gives you peace of mind knowing they'll be taken care of, even if you're not there. Don't wait, take this step to safeguard your family's future today.
To Protect Your Assets
If you have loans for assets like a home or car, term insurance can help protect your family from the burden of these debts after you're gone. This financial support ensures they can keep the assets you worked hard for, without the stress of outstanding payments.
To Cope with New Lifestyle Risks
When a family loses their main earner, it can be very challenging to manage finance. Term insurance provides essential financial support to help your family during this tough time. It ensures that your loved ones can maintain their standard of living and manage daily expenses without the added stress of financial worries. This support is crucial for helping them adjust and move forward without you.
Low Premium and Attractively Large Cover
Term insurance policy is an affordable way to safeguard your family's finances. With low premiums, you can get ample coverage, ensuring your loved ones are financially secure. It's a smart choice that provides peace of mind, knowing you've protected your family without breaking the bank. Choose the best term insurance plan in India today for a worry-free future for your loved ones.
To Be Prepared for Uncertainty
A term life insurance plan’s primary objective is to financially prepare your family for uncertain times. In case of a misfortune with you, the sum assured from the term plan will help your loved ones financially cope from the situation. You can opt for the best term insurance plan for 1 crore to be prepared for any financial uncertainty.
Uncertainty arising due to lifestyle diseases
Lifestyle diseases have been one of the leading causes of deaths in India. Deaths due to heart attacks have increased by 12.5% in 2022 when compared to 2021 (source: National Crime Records Bureau). Although we can take necessary steps to maintain a healthy lifestyle but it is recommended to secure your family’s financial future in case of your demise due to a lifestyle disease.
Term Insurance Calculator
Term insurance plans provide financial protection when your loved ones need it most. Use the term insurance calculator to calculate your premiums and get a policy today!
Why Buy Term Life Insurance Online?
Here are some benefits of purchasing an online Term Insurance Plan:
High Protection at Low Premiums
Term insurance is easy to buy and offers significant coverage at low premiums. Buying early means even lower costs. It's accessible online or through other channels. It offers peace of mind while keeping your budget in check. As per your financial needs you can opt for 2 crore term insurance to secure your family’s future.
Add Ons
Term insurance plans often include riders and add-ons to enhance coverage. Some of these add-ons are critical illness riders and accidental disability riders, providing additional protection and financial security in unexpected situations.
Financial Security
Term insurance plan is one of the purest types of life insurance designed to provide quick financial assistance to your loved ones when you're no longer around. It provides a lump sum of money to your loved ones promptly, helping them manage immediate expenses and maintain stability during difficult times. It's a simple way to ensures your family receives timely support when it matters most.
Convenience
Buying an online term plan is convenient and hassle-free compared to buying offline. With no need for multiple visits, the online term plan process is quick and straightforward, making it easy to get covered without any delays.
Affordability
Online term insurance plans are more cost-effective as they bypass intermediaries, resulting in competitive rates and affordable options for policyholders.
Simplicity
Term insurance buying is a straightforward, quick and user-friendly process. Simply go to the insurer's website, fill in your details, choose a suitable term insurance plan, pay, and activate the policy.
Comprehensive Features
Online term insurance plans offer various features, including death benefits, maturity benefits, tax advantages, and flexible premium payment options. These features ensure comprehensive coverage, providing financial security and peace of mind for policyholders.
Multiple Premium Payment Modes
Buying a term insurance policy online gives you the convenience of choosing from multiple premium payment modes like monthly, quarterly, half-yearly, yearly or all at once.
Who Should Buy Term Insurance?
Let’s take a look at who should buy term insurance:
Term Insurance for Parents
Parents play a crucial role in providing financial support for their children, ensuring they have the resources they need to thrive. From covering school fees and living expenses to saving for hefty university fees, parents are often the primary source of financial assistance throughout their children's lives.
Protect your children's future with our term insurance plan, ensuring financial support for expenses in any parental mishap. With term insurance for parents, rest assured, your children's dreams are secure.
