Frequently Asked Questions for Term Insurance

Term insurance is a type of life insurance that covers an individual for a particular period of time, such as 20 years or 30 years. In case of the death of the insured during the term period, the nominee gets the assured amount, whereas if the person survives the term period, then the policy simply ends with no payout.

Life insurance, on the other hand, is a broader category. It includes term plans, endowment plans, whole life plans, ULIPs, and more. The most affordable type of life insurance in this range would be term insurance plans since they solely focus on pure protection without any investment component attached to them.

There is not a single answer that can fit everyone here. The basic rule is to have an insurance cover of at least ten times your annual income. However, the exact need will vary based on many factors specific to you, such as:

• Monthly expenditure and lifestyle
• Any Liabilities like a home or car loan
• Family size, including dependents
• Financial goals in the long run, such as funding a child’s education or your retirement

The simplest way to calculate your needs is by using a term insurance calculator. All you need to do is put in your income, age, liabilities, and a few more details, and the calculator gives you a suggested insurance coverage amount along with the premium amount.

Insurers consider lifestyle habits when calculating your premium because they directly affect your health risk. If you are a smoker or consume alcohol regularly, you will typically be charged a higher premium compared to someone who does not. This is because the statistical risk of health complications and early death is higher for individuals with these habits.

The premium you pay depends on various factors. If you start smoking or drinking, then you will have to pay a higher premium. The rule is the same for any policyholder who takes a hazardous job. The inclusion of new riders changes the premium too.

Employer-provided life cover is a great benefit, but it should never be your only protection. Here is why relying solely on it can be risky:

• The cover usually ends the moment you leave or lose your job.
• The sum assured is often limited, typically one to four times your annual salary, which may not be enough for your family.
• You have no control over the terms or the insurer.

An individual term plan, on the other hand, stays with you regardless of your employer. It gives you the freedom to choose the coverage amount, the policy term, and the insurer. It is a personal safety net that does not depend on where you work.

Yes, most term insurance policies in India cover the death of the policyholder anywhere in the world. No matter whether you travel overseas for work, spend a few years in another country, or even move abroad, your plan remains valid as long as you pay your premiums on time.

However, one should be sure of their coverage terms to make sure that there are no restrictions based on geographic location. Some policies may have conditions for policyholders who reside in high-risk countries or conflict zones. Always read the terms carefully and confirm with your insurer before making any long-term international trips or stays.

You are absolutely allowed to hold more than one term insurance policy at the same time. In fact, many financial planners recommend this approach for people with high financial obligations. For example, some people choose to have a ₹1 crore term insurance policy from one insurer and add more coverage from another insurer as their responsibilities grow over time.

In the event of a claim, your nominees can file claims with both insurers separately. Each insurer will settle the claim based on the terms of its respective policy. There is no restriction on receiving death benefits from multiple policies, which is why this strategy can be very effective for maximizing your family’s protection.

Yes, Non-Resident Indians (NRIs) are eligible to buy term insurance in India. Most insurers in India offer plans to NRIs, though the procedure to buy one and the supporting documents needed would differ a bit when compared to those required by an Indian resident. Typically, you will need to provide proof of identity, proof of address, income documents, and sometimes a medical report.

Some insurers offer to return the premium upon the maturity of the plan. However, this costs you higher premiums.

Term insurance comes with useful tax advantages that make it even more worthwhile. Here is a quick breakdown:

• Premiums paid towards a term plan are eligible for deduction under Section 80C (now known as Section 123 of the Income Tax Act, 2025) of the Income Tax Act, up to a limit of ₹1.5 lakh per year.
• The death benefit received by the nominee is completely tax-free under Section 10(10D) (now known as Schedule II(2) of the Income Tax Act, 2025) or, subject to the conditions mentioned in the Act.
• If you add a critical illness or health-related rider, the premium for that rider may also qualify for deduction under Section 80D (now known as Section 123 of the Income Tax Act, 2025).

Tax benefits are a welcome bonus, but they should never be the deciding factor when considering insurance. The most important thing about insurance is making sure that your family will have proper coverage at all times. If you need a higher sum assured, a ₹2 crore term insurance plan would be ideal for someone who has significant financial commitments such as a large home loan or young children whose education you want to secure.