1. About Term Life Insurance

Term life insurance is a straightforward form of life coverage that offers financial protection for a specified period, known as the policy term. In exchange for regular premium payments, the insurer promises to pay a predetermined lump sum, known as the death benefit, to the beneficiaries if the insured passes away during the term. Unlike permanent life insurance policies, such as whole life or universal life, term life insurance does not include a cash value component or investment feature. It solely focuses on providing a death benefit to protect the insured's loved ones from financial hardship in the event of their untimely demise. Term life insurance policies offer flexibility in coverage duration, allowing individuals to select a policy term that suits their specific needs and financial obligations.

2. Eligibility Factors

Before diving into purchasing a term insurance policy, it's crucial to ensure you meet the eligibility criteria. While specifics may vary among insurance providers, here's a general overview:

• Age: Typically, individuals must be at least 18 years old to qualify. The maximum age limit varies based on the insurer and the chosen policy.

• Citizenship: Generally, term insurance is available to Indian citizens. However, Persons of Indian Origin (PIOs) and Non-Resident Indians (NRIs) may also be eligible.

• Medical Tests: Many insurers require applicants to undergo a medical test. This helps assess any health risks and determines the policy's premium.

• Income: There's no strict income bracket for eligibility, but insurers may request income proof during the evaluation process.

• Smoking Habits: Whether you smoke or not impacts your premium. Smokers typically face higher premiums due to associated health risks.

By understanding these eligibility factors, you can streamline the term insurance buying process and make an informed decision tailored to your needs and circumstances.

3. Premium Factors

1. Age: One of the primary factors influencing term life insurance premiums is the age of the insured. Typically, younger individuals are charged lower premiums as they are considered lower risk. Premiums tend to increase with age due to the higher likelihood of health issues and mortality.

2. Sum Assured: The sum assured, or the coverage amount, directly impacts the premium amount. Higher coverage amounts result in higher premiums. It's essential to select a sum assured that adequately meets your financial needs while considering affordability.

3. Policy Term: The duration of the policy, known as the policy term, also affects premiums. Longer policy terms generally result in higher premiums due to the extended coverage period and increased risk exposure for the insurer.

4. Health and Lifestyle: Factors such as the insured's health condition, medical history, and lifestyle habits (like smoking) play a significant role in determining premiums. Individuals with pre-existing medical conditions or risky lifestyle habits may face higher premiums to compensate for the increased risk.

5. Occupation: Certain occupations involve higher risks, such as hazardous or high-risk professions like mining or aviation. Insurers may adjust premiums accordingly based on the insured's occupation to reflect the associated risk levels.

6. Rider Add-Ons: Additional riders or benefits added to the term insurance policy, such as critical illness cover or accidental death benefit, will impact the premium amount. Each rider adds to the overall cost of the policy, so it's essential to assess the need for additional coverage against the associated increase in premiums.

7. Underwriting Guidelines: Insurers follow underwriting guidelines set by IRDAI to assess the risk profile of applicants. Factors like medical underwriting, financial underwriting, and lifestyle underwriting are considered during the premium calculation process, ensuring fairness and consistency.

4. Coverage

• Death Benefit: Lump sum payment to beneficiaries upon the insured's death during the policy term.
• Maturity Benefit: No maturity benefit is provided as term life insurance is purely a death benefit plan.
• Policy Term: Coverage for a specified period, typically ranging from 5 to 30 years or more.
• Sum Assured: Pre-determined amount paid to beneficiaries upon the insured's demise, determined at policy inception.
• Premium Payment: Regular premium payments by the insured to keep the policy in force.

5. Add on Covers

1. Critical Illness Cover: Provides a lump sum payout upon diagnosis of critical illnesses like cancer, heart attack, stroke, etc. This additional coverage helps in managing expensive medical treatments and recovery expenses.
2. Accidental Death Benefit: Offers an additional payout in case of death due to accidents. This supplement ensures enhanced financial protection for your family in unforeseen circumstances.
3. Disability Benefit: Provides financial assistance in the event of permanent total disability caused by accidents or illnesses, ensuring continued financial support for you and your family.
4. Waiver of Premium: Waives future premium payments in case of total and permanent disability, ensuring that the policy remains in force without any financial burden on the insured.
5. Income Benefit Rider: Provides a regular income stream to the nominee in addition to the lump sum payout, ensuring continued financial stability for the family after the policyholder's demise.
6. Terminal Illness Cover: Allows the policyholder to avail a portion of the sum assured upon diagnosis of a terminal illness, providing financial support for medical expenses and other needs during the final stages of life

6. Exclusions

• Suicide Clause: No benefit is payable if the insured commits suicide within a specified period after policy inception, usually within the first one or two years.
• Misrepresentation: If the insured provides false information or conceals material facts at the time of policy application, the insurer may deny the claim.
• War and Terrorism: Death resulting from acts of war, terrorism, or participation in hazardous activities may not be covered.
• Criminal Activities: Deaths related to criminal activities or illegal acts may be excluded from coverage.
• Intoxication: Deaths resulting from the influence of alcohol or drugs not prescribed by a medical practitioner may not be covered.
• Aviation Activities: Deaths occurring due to participation in aviation activities, except as a fare-paying passenger on a licensed commercial airline, may be excluded.
• Pre-existing Conditions: Deaths resulting from pre-existing medical conditions not disclosed at the time of policy application may be excluded from coverage.

7. Types of Term Life Plan

1. Level Term Insurance Plan: Offers a fixed sum assured throughout the policy term. For instance, if you purchase coverage of Rs. 1 crore, the same amount will be paid to beneficiaries in case of the policyholder's demise.
2. Term Insurance with Return of Premium: Returns all premiums paid at maturity. If the policyholder survives, they receive the total premiums paid back. If not, the death benefit is paid to beneficiaries.
3. Increasing Term Insurance: Provides increasing coverage over time to meet growing needs. For example, starting with Rs. 25 lakhs, coverage may increase by 10% every 5 years.
4. Decreasing Term Insurance: Offers decreasing coverage over time, aligning with reduced financial obligations. For instance, a Rs. 25 lakh coverage might reduce to Rs. 12.5 lakhs after 5 years.
5. Zero Cost Term Insurance: Allows policyholders to exit after a specified tenure and receive all premiums paid until that date. It provides financial flexibility when life cover is no longer needed.
6. Term Insurance with Riders: Enables adding riders like accidental death cover or disability benefit for enhanced coverage. Ideal for those seeking additional benefits alongside basic life coverage.