Frequently Asked Questions about Term Life Insurance
Term life insurance is a type of life insurance policy that provides coverage for a specified term or period. If the policyholder dies during the term, the nominee receives the death benefit. If the policyholder survives the term, there is no payout.
Term life insurance is suitable for individuals who have financial dependents, such as
spouses, children, or aging parents. It is also beneficial for those who want to ensure their
debts and financial obligations are covered in the event of their untimely death.
The coverage amount should ideally be 10-15 times your annual income. Consider factors
like your family’s living expenses, outstanding debts, future financial goals (such as children's
education and marriage), and inflation when determining the coverage amount.
Eligibility criteria can vary among insurers but generally include:
o Age: Most insurers offer term plans for individuals aged 18 to 65.
o Health: Medical underwriting may be required, including health check-ups based on the sum assured and age.
o Income: Proof of income to justify the coverage amount may be required.
o Age: Most insurers offer term plans for individuals aged 18 to 65.
o Health: Medical underwriting may be required, including health check-ups based on the sum assured and age.
o Income: Proof of income to justify the coverage amount may be required.
Term life insurance provides coverage for a specific term and pays out the death benefit only
if the policyholder dies during that term. Whole life insurance provides lifelong coverage and
includes a savings component that builds cash value over time. Whole life insurance
premiums are typically higher than term life premiums.
Premiums are determined based on several factors, including the policyholder's age, health,
lifestyle (e.g., smoking or drinking habits), occupation, sum assured, and the policy term.
Insurers may require a medical examination to assess the risk.
Some insurers offer a conversion option, allowing you to convert your term life insurance
policy to a permanent policy, such as whole life or endowment insurance, without
undergoing a medical examination. This option is usually available within a specified period.
If you miss a premium payment, most insurers provide a grace period (usually 15-30 days)
during which you can pay the overdue premium without losing coverage. If the premium is
not paid within the grace period, the policy may lapse, and coverage will cease.
Yes, premiums paid for term life insurance are eligible for tax deductions under Section 80C
of the Income Tax Act, up to a maximum limit of ₹1.5 lakh per financial year. Additionally,
the death benefit received by the nominee is tax-free under Section 10(10D).
Some insurers offer the option to increase coverage through riders or by purchasing
additional policies. Life events such as marriage, the birth of a child, or changes in financial
circumstances may also allow for an increase in coverage.