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₹25 lakh Term Insurance Plan

A ₹25 lakh term insurance plan offers a fixed coverage amount of ₹25 lakhs for a specified duration, providing financial protection to beneficiaries.

  • 1,465 Views | Updated on: May 02, 2024

When planning your finances, it is important to keep the future of your family in mind. Having term life insurance can help you secure the future. The sum assured from a term plan can offer a financially secure future to the beneficiaries. Policyholders pay premiums to the insurer, and in return, they are offered the financial security provided to the beneficiaries.

Key Takeaways

  • A ₹25 lakh term insurance plan provides a lump sum payment to beneficiaries upon the insured’s death.
  • Term plans focus solely on death benefits and do not offer maturity benefits after the completion of the term.
  • The premiums paid qualify for tax deductions under Sections 80C and 80D of the Income Tax Act.
  • Additional riders can enhance the coverage of your regular term plan.
  • To choose the 25 lakh term plan, the policyholder should consider premium, claim settlement and add-ons offered.
  • There are different premium payment options available like single pay, regular pay, etc.

A ₹25 lakh term insurance plan is a crucial financial safeguard, offering huge coverage to protect your loved ones in the event of your untimely demise. You must buy a term insurance plan to secure your family’s future. However, before that, understanding such a plan is essential for making informed decisions. When you have comprehensive knowledge about a term insurance plan for ₹25 lakhs, buying it can be a great financial decision for you.

What is a ₹25 lakh Term Insurance Plan?

A term insurance policy with a coverage of ₹25 lakhs protects you and your family for a set duration. If the insured person passes away during the active period of the plan, the designated beneficiary receives a payout of ₹25 lakhs. This amount can help the beneficiary live life without depleting their savings on daily expenses.

How Does a ₹25 lakh Term Insurance Plan Work?

This insurance plan provides a death benefit of ₹25 lakh to the beneficiaries if the insured individual passes away during the policy term. Similar to any other term insurance plan the process and working principle of this plan is also straightforward.

Firstly, you select a plan from an insurer and pay the required premiums. The premium amount is determined based on factors like age, health, lifestyle, and coverage term. The term plan provides coverage for a specified policy term. If the insured person passes away within this term, the beneficiaries receive the ₹25 lakh death benefit. Depending on the payment option chosen (regular pay, single pay, limited pay), you make premium payments as per the policy terms. However, remember that failure to pay premiums may lead to policy lapse or reduced coverage.

If the insured individual passes away during the policy term, the beneficiaries receive the ₹25 lakh death benefit. This amount can be used by the beneficiaries to cover financial obligations, such as paying off debts, replacing lost income, or funding education expenses. Term insurance plans typically do not offer any survival or maturity benefits. If the insured person survives the policy term, no payout is made, and the coverage ends.

What are the Benefits and Features of Term Insurance for ₹25 lakhs?

Before you move forward to know how to choose a term plan, you must know its benefits and features. This will help you understand your needs better and how a term insurance plan can fulfill those requirements:

Death Benefits

The main purpose of a term plan is to offer a death benefit in the unfortunate event of the policyholder’s death. The death benefit is the amount of sum assured the beneficiaries will get under the policy purchased by an individual. As a policyholder, you must take care of the amount your family or beneficiaries will get in your absence. This amount should be enough to sustain your beneficiaries if you are not around.

Maturity Benefits

Some life insurance plans, like whole life or endowment policies, provide maturity benefits. It means you receive a payout – the sum assured amount plus any bonuses – if you outlive the policy term. These plans can act as savings tools alongside life insurance protection. However, term life insurance focuses solely on providing financial security to your beneficiaries in case of your death during the policy period. It does not offer a maturity benefit.

Tax Benefits

Tax benefits are one primary feature that attracts people to buy term insurance plans. As per the Income Tax Act 1961, the term insurance premiums paid can help you reduce your taxable income by up to ₹1.5 lakhs under Section 80C. You can also claim a tax deduction under Section 80D for premiums paid towards a term life insurance plan that includes critical illness coverage. This deduction can reduce your taxable income by up to ₹25,000 per year.

Rider Benefits

Additional riders are complementary add-ons to your existing term plans that enhance the benefits of the insurance plan. For instance, if you have a term plan that does not include critical illness coverage, you can add a critical illness rider to your plan and increase the benefits in your plan. These riders are added with an extra charge, depending on the insurer.

Coverage Against Various Liabilities of Term Insurance

Term life insurance itself does not directly cover liabilities like debt or unpaid bills. However, it provides a financial safety net for your beneficiaries in case of your death, which can indirectly help them manage various liabilities you might leave behind. For example, the death benefit from your term insurance can be used by your beneficiaries to pay off outstanding debts like mortgages, car loans, or personal loans.

Claim Assistance

Claiming your insurance can be hectic if you are not fully aware of the nitty-gritty. In this case, always keep your documents available, and for a better claim, choose an insurer with a higher claim settlement ratio. Higher CSR indicates that insurance companies can settle more claims.

Low Premiums

Term insurance plans often come with affordable and lower premiums, which makes them popular among individuals. Because of its affordability, you can buy a term insurance plan without breaking your bank account.

How to Choose the Right Term Insurance Plan for ₹25 lakhs?

