What is term insurance? Know the benefits of taking term insurance

What is term insurance? Know the benefits of taking term insurance


What is term insurance?

Term insurance is the simplest and purest form of life insurance. It provides financial security to your family at the most affordable rates. With term insurance, you can get a large amount of life cover (i.e sum assured) at a relatively low premium rate. In case of death of the Life Assured during the term of the policy, the benefit amount is paid to the nominee.

  • Life cover with many optional benefits to provide complete protection to you and your family.
  • life insurance at affordable rates.
  • Receive claim payment on first diagnosis of 34 critical illnesses (optional).
  • Accidental Death Benefit up to 2 crores (optional)
  • In-built terminal illness cover – you get the full sum insured in case you are diagnosed with terminal illness4
  • Built-in premium waiver on permanent disability due to accident
  • Under Section 80C, 80D and 10(10D)5. Tax benefits up to 54,600 
  • Choice of 4 payment options – Lump sum, Regular Income, Growing Income and Lump sum + Regular Income
    Get cover till the age of 99.


5 Reasons to buy a Term Insurance Plan

High life insurance

Term insurance plans offer high life sum assured at affordable premium. For example, with ICICI Pru iProtect Smart, you can get a life cover of Rs.1 crore at a premium of Rs.490 per month only. This premium rate is for 1 crore life insurance cover for a 25 year old healthy male for a policy term of 21 years with regular income payment option. The annual premium will be Rs.5725 and the monthly premium will be Rs.490. Taxes are included in the premium amount.

You can also get critical illness cover

Apart from protecting your family in your absence, new age term insurance plans like ICICI Pru iProtect Smart can also provide cover against critical illnesses. By paying additional premium, you can get lump sum payment on first diagnosis of critical illness like heart attack, cancer, kidney failure etc.

You can also get accidental death cover

You can get additional protection by adding accidental death benefit to your term plan. With this benefit, your family will get a higher payout in case of your unfortunate death due to an accident.

Assistance in case of Disability

In term life insurance plans like ICICI Pru iProtect Smart, the insurance company waives off your future premiums in case of permanent disability due to an accident. This ensures that the life insurance continues even if you are unable to pay the premium.

Tax Benefits

Term insurance plans offer tax benefits on premiums paid under section 80C. New-age term plans with critical illness cover also offer additional tax benefits on premiums paid under section 80D. You also get tax benefits under section 10(10D) on the money received by your family in case of an unfortunate event.

How much life cover do I need?

You can get a simple, quick and clear answer to this question by calculating your Human Life Value or HLV. HLV is an easy-to-use numerical method to calculate the amount of life insurance you may need. The basic rules that can be used to detect your HLV are as follows:

Age in yearsIncome Multiple
18-3525 times your annual income
36-4520 times your annual income
46-5015 times your annual income
51-6010 times your annual income

For example, if the annual income of a 32-year-old man is 5 lakhs, then the ideal life cover for him would be 25 x 5 lakhs = 1.25 crores.

What are the factors affecting term insurance premium?

The insurance company considers many factors before deciding your premium. The main ones are – age, gender, personal and family medical history, geographic location, occupation, BMI index and lifestyle.

What is a term insurance rider?

“Riders” are the add-on benefits or modifications attached to your original term insurance plan. These can be bought at nominal rates. They allow the policyholder to customize the plan as per their requirements. ICICI Prudential offers these riders – Waiver of Premium, Critical Illness, Accidental Death, and Permanent or Partial Disability.

What is a terminal illness benefit?

Terminal Illness Benefit pays a lump sum amount to the policyholder if he is diagnosed with end-stage disease and is expected to die within 12 months. This additional benefit provides cover for an unforeseen illness that is not curable.

Does term insurance cover death outside India?

Yes, deaths outside India are covered in a term insurance plan, provided the insurance company is informed about the accident in time with necessary details. However, the company may reject the claim in case of death due to travel to unsafe countries. Talk to your policy maker for more details.

5 things to know before buying a term plan

1. Claim Settlement Ratio

It is an indicator of the total claims settled by an insurer in a year. The higher the ratio, the better

2. Solvency Ratio

This ratio reflects the insurer’s financial ability to settle claims. Go for the insurer whose solvency ratio is at least 1.5

3. Critical illness cover

Opting for a term plan with critical illness cover can help you cover the high cost of medical treatment in case of critical illness.

4. Additional Riders

Opt for a term plan which gives you a number of benefits like ‘waiver of premium’, ‘accidental death benefit’ and ‘income benefit’.

5. Insurance Cover

Evaluates the amount you want to cover based on your age, needs, inventory, income and liabilities.


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