...Read More
Term Insurance for Young Professionals
As young professionals you have limited financial liabilities. If you invest in a term plan now, your premiums will be low and becomes more affordable with every increase in salary, offering the much-needed financial security for loved ones.
...Read More
Term Insurance for Newly Married
Forget short-lived gifts like jewellery or dinner dates; give your spouse the security of term insurance. Unlike roses or chocolates, it's a gift that ensures lasting protection and peace of mind. Term insurance isn't just about temporary happiness; it's about securing your spouse's future. Choose a gift that lasts beyond the moment and invest in their long-term well-being with a term life insurance plan. To find the best fit for your needs, it's advisable to compare HDFC Life Term Insurance Plans.
...Read More
Term Insurance for Women
Today, women are equal partners in managing finances and supporting their families. Term plan is a vital tool to ensure your family's financial security if something happens to you. It guarantees they can maintain their lifestyle and fulfill their goals. It also helps settle any outstanding debts like home or auto loans. Plus, with critical illness riders, you're covered if diagnosed with serious illnesses like breast or cervical cancer. Term insurance for women is tailored to provide reassurance, ensuring your loved ones are safeguarded.
...Read More
Term Insurance for Tax Payers
Term insurance policies come with tax benefits that help you lower your taxes. The money you pay for term insurance can be deducted from your taxable income i.e. deductions under 80C of the Income Tax Act.
...Read More
Term Insurance for Senior Citizens
Having a term insurance plan in your golden years provides financial security to your spouse. In case of your death, the payout from the term insurance for senior citizen will allow them to maintain their standard of living and cover medical costs.
...Read More
Term Insurance for Housewife
Term insurance for housewife is important as it provides her family with financial security in case of her untimely death. A term insurance payout helps cover the costs of running the household, including childcare and other expenses.
...Read More
Term Insurance for Self Employed
Term insurance for self employed lends financial security to the families of the self-employed in case of their death. The policy payout may cover the cost of immediate business overheads as well as everyday household expenses till someone else can take charge.
...Read More
Term Insurance for NRI
NRIs living abroad can take a term insurance plan benefiting their family back in India with financial security in case of their death. The maturity amount of the term insurance for NRI can help offer respite from the high cost of medical care, or the travel expenses etc.
...Read More
Term Insurance for Home buyers
Buying a home is a very important step in your life as it involves a considerable financial outlay. Most of us end up opting for a home loan to purchase our dream home. Unfortunately in case of the primary breadwinner's death the burden of paying home loan EMI is with their family. To avoid any financial burden due to liabilities it is recommended to get a term insurance as the life cover amount will facilitate the payment of the EMIs.
...Read More
Term insurance for diabetics
Having diabetes can make your life difficult. Having diabetes increase your risk of other critical illnesses. Thus, to provide financial protection for your family it is recommended that you take a term life insurance.
...Read More
Term insurance for equity investors
As an equity investor the primary objective for you is to drive growth in your investment. Investing in equity can be risky and since the individual investing in equities tend to have higher appetite for risk. Thus it’s important to cover the risk in your investments by taking a term insurance so that in case of your death the life cover of the term plan helps you protect the financial future of your family.
...Read More
How does a Term Plan Work?
Term insurance plan work for a limited duration. They provide life cover for a specific time. To enjoy the life cover, you must pay premiums at regular intervals. If anything happens to you, the policyholder, during the policy tenure, your nominee receives the promised sum assured as the policy payout. To enhance your family’s financial protection, you can choose to purchase riders or add-ons. There are primarily 6 stages as to how a term insurance works:
Agreement
Term insurance is a contract between you and an insurance company. The policyholder pays a premium to obtain life coverage for themselves or a family member. The person covered by the policy is called the life assured.
Filling out the Proposal Form
When buying an online term insurance plan, a crucial step is completing the proposal form. This form requires details such as your date of birth, gender, lifestyle habits, income, education, and medical history. It is essential to provide honest and accurate information, as these details determine your eligibility for the term life insurance plan.
