Term insurance is a pure protection plan. You pay a premium, and in return, your family gets a lump sum amount if something happens to you during the policy term.
When it involves protecting your family’s financial future, term insurance is an obvious choice. It is the easiest and most cost-effective life insurance option, providing substantial coverage for a low premium. However, given the multitude of choices in the Indian market, how can you choose the ideal term insurance policy in 2025?
What is Term Insurance?
Term Insurance is a kind of life insurance where, if death happens within the policy period, the designated nominee will get the assured amount. Unlike other insurance policies, there’s no maturity benefit, making it an economical choice for those seeking high coverage.
Why Do You Need Term Insurance? – Benefits
- A term insurance plan offers greater risk protection for a reduced premium.
- In the case of unexpected death, your nominee will receive a one-time payment.
- You have the option to choose an extra sum assured benefit in the event of accidental death.
- A term insurance plan provides support for the family in the event of a critical illness or disability.
- A fixed sum can be obtained if one is diagnosed with a serious illness.
- You can obtain a tax advantage for the premium amount paid.
- If chosen, one can receive additional income in the event of income loss caused by accidental disability or sickness.
- A digital choice is provided. It can be acquired easily without the assistance of an agent.
Types of Term Plans
Standard Term Plan
In a standard term plan, the individual receives life insurance by paying the premium amount. It is a straightforward term policy with premiums paid on a yearly basis.
Increasing Term Insurance Plan
An increasing term insurance plan resembles the standard term plan in terms of premium payments and policy duration. The sole modification is that the sum assured (insurance coverage) grows as the policyholder gets older.
Life Stage Term Plan
Life stage or Event Term Plan allows policyholders to increase the coverage of their significant life stages.
Group Term Insurance Plan
A Group Term Insurance Plan is provided to a collective of individuals. The group term plan offers identical coverage to each individual included in this plan.
Convertible Plan
The convertible scheme is a savings plus insurance plan. This policy permits the insured to change it into an endowment plan at a future date.
Single and Joint Life Term Insurance Plan
A Joint Life term insurance plan is provided to two people, typically a married couple. The Joint Life Term Insurance Plan tends to be less expensive than a single policy.
Offline and Online Term Plan
The plans offered online are referred to as online term plans, while those available offline are called offline term plans.
Things To Consider Before Choosing a Term Insurance Plan
1. Risk Cover
The main benefit of an insurance policy is protection against risks. The insurance firm grants financial reimbursement to the relatives of the deceased policyholder to offset the premium paid by the insured. This allows for the protection of the family’s risk.
2. Type of Plans
Insurance firms provide various plans to meet the requirements of the insured — greater premiums lead to greater advantages. You must look at your requirements versus the type of plan offered by the insurance company.
3. Inculcates Savings Culture
Only a small number of insurance policies include a savings plan. This allows subscribers to build wealth while fostering a savings mindset for the future.
4. Additional Income
Limited insurance plans offer assured income. When any unforeseen event occurs, the insured individual or the policy’s nominee receives the assured amount at each interval (usually monthly or quarterly).
5. Loan Facility
The insurance firm offers you the option of extending credit to the insured party. Nonetheless, this option is accessible only on certain policies.
6. Comprehensive Coverage
When assessing term insurance plans, it’s crucial to seek policies that provide extensive coverage. The real worth of a term plan is in its capacity to offer financial security to your family in the event of your untimely death. Choose a policy that encompasses a broad spectrum of situations, such as natural and accidental deaths, to guarantee that your family is protected from different uncertainties.
7. Claim Settlement Ratio
The ratio of claims settled is an important measure of an insurer’s dependability. This ratio indicates the proportion of claims resolved by the insurance company relative to the total claims submitted. A greater claim settlement ratio signifies a more effective and customer-oriented insurance provider. When choosing a term insurance policy, focus on firms that maintain a consistently high claim settlement ratio to guarantee an easy claims process for your beneficiaries.
8. Policy Tenure and Flexibility
Take into account the duration of the policy and the flexibility provided by the insurance coverage. The perfect term insurance policy must correspond with your financial objectives and responsibilities. Choose a plan that offers flexibility in selecting the duration of the policy, guaranteeing it aligns with your unique requirements. Moreover, seek out attributes like the ability to extend coverage during significant life events, such as marriage or childbirth.
9. Customer Reviews and Feedback
In the digital era, obtaining customer reviews and feedback has become simpler than ever. Utilize digital platforms to collect information about the experiences of current policyholders with various insurance providers. Customer feedback can offer important insights into the simplicity of the claims process, the quality of customer service, and general satisfaction rates. Choose insurers that have favorable reviews, as this reflects a reliable and customer-focused attitude.
10. Affordability
Although extensive coverage is essential, the cost-effectiveness of the term insurance policy is also important. Achieving equilibrium between coverage and expense is essential to guarantee that the plan stays viable in the long run. Seek out plans that present an affordable premium while still delivering the required protection. It’s recommended to utilize online tools and calculators to assess premiums from various insurers and discover the most affordable choice.
