Why Term Plans are so Cheaper?

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Term Plans are Definitely Cheaper than You Think!

Term Insurance Quote
  • 5th Oct 2020
  • 790

Term Plans are Definitely Cheaper than You Think!

A frequent misconception about life insurance is that the products are expensive. However, the fact is that term insurance has the unmatched advantage of being the most affordable form of life insurance. The low premiums allow you to get extensive coverage at reasonable premium amounts. If you are wondering how term plans are so inexpensive, here is a brief explanation of how such plans work. The associated benefits that further increase your savings with term insurance are also listed here.

Why are term plan premiums so low?

Term plans are pure risk protection schemes with no investment component, unlike endowment plans. With endowment insurance, your insurer pays you a lump sum maturity benefit if you survive the policy tenure. This benefit fund accrues over the years as the insurer invests a part of your premium and shares the revenues with you. Another part of the premium covers the cost of your life insurance. A third part goes towards the administrative charges of the insurance company. But a term plan has no return feature, and thus, you do not have to pay any extra amount for investments. Your entire premium, apart from nominal operational fees deductions, covers the cost of your life insurance. Moreover, since the mortality rates of healthy individuals are usually low, the insurance provider’s risk is small as well. The providers pass on the benefit by charging minimal premiums for term plans and making term insurance cheaper than you can imagine.

How much premium do you have to pay?

While deciding the premiums, the insurance company assesses the risk of insuring your life based on factors like your age, gender, health conditions, and lifestyle habits. Your sum assured, policy term, premium payment term and mode, and the chosen payout scheme also determine the premium amount. Among all the parameters, age is a major decisive factor. As you age, the chances of chronic diseases and mortality risk increase, and your term plan becomes costlier. Thus, you can save on your total premium outgo if you buy term plans early in life.

Benefits of term plans that lead to additional savings

1 . Tax Savings: Premiums you pay towards your term plan are eligible for
deductions up to ₹1.5 lakhs under Section 80C of the Income Tax Act (ITA),1961. Moreover, if you are below the age of 60 and opt for health-related riders with your term insurance, you can avail of deductions up to ₹25000 under Section 80D. Thus, if you fall under the highest tax bracket of 31.2%, you can save close to ₹54600 in taxes.

2 . Perks of buying online: Online term plans usually cost less. Thus buying an e-Term policy can help you save.

3 . Savings on paying premium upfront or annually: If you opt for a single premium or limited-pay term plan, or choose the annual premium payment mode, your premium amount will be lower than the monthly or quarterly payment mode.

Kotak Life Term Plans are suitable for every budget.

  • Affordable premium rates
  • Special rates for females and non-smokers
  • Provision to buy a term plan online at affordable prices
  • Single pay, limited pay, and regular pay options
  • Annual, half-yearly, monthly, and quarterly premium paying frequencies under the regular pay scheme of the offline plan
  • Single and limited premium options cost less
  • With the annual payment mode, save over 5%
  • Three payout options offered - lump sum, steady income, and increasing payout
  • The regular payout mode provides yearly earnings and offers lower premiums
  • A facility in the e-Term plan to step down life coverage with changing circumstances leads to reduced premiums
    Thus, if your family members depend upon your earnings, you can safeguard their financial well being with a cost-effective term plan from Kotak Life. After all, the peace of mind arising from the assurance of your loved ones’ security is invaluable.



IRDAI is not involved in activities like selling insurance policies, announcing bonus or investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.

Kotak e-Term Plan: UIN:107N104V02, Form No: N104. This is a Non-Participating pure protection plan. For sub-standard lives, extra premium may be charged based on Kotak Life Insurance underwriting policy. For more details on risk factors, terms and conditions, please read sales brochure carefully before concluding a sale.

Kotak Mahindra Life Insurance Company Ltd.Regn. No.: 107,CIN: U66030MH2000PLC128503, Regd. Office: 2nd Floor, Plot # C-12, G-Block, BKC, Bandra(E), Mumbai-400 051. Website: www.insurance.kotak.com|Email: clientservicedesk@kotak.com| Toll Free No.: 1800 209 8800 | Ref. No.: KLI/21-22/E-WEB/505

Trade Logo displayed above belongs to Kotak Mahindra Bank Limited and is used by Kotak Mahindra Life Insurance Company Ltd. Under license.

- A Consumer Education Initiative series by Kotak Life

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