Understanding Your and Your Family’s Needs
In order to select the right term insurance one needs to assess his and his family’s financial needs. Once you have properly assessed the financial needs you will be able to decide on life cover amount, policy term, premium payment frequency, riders and more. You can make the correct choice out of several types of term insurance available to meet your needs for financial protection.
Calculating Term Insurance Premium
With the help of a simple term insurance premium calculator you can calculate the premium for your desired sum assured.
Making Premium Payment
After assessing the information you have provided in the proposal form the insurance company sets your premium rate. Now you will need to pay the required premium in a manner of your choice.
Assigning A Nominee
In case of a term insurance it is vital that the policyholder selects a nominee who will receive the sum assured payout in case the policyholder is no more.
Let’s understand how a term life insurance plan works with a help of an example:
-
![Enter Basic Information]( "Enter Basic Information")
Step 01
Start by entering your basic information such as age, gender, and income.
-
![Enter existing liabilities]( "Enter existing liabilities")
Step 02
The calculator will then ask you to enter details about your existing liabilities such as outstanding loans, mortgages, and other debt obligations.
-
![Recommeded Term Insurance Plan]( "Recommeded Term Insurance Plan")
Step 03
Once you have entered all your details, the calculator will analyse your data and generate a recommended term plan coverage amount.
-
![Estimated Term insurance Premium]( "Estimated Term insurance Premium")
Step 04
The calculator will also give you an estimate of the premium you will need to pay for the term plan.
-
![You can now compare term insurance premiums]( "You can now compare term insurance premiums")
Step 05
You can then compare the premiums and coverage amounts of different term plans and choose the one that best meets your needs.
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![You have to complete Medical and Submit documents]( "You have to complete Medical and Submit documents")
Step 06
After selecting a plan, complete a medical check-up and submit required documents to activate your life insurance policy and enjoy its benefits.
Experiences of term insurance buyers
We spoke to some term insurance plan customers and here is what they had to say:
Rohit Verma, 31 years | Pune
I came to know about term insurance in my mid twenties when I started my professional career. Due to lack of awareness at that time I was looking to invest first and grow my wealth. 5 years down the line when I got married to struck me that even though I am investing to grow my wealth but do I have enough financial cover for my family in case of an unfortunate event and the answer was NO! Then I started my research to identify a financial product that would give an adequate life cover. The answer was pretty simple – term insurance. But I should have taken term insurance earlier.
Liza Mathews, 28 years | Mumbai
Once anyone decides to get a term insurance it can be a overwhelming process to go through the entire process of buying it. The same was the case with me. With so many options available online I got a bit confused on which option should I choose? I took a step back and followed the steps – Calculated my premium online, decided whether I needed any add-ons, evaluated the claims settlement ratio of various brands, consulted representatives of various brands and then took an informed decision. The actual process of buying once you have decided it’s that difficult. Good thing is that most of the things are online and hassle free. Now I am proud that I took a term plan for financial protection.
Sanjay Jha, 35 years | Delhi
I come from a family where money management is given a lot of importance. Thanks to the awareness I had I knew it was imperative to financially protect my future before I started investing to grow my wealth. The first thing I did when I started to earn was to get my financial future sorted with a term plan. Now a days it’s not that difficult to get a term life insurance online with so many options to choose from. At the beginning I calculated my premium for 1 crore life cover and then had to go through the usual process for the policy to get issued.
Ashish Dhade, 37 years | Nagpur
For me buying term insurance proved to be a challenging task since I wasn’t conversant about financial products. Since I lacked the understanding of a term insurance, I did a lot of research online and spoke to few of my colleagues who had already bought a term insurance. In my journey to buy term insurance I understood why it was necessary to get term insurance. For me term life insurance has a crucial purpose to fulfill – financial protection. I opted for term insurance at the age of 34 and realized that I could have saved on my premiums if I would have bought it earlier.