Best Term Insurance Plan in India 2025
1. LIC e-Term Insurance Plan
LIC is among the top term insurance companies in India. LIC e-term plan is a non-participating pure life insurance policy that can be obtained solely through online channels without the need for intermediaries. Pure life insurance coverage means that solely the life of the policyholder is insured.
If the policyholder dies while the plan is active, the beneficiaries will receive the assured amount. If the policyholder outlives the term of the e-term plan, then no amount is paid to the policyholder or his family members or beneficiaries.
Key Features
- The plan is available for purchase online.
- Various premium rates are applied to smokers and non-smokers.
- If the policyholder passes away, the assured amount will be disbursed.
- The buyer can return the policy within 30 days of purchase if he is not satisfied with the terms and conditions of the policy.
- It is more affordable than LIC’s offline term plan.
- Non-resident individuals can also buy the LIC Online e-term plan, which will be applicable even if they are overseas, as long as they are in the country for medical examinations.
Benefits
Death Benefit – If the insured passes away during the policy period, the assured amount will be paid to their nominee, who may be a dependent family member.
Maturity Benefit – If the policyholder lives through the entire policy term, no sum will be provided to him or his family members. Pure-term plans offer no payout upon maturity, allowing them to charge significantly lower premiums.
Eligibility
| Entry Age | Minimum 18 yrs |
| Maximum 60 yrs. | |
| Sum assured | Minimum: |
| For aggregate category Rs. 25,00,00 | |
| For the non-smoker category Rs 50,00,000 | |
| No maximum limit on sum assured | |
| Policy term | Minimum: 10 yrs |
| Maximum: 35 years | |
| Premium payment frequency | Annual Premium Payment |
| Income | Proposer should have own earned income |
| Person covered | Only life of proposer is covered. |
2. ICICI Pru iProtect Smart
ICICI Pru iProtect Smart is one of the best life insurance policies in India. This term insurance policy from ICICI is the sole plan that guarantees claim settlement upon the diagnosis of 34 severe illnesses. With this plan, an insured individual can receive coverage until the age of 75 and is eligible for three forms of tax advantages.
Key Features
- It aligns with the insured’s financial plan.
- It provides the insured with extended coverage.
- It provides a payout upon diagnosis of any one of the 34 specified critical illnesses.
- It offers 4 choices for payouts to select from.
- It provides life insurance for terminal illnesses (including AIDS).
- It provides the policyholder with the choice to include accidental coverage now or at a later time.
Benefits
- The Life-Nominee will obtain the benefits solely upon the death of a policyholder or if the policyholder suffers from a terminal illness. In this policy, if the policyholder is found to have permanent disabilities resulting from an accident, he will be exempt from paying future premiums. The policy will proceed as usual without any premium payment from the insured individual.
- Life Plus, in addition to the “Life” option, provides the insured with accidental rider benefits.
- Life & Health – In addition to the “Life” option, it offers the insured a critical illness rider advantage.
It encompasses 34 significant diseases. The policyholder will receive the complete benefit regardless of the actual treatment expenses. This benefit can be utilized only a single time throughout the policy term.
1. Death and Terminal Illness
In the event of the insured’s death, the nominated beneficiary receives the life coverage sum. The policyholder receives a full cash payout of the entire life coverage amount if diagnosed with a terminal illness. The policy will terminate upon the payment of either the terminal illness benefit or the death benefit. Terminal Illness denotes a significant probability of death occurring within the next six months, as determined by medical professionals who specialize in this area.
2. Permanent Disability
The company covers the entire premium owed on the insured’s behalf if an accident leads to permanent disability. Permanent disability will be activated if the insured cannot carry out 3 of the 6 specified activities permanently and consistently for 6 straight months.
3. Accidental Death (optional)
If an insured individual dies in an accident, their designated beneficiary receives a one-time payment known as the accident cover.
4. Critical Illness (optional)
Upon the initial diagnosis of any of the 34 specified critical illnesses, the insured is granted a lump sum payout.
3. HDFC Click 2 Protect Plus
HDFC Life Click 2 Protect Plus is a straightforward term insurance plan that offers substantial life coverage at a very affordable premium. The policy additionally provides extra features like:
1) The possibility of enhanced coverage for events like marriage and childbirth.
2) Accidental Death Benefit for the rider
3) Receiving the payout as a lump sum plus monthly claim disbursement
Key Features
Death Benefit: If the insured individual passes away while the policy is active, the nominee will receive the following benefits – For single premium policies, 125% of the single premium or the sum assured, whichever amount is greater.
For policies that are not single premiums, the amount will be the greater of 10 times the annualized premium, 105% of all premiums paid up to the date of death, or the sum assured.
