5 Best Term Insurance Policies in 2024

Factors To Consider Before Choosing a Term Insurance Plan

There are innumerable factors of the best insurance term plan that you should consider before choosing one, and here are a few.

1. Risk Coverage

The primary advantage of an insurance policy is risk coverage. The insurance company provides monetary compensation to the family of the deceased insured to compensate against the premium paid by the insured.

This enables covering the risk of the family.

2. Varied Plans

Insurance companies offer different plans to suit the need of the insured — higher premiums results in higher benefits.

3. Health Benefits

Insurance policies cover expenses of hospitalization and treatment of critical illness.

4. Inculcates Savings Culture

Few insurance policies come with a savings plan. This enables subscribers to accumulate wealth while inculcating a savings culture for the future.

5. Additional Income

Few insurance policies provide guaranteed income. When any uncertain event happens, the insured or the nominee of the insurance policy is paid the sum assured at every frequency (typically monthly or quarterly).

6. Availing Loan

The insurance company provides you with a choice of giving credit to the insured. However, this facility is available only on selected policies.

7. Tax Benefit

Availing insurance policy enables an individual to get tax benefits under section 80C of the Income Tax Act, 1961.

5 Best Term Insurance In India: Overview

Here is an overview of the top term insurance plans available in India-

1. LIC e-Term Insurance Plan

LIC is one of the best term insurance company in India. Its e-term plan is a non-participating pure life insurance plan which can be purchased only through the online mode without the involvement of any middlemen. Pure life insurance cover implies that only the policy holder’s life is covered.

If the policyholder happens to die during the duration of the plan, then the beneficiaries of the policyholder are given the sum assured. If the policy holder survives the duration of the e-term plan, then no sum is paid to the policyholder and his family members or beneficiaries.

Features of LIC e-Term Insurance Plan

• Plan can be purchased online.
• Different premium rates are charged for smokers and non-smokers.
• In case of the death of the policyholder, the sum assured will be paid.
• The purchaser can return the policy within 30 days of purchasing the policy with reasons if he is not convinced with the terms and conditions of the policy.
• It is less costly than the offline term plan of LIC.
• Non-resident individuals can also purchase the LIC Online e-term plan, which will be covered even if they are abroad, provided they are in the country for medical tests.

Benefits of LIC e-Term Insurance Plan

1. Death Benefit: In case of the unfortunate death of the insured during the policy term, the sum assured shall be payable to his or her nominee, who can be a dependent family member.

2. Maturity Benefit: If the policyholder survives until the end of the policy term, no amount shall be given to him or his family members. Pure term plans do not pay anything on maturity and hence are able to charge much less premium.

3. Income Tax Benefit: A life insurance premium paid up to Rs.1,50,000 every year is allowed as a deduction from the taxable income each year under section 80C of the Income Tax Act.

Death Benefit amount paid to the nominee is also exempted from tax under section 10(10D).

Criteria for Purchasing the E-Term Plan

2. ICICI Pru iProtect Smart

ICICI offers some of the best term life insurance in India. This term insurance plan provided by ICICI is the only plan that offers claim payment on the diagnosis of 34 critical illnesses. Under this plan, an insured can get cover up to 75 years of age and he can get three types of tax benefits.

 Features of ICICI Pru iProtect Smart

• It fits into the insured’s budget
• It gives the insured longer cover
• It pays on diagnosis of any of the 34 listed critical illness
• It gives 4 payout options to pick from
• It pays life cover on terminal illness (including AIDS)
• It gives the insured an option to add accidental benefit now, or later

Benefits of ICICI Pru iProtect Smart

1. Life-Nominee will receive the gains only in case of demise of a policyholder or terminal illness of policyholders.

Along with that, if the policyholder is diagnosed with permanent disabilities due to an accident, then he will not have to pay future premiums. The policy will continue normally without any premium payment from the person insured.

2. Life Plus-Along with “Life” option gives the insured accidental rider benefit.

3. Life & Health-Along with “Life” option gives the insured critical illness rider benefit.

It covers 34 major illnesses. The policyholder will get the full benefit irrespective of the actual cost of treatment. This gain can be exercised only once during the policy period.

Variants of ICICI Pru iProtect Smart

Protection Benefits of ICICI Pru iProtect Smart:

1. Death and Terminal Illness

The insured’s nominee receives the life cover amount in case of his or her death. The insured gets 100% cash payout of the total life cover amount if you are diagnosed with a terminal illness.

The policy will close on payment of either the terminal illness or death benefit.

Terminal Illness refers to the high likelihood of death within the next six months as diagnosed by medical practitioners that specialize in the same.

2. Permanent Disability

The company pays all the due premium on the insured’s behalf in case of permanent disability caused due to an accident.

Permanent disability will be triggered if the insured is unable to perform 3 out of the 6 listed activities permanently and consistently for 6 consecutive months

3. Accidental Death (optional)

In case of death due to an accident, the insured’s nominee receives a lump sum amount called the accident cover.

4. Critical Illness (optional)

On the first occurrence of any of the 34 covered critical illnesses, the insured receives a lump sum pay-out.

You may also want to read The Life and Health Insurance Checklist

3. SBI Smart Shield

This is a simple-term insurance policy that plans to provide financial support to family members in case of an unfortunate event of the death of the breadwinner of the family.

This term plan pays the sum assured to the nominee in case of the death of the insured. The plan lets single premium policyholders surrender the policy after the second year.

The surrender value is calculated as per the pre-specified formula. It does not pay any survival benefit.

The 4 Types of Insurance Every 30-Year-Old Must Have - Options Available for SBI Smart Shield

1. Level Term Assurance

This is a simple term insurance plan where the nominee gets a sum assured in case of death of the life insured.