Rohit Ghosh, 27 years | Lucknow
When I started to earn, I was inclined towards growing my wealth and started to consult others. My brother introduced me to term life insurance and explained why getting term insurance was a necessity early in life. A term insurance serves the purpose of protecting the financial future of my dependents. Once I understood the benefits of a term plan I went ahead and did some research as to which one I should opt for. There are a few things that helped me make the decision – credibility of the brand, claims settlement ratio and ease of claim settlement.
Priya Yadav, 34 years | Dubai
Being an NRI I wanted to get comprehensive financial protection for my family. Post my research online, I got to know many life insurance providers in India have started providing term insurance for NRIs at reasonable premiums along with add-on riders such as critical illness and accidental death benefit rider. To my surprise it was a hassle-free experience of buying a term insurance plan.
Our Top Term Insurance Plans
Here are some of the best term insurance plans by HDFC Life:
Hear from the expert on Term Life Insurance
Hear from the expert on Term Life Insurance
HDFC Life Click 2 Protect Super10 (UIN: 101N145V06) is an intelligent term insurance plan that provides benefits as per your altering lifestyle and life stage needs and helps you stay truly protected. It also provides you with the flexibility to choose a cover that fits your needs from 3 plan options.
What are the best term insurance plans in India 2025?
Indentifying the best term insurance in India out of the various options available can be a challenging task. The easiest way to identify the best term insurance in India is to check for the claim settlement ratio of the insurer, brand trust of the insurer, affordability of the term insurance and ease of claim settlement process. Here are some options for one of the best term insurance plans in India:
Term Plan |
Benefits |
1. Term Insurance |
This policy offers financial security and protection to your dependents and beneficiaries at affordable premium rates, ensuring they’re supported if something happens to you. |
2. Term Insurance with Critical Illness rider |
This policy ensures your family’s financial security if you pass away unexpectedly. The lump sum payout can help cover your family’s financial needs and goals. Additionally, you can add a Critical Illness rider for extra protection against a range of serious illnesses, depending on the plan you select. |
This type of term insurance offers financial security to dependents at a low premium if the policyholder dies. If the policyholder outlives the policy term, all premiums paid are returned. |
|
4. Term Insurance with Waiver of Premium Waiver |
Under this plan, all future premiums are waivered in case there is a covered dismemberment or a critical illness diagnosis. Such a plan eases the stress of financial security in the face of unexpected situations and health concerns. |
5. Term Insurance with Accidental Disability & Death Cover |
In case you avail additional financial protection in form of accidental disability and death cover along with your base term life insurance, your nominee will receive the additional cover in case of your death due to accident |
6. Term Insurance with Monthly Income |
This insurance plan features payout in the form of monthly income to help ensure a regular inflow of money besides the lump sum received as a death benefit. |
This is an insurance plan offered by employers to their employees to lend financial security to their families. It is an affordable insurance cover for death or disability caused by illness or accident. |
|
8. Increasing sum assured plan |
In this plan, the sum assured increases by a certain percentage, typically capped to a multiple of the original sum assured. The premiums are higher than a level plan as the benefit amount increases with each passing year. |
9. Whole life insurance |
It is a type of term life insurance that provides life cover till the age of 99/100 years if all premiums are paid as per the premium paying term. |
How is term life insurance different from whole life insurance?