Life Stage Protection: Life Stage Protection is an optional coverage offered within the life option of the policy and can be acquired upon payment of an extra premium. This coverage ensures that the insured individual is financially safeguarded at every life stage as they reach various milestones. By using this additional function, a person can increase the sum assured or reduce additional cover at a later stage.
Maturity Benefits: There will be no amount payable when the person insured survives till the end of the policy term.
HDFC Click 2 Protect Plus Options
Life Option – Lump sum payout on Death. This is a good old option, which gives your family the assured sum as a lump sum amount.
Under the life option, you have the facility to increase life cover on certain key milestones of your life like Marriage, and birth without a fresh medical test.
Extra Life Option (Accidental Death Benefit) – Extra life option covering accident death benefit which gives your family double the assured sum.
Income Plus Option – 100% of the death benefit is paid as a lump sum amount at the death of the insured person. A monthly income equal to 0.5% of the sum assured will be paid for a tenure of 10 years. This monthly income can level or rise at 10% per annum, as per the needs of the policyholder.
4. SBI Smart Shield
This is a straightforward term insurance policy designed to offer financial assistance to family members in the event of the unfortunate passing of the family’s primary earner.
This term plan provides the assured amount to the nominee upon the death of the insured. The scheme allows holders of single premium policies to surrender their policy following the second year
SBI Smart Shield Options
This is a simple term insurance plan where the nominee gets a sum assured in case of death of the life insured.
Increased Term Assurance
This results in a higher assured sum every year. This is a viable choice to consider if the insured wishes for his family to account for inflation and maintain a high standard of living.
Decreased Term Assurance (Loan Protection)
This plan is for individuals who have a home loan or car loan. This option is not available to others.
Decreased Term Assurance (Family income protection)
The assured amount would reduce over the duration of the policy and upon the death of the insured. The nominee can receive either a standard monthly payment or opt for a lump sum payment, which is payable from a reduced term assurance policy
5. Max Online Term Plan Plus
Max Life offers an online term plan that ensures a safe financial future for your loved ones, protecting them from risks of death, disability, and illness. It is among the top term plans in India.
Key Features
- The lowest age to buy the plan is 18.
- The highest age for buying the insurance can reach 60 years.
- Selection of standard income distribution choices
- Restricted payment choice for premium options.
- Choice to include benefits such as accidental death, premium waiver, and critical illness coverage by paying an extra premium.
- The policyholder can choose to pay premiums on a monthly, quarterly, semi-annual, or annual basis.
- For online subscriptions, the freelook duration is 30 days.
- A grace period of 15 days is offered for payment of regular premium on a monthly basis and 30 days for other payment modes.
- The highest age limit for the insured individual in term plans can reach 85 years.
Max Online Term Plan Plus
Basic Life Cover
A basic term plan provides a set sum to the insured’s family. Within this coverage, in the event of death during the plan’s term, the assured amount is disbursed as the death benefit.
Life Cover + Monthly Income
A pure-term plan provides a set amount to the insured’s family, in addition to a fixed monthly sum. With this policy, the entire assured amount is disbursed as a single payment. Subsequently, 0.4% of the total coverage is disbursed monthly for a duration of 120 months.
Consequently, with this provision, the policy disburses 148% of the guaranteed amount.
Life Cover + Increasing Monthly Income
It is a pure-term policy that provides a set amount to the insured’s family plus a monthly fixed sum for 10 years, increasing by 10% annually to adjust for the escalating cost of living.
Final Thoughts
Choosing the best term insurance plan in India for 2025 requires careful consideration of factors like premium costs, coverage, riders, and claim settlement ratio. The right plan ensures your loved ones remain financially stable even in your absence. So, compare, analyze, and make an informed decision today!
Frequently Asked Questions (FAQs)
1. Which is the best term insurance plan in India for 2025?
The best plan depends on your needs, but LIC Tech Term, HDFC Life Click 2 Protect Super, and ICICI Pru iProtect Smart are top contenders.
2. Is it better to buy term insurance online or offline?
Buying online is usually cheaper and more convenient, with better transparency.
3. What is the ideal coverage amount for term insurance?
Your sum assured should be at least 15-20 times your annual income.
4. Can NRIs buy term insurance in India?
Yes, NRIs can purchase term insurance in India, but terms may vary by insurer.
5. Do term insurance plans provide maturity benefits?
No, pure term plans do not offer maturity benefits. However, return-of-premium options are available in some plans.
6. What happens if I miss a premium payment?
Most policies offer a grace period (usually 30 days). If you fail to pay within this time, the policy may lapse.
7. Can I increase my coverage later?
Yes, some plans allow coverage enhancement at milestones like marriage or childbirth.
8. What documents are required to buy term insurance?
You need identity proof, address proof, income proof, and medical test reports (if required).
9. Can I have multiple term insurance policies?
Yes, you can buy multiple policies from different insurers for added security.
10. How long does it take for a claim to be settled?
Most insurers settle claims within 30 days, provided all documents are in order.