Term Life insurance is the purest and most cost effective form of life insurance. This type of life insurance provides financial protection to the nominee in case policyholder dies during policy term. Term Insurance policies provide high life cover at lower premiums. For eg: Premium for ₹1 Cr Term Insurance cover could be as low as ₹490** p.m. These fixed premiums can be paid at once or at regular intervals for the entire policy term or for a limited period of time. Premium amount varies basis the type of the premium payment method opted by the buyer.
Anyone with financial dependents should buy a term insurance policy. This includes married couples, parents, young professionals, SIP investors and in some cases, even retirees.
Life Insurance premiums paid are deductible from taxable income under Section 80C and hence carry a double benefit for taxpayers – protection and tax-saving. The payment (maturity value) received under an insurance policy is also exempt subject to conditions under Section 10(10D) of the Income Tax Act, 1961^^. Term insurance also has among the lowest premiums among the different types of insurance policies.
Hence, individuals who derive any of the three major benefits associated with term insurance should consider buying such policies. The three major benefits are – life protection, tax saving and affordable premiums.
While buying a Term Plan, we always have questions like which Term Plan is best and how to compare the best Term Insurance Plan. Here are some parameters which may help you choose the Best Term Plan for yourself:
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1. Calculate Term Insurance premium with Term Insurance Premium Calculator
2. Complete the application form by answering some simple questions about your personal & professional life and health details.
3. Review the form and make payment.
You can get a simple, quick and clear answer to this question by calculating your Human Life Value or HLV. HLV is an easy-to-use numeric method of calculating the amount of Life Cover that you may need.
The policy term offered by most life insurers ranges from 5 years to 40 years. One should always opt for a policy term depending on their retirement age. In India, 60 years is the general age of retirement. If you buy a Term Insurance policy till 60 years, by that age all your financial liabilities and responsibilities will be cleared. Policyholders can opt for life cover for up to 99 years age if they have a number of dependents and would like to cover them for his complete life span.
I. Added Benefits – Consider the added benefits that come by default or as additional options with a term plan e.g. critical illness cover terminal illness cover or waiver of premium due to disability.
II. Brand Strength - Understand how strong the insurance brand is and how likely it is to make a payment in case a claim is made. Important parameters here would be the ‘Claim settlement ratio’, time taken to pay the claims and ‘Amount of claims paid’.
III. Right cover and policy term – Choosing the right cover and policy term helps you save money too. You must select these as per your requirements. It is recommended that you should have a term insurance cover of 10-12 times your income. Also, the policy term should ideally be till your retirement age (typically 60 years).
IV. Budget – Choose a term plan that fits in your budget & offers premium pay-out options to suit your needs. E.g. If budget is a problem, one could go for a plan that provides monthly premium payment option over a yearly commitment.
We suggest, you term insurance cover should be about 10-12 times your annual income. For eg: if you are earning ` 7.5 Lakhs per annum, you must secure yourself with a cover of about 75 Lakhs.
Additionally, you may also consider the following liabilities if applicable:
I. Loans & Liabilities
II. Children’s’ Education Cost
A simple rule of thumb for calculating Sum Assured in a Term Insurance policy is -
Minimum Sum Assured = Annual Income x 10 times + Loans/Liabilities $$
As a thumb rule, you should opt for a policy term depending on your retirement age. By then you would have paid off all your liabilities. However, in case you have some loans or liabilities, which will continue even after your retirement, you may choose your policy term accordingly.
Eg: If your current age is 30 and you expect to retire at the age of 60, you should opt for a term life cover for 30 years policy term.
Ideal Policy Term = Your Expected Retirement Age – Your Current Age1
Your Expected Age to attain Zero Liability – Your Current Age2
You can save up to 68%`` on the total premium if you opt to pay off your premiums early with Limited Pay option of 5, 7 or 10 years. This also ensures lesser liabilities but sufficient cover for the later part of your life.
For instance, if you are 30 years old and bought a term plan with a policy term of 30 years. You may pay off your premium in the first 10 years itself. By then you would have turned 40 and you will not have to pay any premium anymore but you will be sufficiently covered till you are 60.
*Source: ICICI Prudential Life Annual Report FY2018-19
#The Average Claims Turn Around Time (TAT) for FY2019 for Death Claim (Individual) is 2.34 days* The TAT is calculated for Non-investigated claims from Last document received to Disbursal date
"The percentage saving computed is purely in terms of premium paid over the term (Difference between Limited Pay: 5 years and Regular pay) of the policy and does not account for time & other factors that may happen during this period. It is one of the many features that the product offers and you can opt for it based on your individual needs. The percentage saving is for ICICI Pru iProtect Smart - Life Option for `2.00 Crores life cover for a 20 year old healthy Male for a policy term of 61 years with regular income payout option. The monthly premium will be `1,441. The premium amounts are inclusive of taxes and online discount is applied.
~~(Source: Company BuyOnline data - Dec 2015 till Sep 2018)
** The premium rate is of life option, regular pay and Income Payout option of ICICI Pru iProtect Smart for 25 year healthy male for policy term of 15 years and inclusive of tax. Yearly premium will be `5,444. You can choose to purchase other variants of the product as per your needs. For more details, please refer the product brochure.
~Claim statistics are for Financial Year 2018-19 and is computed basis individual claims settled over total individual claims for the financial year. For details, refer to Public Disclosures in our Website.
^Critical Illness Benefit is optional and available under Life and Health and All in One options. This benefit is payable, on first occurrence of any of the 34 illnesses covered. The CI Benefit, is accelerated and not an additional benefit which means the policy will continue with the Death Benefit reduced by the extent of the CI Benefit paid. The future premiums payable under the policy will reduce proportionately. If CI Benefit paid is equal to the Death Benefit, the policy will terminate on payment of the CI Benefit. To know more in detail about CI Benefit, terms & conditions governing it, kindly refer to sales brochure. Critical Illness benefit is available till age of 75.
+Accidental Death benefit is up to `2 Crores. Accidental Death Benefit is optional and available in Life Plus and All in One options. Accidental Death Benefit cover is available upto age 80.
++Nothing herein contained shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of assurance, which may have been effected with intent to defraud creditors. Unless taken otherwise with the intent to defraud creditors. In case of any third party claim in the Courts of India with regards the insurance proceeds, the amount shall be subject to the judiciary directions. Please seek professional legal advice for the applicability of this provision.
^^Tax benefits under the policy are subject to conditions under Section 80C, 80D, 10(10D) and other provisions of the Income Tax Act, 1961.Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
## Refer the product brochure for the definitions, exclusions and other terms and conditions applicable for Permanent Disability due to accident and Terminal Illness.
`Based on number of policies sold online between January 2016 - February 2017.
$As per IRDA Annual Report 2017-18.
3. Only doctor’s certificate confirming diagnosis needs to be submitted. The benefit is payable only on the fulfillment of the definition of the diagnosed critical illness.
ICICI Pru iProtect Smart UIN 105N151V04.