Let's understand term vs whole life insurance:
Term Life Insurance |
Whole Life Insurance |
When you think of the period of term life insurance, it is intended to protect the insured for a certain period, usually between 5 and 30 years. For instance, a 5-year term life insurance means the policy guarantees coverage for precisely 5 years. As long as the tenure of the policy continues and you pay your premiums on time, you stay covered. |
Whole life insurance is a kind of permanent life insurance, denoting that if the premiums are continuously paid, it is intended to last the insured person till the age of 99/100 years. |
As you think of what is covered in term life insurance, it provides pure life insurance coverage, meaning that it only pays a death benefit if the insured dies during the term of the policy. The primary rule of term life insurance is that it is intended to provide financial protection during a specific period. |
Whole life insurance provides financial coverage just like a pure term insurance but the coverage is extended till the age of 99/100 years of the insured. |
Term life insurance premiums are often less expensive than whole life insurance. This is because term insurance is for a specific period. Term life insurance is an appealing choice for young families or people looking for economical coverage due to its cost-effectiveness. Generally speaking, premiums are fixed during the term, which means they don't change throughout the policy's 10, 20, or 30-year lifespan. |
Whole life insurance premiums might prove to be higher than pure term life insurance since it provides extended coverage till 99/100 years. Thus, a longer policy term leads to higher premiums for whole life insurance. To get a better understanding of how these premiums compare, you can use a life insurance calculator to estimate the costs based on your age, health, and coverage needs. |
In case of a basic term life insurance plan you don’t get any money back on surviving the term of the policy. Only under the circumstance when you have taken a term return of premium rider along with your primary policy you are eligible for getting back your premiums except taxes and levies. |
Whole life insurance usual has very long policy terms extending to 99/100 years of age. In case the insured is still alive beyond the age of 99/100 years they aren’t eligible for any money back. |
Term life insurance is typically not permanent, and not convertible to whole life insurance by default. However, certain term life insurance plans provide a conversion option. |
Since a whole life insurance currently offers life coverage till the age of 99/100 years it does not need to be converted to term life insurance. |
A term life insurance expires once the policy term is over or the policy lapses due to non-payment of premiums. There is no financial cover once a term life insurance expires. This kind of life insurance provides financial cover in case of demise of the insured and provides no financial return if the insured survives the term of the policy. |
Similar to a term life insurance a whole life insurance expires when either the insured lives beyond 99/100 years or hasn’t paid the due premiums. Post expiration a whole life insurance behaves similar to a term life insurance. |
What is a Term Insurance Rider?
A term insurance rider is an extra feature you can add to your life insurance policy for added benefits. Here’s how they work:
Accidental Death Rider:
Disability Rider:
Critical Illness Rider:
Premium Waiver Rider:
Provides extra money if you pass away due to an accident.
Offers additional support if you become disabled.
Pays a lump sum if you’re diagnosed with a covered serious illness.
Covers future premiums if you’re diagnosed with a critical illness or face other specified situations.
These riders enhance your coverage and offer extra protection based on your needs.
Our top riders with Term Insurance plan
They help you deal with those additional risks life brings.
HDFC Life Income Benefit on Accidental Disability Rider – Non Linked
UIN: 101B041V01
Get additional income benefits over and above your Sum Assured in the event of total permanent disability due to an accident.
HDFC Life Critical Illness Plus Rider
UIN: 101B014V02
We pay a lump sum amount equal to Rider Sum Assured upfront if diagnosed with of any of the specified critical illnesses.
HDFC Life Protect Plus Rider – Non Linked
UIN: 101B040V01
Get protected with a proportion of Rider Sum Assured in case of accidental death or partial/total disability due to accident or diagnosed with Cancer
HDFC Life Health Plus Rider – Non Linked
UIN: 101B031V02
Get lump sum benefit equivalent to Rider Sum Assured on diagnosis of any of the covered 60 Critical Illnesses or benefit as a proportionate of the Rider Sum Assured on diagnosis of Early Stage Cancer / Major Cancer depending on the plan option chosen.
Extra Protection with | Term Insurance Riders
Discover the power of Extra Protection with HDFC Life Riders
How to Buy Term Life Insurance?
Purchasing a term life insurance plan is a quick and easy process. Let’s see how you can get the cover you need:
Estimate Your Sum Assured
Think about your current financial situation. Do you have any debts or family members who depend on you? If something were to happen to you in the next 20 or 30 years, how much would they need to maintain their lifestyle? Decide how much insurance you need to support your loved ones and look for term insurance plans that provide that coverage.