2. Increased Term Assurance

This gives an increased sum assured amount year on year. This is a good option to take into consideration in case the insured wants his family to consider inflation and live a high standard of living.

3. Decreased Term Assurance (Loan Protection)

This plan is for individuals who have a home loan or car loan. This option is not available to others.

4. Decreased Term Assurance (Family income protection)

In this plan, the sum assured would be decreased during the policy term and during the death of the insured.

The nominee would get either a regular monthly payment or can choose for a lump sum payment which is available for distribution based on a reduced term assurance policy.

The entry age is 18 to 60 years and the maturity age is 65 years.

4. HDFC Click 2 Protect Plus

HDFC Life Click 2 Protect Plus is pure term insurance that gives a large amount of life cover for a really low premium.

The policy also offers added features such as:

1) Option to increase cover on milestones such as marriage and childbirth

2) Accidental Death Benefit to the rider

3) Taking the payout as lumpsum + monthly claim settlement.

3 Most Important Things About Insurance Plans You Have to Know

Features of HDFC Click 2 Protect Plus

1. Death Benefit: In the case of death of the person insured while the policy is in force, the nominee will get the following benefits:

• For single premium policies, 125% of single premium, or sum assured, whichever is higher
• For policies other than the single premium type, 10 times the annualized premium, or, 105% of all paid premiums till the date of death, or, sum assured, whichever is higher

2. Life Stage Protection: Life Stage Protection is an optional cover that is available under the life option of the policy and can be taken after payment of an additional premium.

This cover makes sure that the person insured is financially protected at each stage of life as he/she achieves different milestones. With this add-on feature, one can:

3. Increase Your Sum Assured: One can increase their insurance coverage

4. Reduce the Additional Cover at a Later Stage: This term plan offers the ability to reduce the insured person’s Additional Insurance Cover from the point where he attains 45 years of age.

5. Maturity Benefit: There will be no amount payable when the person insured survives till the end of the policy term.

6. Income Tax Benefit: Life Insurance premiums paid up to Rs. 1,50,000 are allowed as a deduction from the taxable income every financial year under section 80C.

The maturity amount he receives from this plan is tax-free under section 10(10D)

Options Available for HDFC Click 2 Protect Plus

1. Life Option

The Death Benefit as per the above calculations will be paid in lump sum amount on the death of the insured person.

2. Extra Life Option

The death benefit as mentioned above will be paid as a lump sum amount. An additional benefit equal to the sum assured will be paid if the death is because of an accident.

Here are some of the basics about health insurance that everyone should know of:

The Death Benefit as per calculation is paid as follows:

• 10% of the death benefit will be paid as a lump sum amount at the death of the insured person.
• The rest of 90% of the death benefit will be paid on a monthly basis over the subsequent 15 years, i.e., 0.5% of the Death benefit paid each month for the 15-year duration.

Income Plus option

The death benefit as mentioned above is paid in the following way:

• 100% of the death benefit is paid as a lump sum amount at the death of the insured person.
• A monthly income equal to 0.5% of the sum assured will be paid for a tenure of 10 years. This monthly income can level or rise at 10% per annum, as per the needs of the policyholder.

5. Max Online Term Plan Plus

Max Life brings to you an online term plan plus that gives a secure financial future to your loved ones, against the risk of death, disability, and disease. It is one of the best term plan in India.

Features of Max Online Term Plan Plus

• Minimum age to purchase the plan is 18
• Maximum age to purchase the cover can be up to 60 years
• Choice of regular income payout options
• Limited pay option for premium payment
• Option to add benefits like accidental death, premium waiver, and critical illness covers on payment of additional premium
• The insured has the option to pay premiums monthly, quarterly, half-yearly or annually
• For online plans, the freelook period is of 30 days
• A grace period of 15 days is available for payment of regular premium under monthly30 days for other modes
• Maximum covered age of the person insured can be up to 85 years for term plans

Options Available for Max Online Term Plan Plus

1. Basic Life Cover

A pure term plan pays a fixed amount to the family of the insured. Under this cover, on death during the plan duration, the sum assured is paid as the death benefit.

2. Life Cover + Monthly Income

A pure term plan pays a fixed amount to the family of the insured + a fixed sum every month.

Under this cover, 100% of the sum assured is paid in a lump sum. Thereafter, 0.4% of the sum assured is paid each month for 120 months. Thus, under this cover, the plan pays 148% of the sum assured.

3. Life Cover + Increasing Monthly Income

It is a pure-term plan which pays a fixed amount to the family of the insured + a fixed sum every month payable for 10 years that keeps rising by 10% every year to account for the rising living cost.

Under this cover, 100% of the sum assured is paid in a lump sum. Thereafter, the rising monthly income is paid for the next 120 months.

The first monthly instalment is 0.4% of the sum assured, which then rises by 10% (simple rate of interest) every year. Thus, this variant pays a total of 169.6% of the Sum Assured.

Conclusion

Life/Term insurance is an arrangement between the insurer and the insured where the insurer compensates for the loss of life of the insured. The sum assured by the insurer is paid to the nominee or the legal heirs of the insured as defined in the policy document.

This is typically used to mitigate the risk of an untimely death of a family member and is used to safeguard the interest of the family members. 

Term insurance plans are a great way to protect your financial future and make sure you're covered in the case of an unexpected illness or injury. Because they last so long, term insurance plans can be used for large expenses—like paying for college or buying a house—or for smaller ones, like replacing a car or replacing household items destroyed by a fire.

While selecting a term plan, a person should keep in mind the purpose for which he is taking the term plan. Also, he should evaluate all the benefits offered by different term plans and should accordingly decide the plan he intends to take.

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

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Research Analyst - Aakash Baid