Choosing the right term insurance is a critical task for anyone. You must be aware of your financial needs, budget, and many other factors affecting it. Before making the final decision, you must go through the following factors impacting your term plan insurance:

Premium

Premium is one of the most important aspects of any term insurance plan. It is the amount of money that you pay to the insurance company to avail of the benefits provided under the plan you chose. This amount should be evaluated properly so that it covers all your expenses when the crisis arrives. You should also be able to continue paying your premiums on time to avail of the benefits. Therefore, choose a premium that fits your budget and fulfills your needs.

Individual Death Claim Settlement Ratio

When choosing an insurance provider, consider their Claim Settlement Ratio (CSR). The CSR reflects the percentage of claims the company approves each year. A higher CSR generally indicates a smoother claims process and a greater likelihood of your claim being settled efficiently

Add-ons

Additional riders or add-ons are extra features that you can opt for along with your regular insurance plan if you want. These are complementary benefits that enhance the usability of your term plan. Accidental cover, critical illness rider, or permanent disability riders can add to the already existing benefits of your term plan.

Steps to Purchase a Term Insurance Plan for ₹25 lakhs?

Here are the steps to consider when purchasing a term insurance plan for ₹25 lakhs in India:

Step 1. Research and Compare Plans

Identify your needs and consider factors like age, dependents, income, and desired policy term (coverage period). You should also compare insurance plans from different insurance providers. Insurance company websites, comparison websites, or independent insurance brokers can provide quotes and plan details.

Step 2. Choose a Plan

Consider factors like level cover (fixed sum assured) or increasing cover (adjusted for inflation), the rider benefits (additional coverage for critical illness or accidental death). Also, look for insurers with a good claim settlement ratio, indicating their record of paying claims.

Step 3. Apply for the Policy

Many insurers offer online applications, or you can also approach an insurance agent. You should be prepared to provide your basic details, medical history, and lifestyle habits (smoking, etc.)

Step 4. Medical Checkup

Depending on your age and the sum assured, a medical checkup might be required.

Step 5. Policy Issuance and Premium Payment:

Carefully review the policy document to ensure all details are accurate, and choose a payment mode (yearly, half-yearly, quarterly, or monthly) that suits you.

What are the ₹25 lakh Term Insurance Premium Payment Options?

The premium paying term is the duration during which you must pay premiums for your policy. This term can either match or be shorter than the policy’s overall duration. For example, you might opt for a term insurance plan offering life coverage for 40 years. Here are the popular premium payment options for a ₹25 lakh term insurance plan:

Regular Pay

With this option, you pay premiums for the entire duration of the policy until it matures or until the end of the policy term. Premiums are paid on a regular basis, such as monthly, quarterly, semi-annually, or annually, depending on the policy terms.

Single Pay

It involves making a one-time lump sum payment for the entire policy coverage at the beginning of the policy term. Once you make this single premium payment, you are not required to make any further payments toward the policy.

5 years Limited Pay

With the 5-year limited pay option, you pay premiums for a limited period of 5 years, after which you are not required to pay any more premiums, even though the coverage continues until the end of the policy term.

10 years Limited Pay

Similar to the 5-year limited pay, it involves paying premiums for a limited period of 10 years. Once the 10-year premium payment term is completed, you are not required to pay any more premiums, but the coverage continues until the end of the policy term.

These payment options offer flexibility to policyholders in terms of managing their premium payments according to their financial situations and preferences.

Wrapping Up

A ₹25 lakh term insurance plan ensures that your beneficiaries receive a significant payout, providing them with the necessary support to maintain their standard of living and meet future expenses. By understanding the benefits, features, and premium payment options associated with term insurance, you can make informed decisions to safeguard your family’s financial security. Remember to assess your needs thoroughly, compare plans from different insurers, and choose a policy that aligns with your requirements and budget.

FAQs on ₹25 lakh Term Insurance Plan


1

Who is eligible to buy ₹25 lakh term insurance plans?

Anyone meeting the insurer’s eligibility criteria can buy a ₹25 lakh term insurance plan.



2

What is the maximum maturity age in ₹25 lakhs term plan?

The maximum maturity age for a ₹25 lakh term plan varies among insurers, typically ranging from 75 to 85 years.



3

Does the ₹25 lakhs Kotak Standard Plan have a grace period?

Yes, the Kotak Standard Plan typically offers a grace period for premium payments.



4

What coverage does a ₹25 lakh term insurance plan offer?

A ₹25 lakh term insurance plan provides financial protection to your beneficiaries in case of your demise.



5

What is the premium amount for a ₹25 lakh term insurance plan?

Premium amounts for a ₹25 lakh term insurance plan depend on various factors like age, health, and chosen coverage.



6

What happens if I miss paying the premium for my ₹25 lakh term insurance plan?

Missing premium payments could result in policy lapse or require reinstatement with potential penalties.



7

What is the claim settlement process for a ₹25 lakh term insurance plan?

The claim settlement process involves notifying the insurer, submitting required documents, and undergoing evaluation.



8

Is there an option to add my spouse or children to my ₹25 lakh term insurance plan?

Many insurers offer options to add spouses or children to a ₹25 lakh term insurance plan for enhanced coverage.



9

How long does it take for the coverage to start after purchasing a ₹25 lakh term insurance plan?

Coverage usually begins shortly after purchasing a ₹25 lakh term insurance plan, once all formalities are completed.1



10

Are there any restrictions on the usage of the death benefit received from a ₹25 lakh term insurance plan?

The usage of death benefits from a ₹25 lakh term insurance plan is typically unrestricted, allowing beneficiaries to utilize it as needed.

- A Consumer Education Initiative series by Kotak Life

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

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