Enhance Your Cover
If you want to increase your coverage, consider adding riders to your policy. Once you have a clear idea of what you need, you can easily get online quotes and compare different plans.
Fill Up the Application Form
Select the term insurance plan you want to purchase and fill up the online application form. You have to provide details about your age, medical history and lifestyle habits. You have to upload a few documents for verification. After that, our team will schedule a medical test for term insurance.
Pay the Premium and Rest Easy
Submit the application and pay the premium amount to enjoy life cover and peace of mind.
What are the 5 important stages in life to buy a Term life insurance?
01 Staring to earn
We you start earning a steady income in form of your salary or from your business it is essential that you get a term life insurance and take the first step towards financial protection for your loved ones. Starting as early as possible also gives you the advantage of lower premiums at a younger age.
02 Starting family
When you get married and start a family, financial responsibilities might increase if you are the sole earner for yourself and your spouse. In case of your untimely death, your spouse might have to undergo financial distress if not protected with a term plan.
03 Becoming Parent
Becoming a parent is a life changing event in most of our lives. Along the joy it also brings responsibilities towards your child. Your little one will be financially dependent on you and thus it is imperative that you protect your child’s financial future with a term insurance policy in case of an unfortunate event.
04 Taking loan/debt
Opting for liabilities such as home loans can bring financial distress on your loved ones in case of your death and they are not financially capable to pay the installments for the home loan. The life cover of the term life insurance plan will help your family pay off the debt in your absence.
05 Moving to a new country
Life as we all know can be really challenging and unpredictable when you move to a new country. To financially secure our loved ones with us in a foreign country and the ones in India it is a necessity to let a term insurance. Life insurers in India provide term insurance for NRIs.
Know more about Term Insurance
Here are a few more essential things to know about term insurance policies before you invest in them:
01 How to Choose a Term Insurance Plan?
Follow these steps to purchase the most suitable term plan:
a. Step 1 – Assess the Sum Assured
To understand your sum assured requirement, simply multiply your annual income by 10, and you will get a rough estimate. Do consider your EMIs and other financial liabilities.
b. Step 2 – Factor in Additional Benefits
Understand the following for enhanced protection before purchasing your term plan:
You can select from the critical illness or disability riders.
Choose the payout type - lump sum or monthly installments.
Check maturity benefits if any incase you outlive the term.
c. Step 3 – Pay the Premium
You can finalize the plan by paying the premium. Enter your details and make a secure payment online to purchase the plan.
02 How Much Term Insurance Cover Do You Need?
In case you have a young family or have parents who are financially dependent it becomes essentially to secure their financial future in case of an uncertainty. To ensure that all their financial needs are taken care of you need to get a term insurance with adequate amount of sum assured. There are some basic rules that people follow to decide on the life cover they would need:
10-15X your annual income :
One of the simplest ways to determine the adequate sum assured is to multiply your annual income by 10-15. This is a very simple and widely accepted approach to decide on the sum assured of a term life insurance plan.
D.I.M.E formula :
There is a unique approach based on the 4 fundamental financial needs to calculate the sum assured for your term insurance known as D.I.M.E (Debt, Income, Mortgage and Education).
In this approach you are required to add up your debt, mortgage and college expenses, and your salary for the number of years your family needs financial protection and that’s the life cover you will need. Let’s understand with a help of an example, suppose someone has debt of Rs. 5 lacs, home loan of Rs. 50 lacs, estimated education expenses of his children is Rs. 30 lacs and his salary is Rs. 10 lacs per annum. He has assessed and decided that his family needs financial cover till the time his kids get a job and that will take another 10 years.
For the above scenario the estimated life cover needed as per the D.I.M.E approach is 5+50+30+ (10X10) = Rs. 1.85 Cr
Human Live Value (HLV) :
Another popular approach is the HLV philosophy. To calculate your HLV you need simply to multiply a variable to your annual income depending on factors such as current income, working years, age etc. The HLV calculator comes in handy to calculate your HLV and take a decision accordingly.
