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How To Choose the Right Term Insurance Plan?

Choosing a suitable term insurance plan can be difficult, with plenty of options available in the market. Read this blog to learn how to select the right term for you and your family.

  • Nov 10, 2023
Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

A term insurance policy is a protection plan that provides financial security to your family. You can receive many advantages from a term life insurance policy. As the family’s sole provider, the funds from a term insurance policy can replace your income in the event of your death and enable your family to live comfortably and respectably after you.

Key Takeaways

  • Term insurance acts as a safety net, providing dependents with financial security in the case of the policyholder’s untimely passing.
  • Key features of term insurance plans include death benefits, affordable premiums, riders, and tax benefits.
  • One should consider factors like liabilities, financial status of dependents, and premium affordability before buying the term plan.
  • You should choose a plan that aligns with your financial goal and budget.

How to Choose the Best Term Insurance Plan in India?

You must consider certain factors to choose a suitable tenure for term insurance. These factors are vital as they can impact your policy in the long term. Take a look at some of these aspects:

Assess Your liabilities

When buying a term plan, it is necessary to take your time and assess your current financial situation and list down the liabilities you may have. It could include home loans, personal loans, business debts, credit card bills, etc., that you must pay over a period. Once you know the exact number, you can choose the term plan duration equal to or more than this time frame.

Analyze the Financial status of Dependents

Another critical factor to consider while choosing the term plan tenure is the number of family members financially dependent on you. If your family members still have a few years before they can be financially independent, then it is advisable to choose a long-term plan so they do not face any financial hassles in your absence.

Determine the Policy Term

The policy term is the duration for which the insurance coverage remains in force. Think about how long your family will depend on your financial support. A term insurance plan should ideally cover the years until your dependents become financially self-sufficient.

For instance, if your dependents are very young, you can opt for a longer-term plan so that the amount will build up until their proper age. You can opt for a short-term plan if your family members are financially independent.

Evaluate Premium Affordability

If you want long-term term insurance, you must be ready to loosen the wallet strings and pay a higher premium. But longer policy tenure also means that your family gets protection for a more extended period.

Compare Premiums

Compare premiums from various insurance companies to find a plan that fits your budget. Remember that a lower premium does not necessarily mean a better plan, so understand the terms and conditions.

Check the Claim Settlement Ratio

The Claim Settlement Ratio (CSR) is the number of claims that are settled by an insurance company. A higher ratio shows a better track record of paying claims promptly. Look for an insurance provider with a higher claim settlement ratio to ensure your family receives the necessary benefits.

Riders and Additional Benefits

Many insurance companies offer riders and additional benefits that can enhance your coverage. These include critical illness riders, accidental death riders, and more. Consider whether you need any of these add-ons to customize your plan.

A term insurance plan is essential in today’s unpredictable world. It is a safety net that offers financial protection in the event of the policyholder’s untimely demise. Many insurance companies offer a wide variety of term insurance plans. And, with online services provided by insurers, term insurance investment has become more accessible. However, several people find it challenging to choose the right policy. Let’s discuss the key features of term insurance policy and how to choose a plan that best suits your needs as well as your finances.

Understanding Term Insurance Plan

A term insurance plan is a policy that offers financial protection to the dependents of the policyholders in case of their demise. It helps them by paying the assured sum so they can live without any financial dependency on anyone.

As a policyholder, choosing a plan that aligns with your financial goal and budget is essential. It might look like a tough task, but in the long run, it is fruitful.

Features of a Term Insurance Plan

A term life insurance policy offers straightforward and cost-effective coverage, making it an excellent choice for individuals looking to secure their family’s financial future. Here are some essential features of a term insurance plan:

Death Benefit

Term insurance plans offer a death benefit, which is paid to the nominee or beneficiary if the insured person passes away during the policy term. This benefit is generally tax-free.

Affordable Premiums

Term insurance is known for its affordability. Premiums are relatively low compared to other types of life insurance, making it accessible for many individuals.

Fixed Term

Term insurance plans have a predefined term, which the policyholder can choose. The common duration of these plans can be 10, 20, or 30 years. The policy expires at the end of the selected period.

Renewable and Convertible

Some term insurance plans are renewable, allowing the policyholder to extend coverage after the initial term without a medical exam. Additionally, some policies are convertible, meaning they can be converted into permanent life insurance later if desired.


Many term insurance plans offer optional riders (add-on coverages) for an additional premium. Standard riders include critical illness, accidental death, and disability riders, which can provide extra protection.

Tax Benefits

Premiums paid for term insurance plans may be eligible for tax benefits under ITA (Income Tax Act) Section 80C. The death benefit is usually tax-free under Section 10(10D).

Claim Settlement

Reputable insurance companies aim for a high claim settlement ratio, ensuring that valid claims are settled promptly. It is important to choose an insurer with a good track record.

In a Nutshell

A term insurance plan is your financial safety net in an unpredictable world. It is a promise of security for your family in any unfortunate event. The primary objective of buying term insurance is to give your family financial protection against the uncertainties of life. While the process may seem daunting, it is an essential step toward securing your family’s future. So, take your time, assess your needs, and make an informed decision. Your loved ones will thank you for it.

Kotak e-Term

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  • Life Cover till 85 years for Life & Life Secure Option
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Ref. No. KLI/22-23/E-BB/2435


- A Consumer Education Initiative series by Kotak Life