03 What are the payout options in Term Life Insurance?
Term insurance offers multiple payout options, some of them are as follow:
a. Lump Sum: Here, the entire sum assured is paid as a one-time amount.
b. One-time lump sum payment with fixed monthly payout: A portion of the sum assured is paid one time in lumpsum and the remaining is paid in monthly installments for some years as chosen by the policyholder.
c. One-time lump sum payment with increasing monthly payout: A portion of the sum assured is paid one time in lumpsum and the remaining is paid in monthly installments that keep increasing every year. The term is decided by the policyholder.
04 What are term insurance variants?
Here are the term insurance plan variants you can choose from:
a. Life: provide pure life cover without any rider.
b. Life Plus: Life cover with accelerated death benefit rider
c. Life and Health: Life cover with Critical Illness rider
d. All in-one: Life Cover with accelerated death benefit rider and Critical Illness.
When Should I Buy a Term Insurance Plan?
Starting a term insurance early can save you a lot of money. Premiums go up as you age, so by signing up now, you lock in a lower rate. This is even more advantageous for non-smokers. Get ahead of the curve and ensure financial protection for your loved ones while keeping costs manageable. Don’t wait—take a look at the table below to see how premiums increase with age and make the wise choice to start your term insurance today!
Age |
Base Policy Premium (Life Cover ₹ 1 Crore) |
With Critical Illness Cover (₹ 10 Lakh) |
With Accidental Death Cover (₹ 25 Lakh) |
20 years |
Rs.772 |
Rs.875 |
Rs.895 |
30 years |
Rs.992 |
Rs.1333 |
Rs.1115 |
40 years |
Rs.1951 |
Rs.2890 |
Rs.2074 |
50 years |
Rs.4288 |
Rs.7416 |
Rs.4411 |
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How long should your Term Life Insurance be?
One of the most important decisions when buying online term insurance is choosing the policy term. Several factors can help you determine the ideal policy term, such as your retirement age, the time needed to pay off liabilities, the age by which you expect to have no financial dependents, or opting for coverage until the age of 99 or 100.
Another aspect that you can consider while deciding on the policy term for your term life insurance is the life expectancy at birth of your country. Life expectancy at birth is basically the average number of years a newborn is expected to live. As per World Health Organization the life expectancy at birth for India stood at 67.3 years in 2021. Refer to the graphical representation of how life expectancy has changed from 2000 to 2021 in India.
Source: World Health Organization;
(https://data.who.int/countries/356)
How to choose the right term length for your term insurance?
In case if you are wondering how long your policy term should be, you can consider the following factors:
Financial independence of your children
Providing for your children financial can be really expensive speacially in the urban world. There are various expenses that your kids incur like education, clothing, food and extra-curriculars. You should consider for how many years are you planning to provide for your kids as the expenses might increase if you are paying for their college.
Time period of your loans and liabilities
Often repayments of our liabilities are a big part of our monthly expenses and thus it becomes imperative that we take a term insurance. Now if you want your term life insurance plan to cover your mortgage, consider the number of years you have left untill you pay off the loans. You would want to avoid the scenario where your term policy expires after 10 years but your liabilities continues for another decade.
Your desired retirement age
Under an ideal scenario you would live off you savings post your retirement. Now if you are getting a term life insurance plan to replace your income, you might not need it post retirement. Once your major expenses like home loan and child’s education are taken care of and you are living your retired life with your savings, you wouldn’t ideally need a term insurance anymore.
Current Age
You should take your current age into considerable while deciding the adequate length of your term insurance policy. Depending on your age and current financial situation you will be able to decide on how long you should take a term plan for.
How to select the Best Term Insurance Plan in India?
To ensure you choose the best term insurance in India, you should:
Evaluate your and your family’s financial needs
While selecting a term insurance plan it is essential that you map the benefits of the plan to the financial needs of your family in your absence. The term plan should be able to help your family maintain a health standard of living, cover all liabilities and future expenses.