Term insurance is the most simple and straightforward form of life insurance, which is not only affordable, but also highly preferred and considered essential by insurance experts for its coverage size. In case something happens to you during the policy duration (policy term), the term life insurance plan promises financial security to your loved ones. Since term life policies are primarily designed to act as financial instruments for family protection and not high-risk market-linked investments yielding attractive returns, there is generally no payout at maturity if you survive the term (unless you opted for a term life insurance with ‘Return Of Premium’ plan). The key highlight of any term insurance policy is its ‘low cost of premium for a high coverage amount’ benefit. So, a 25-year-old young professional, with clean health records and a non-smoker status, can buy a Rs. 1 crore term insurance plan at an annual premium of just a few thousands. That is, for as little as Rs. 800 - Rs. 1,000 per month. If you pass away during the term, the lump sum payout from your term insurance cover protects your family members from financial distress, especially because your income and earnings are no longer available to them. Your dear ones can use this death benefit to repay your loans, fund their dreams, afford major milestones like higher education, marriage, etc., invest in other financial instruments for a better future, maintain their standard of living, live with dignity in their old age / retirement period, all this and more while keeping you in their memories for your one wise decision, your sheer commitment to secure their future with the best term policy. Often requiring just basic documents and a few medical tests based on your age and health / lifestyle factors, online term insurance covers are super easy to understand, buy and claim. You can also customize your term insurance coverage for comprehensive protection by adding riders like accidental death benefit, critical illness cover, waiver of premium, and / or disability cover.

So, what do you think makes the term life insurance plan a smart financial choice for policyholders? Well, the answer is simple. Multiple tax benefits!

• Section 80C - Premiums paid towards your term insurance plan are eligible for tax deductions (up to Rs. 1.5 lakh annually).
• Section 10(10D) - The death benefit / payout (sum assured paid to the nominee) is completely tax-free.
• Section 80D - If you have added health-related riders like critical illness or disability cover, premiums for those may also qualify for deductions under this section.

For example, if you pay Rs. 20,000 towards your term life insurance as annual premium, this amount can be claimed as a deduction under Section 80C, which reduces your taxable income. If the unfortunate event of death happens during the policy term, and your nominee receives Rs. 1 crore sum assured, the entire payout is tax-free in their hands

When you buy a term insurance policy, keep these documents handy to ensure that you have a stress-free experience and quick policy issuance as you apply for the coverage you desire. You are expected to provide accurate information in these documents. If any of these documents or details provided in your application are found to be forged and invalid, your claim can get rejected later.

• Identity proof (Aadhaar, PAN, passport, voter ID)
• Age proof (Birth certificate, Aadhaar, driving license)
• Address proof (Utility bills, Aadhaar, passport, rent agreement)
• Income proof (Salary slips, Form 16, ITR, bank statements [to justify the sum assured you are applying for])
• Medical reports (Depending on your age, occupation, health declarations made, and sum assured mentioned in the application, the insurer may want you to undergo medical examination or reports may have to be submitted as required)
• Photographs (Passport-sized photos for records)

Yes, you can buy multiple term insurance policies from different insurance companies. This allows you to diversify benefits from several term insurance covers while also scaling protection with increased sum assured from multiple plans. However, make sure to disclose about each of your term life policies to all your insurers because insurance companies generally tend to check the overall eligibility of the policyholder to ensure alignment of your income with your desired total coverage amount. Multiple term insurance covers means more flexibility for the policyholder because you need not overpay or overcommit at an early age. Instead, your term life insurance covers can be structured based on your financial responsibilities at different life stages. Your nominees can claim payouts from all policies you hold at the time of death, thus leading to lump sum benefits helping in their immediate and long-term financial relief. Example: Anuradha, a 28-year-old non-smoker, healthy female, buys a Rs. 50 lakh term insurance plan, with the goal of providing financially for elderly care expenses of her parents, upon the likelihood of her untimely death. At 35, after marriage and taking a home loan, she buys an additional Rs. 1 crore term life insurance policy to provide coverage for her spouse and loan obligations. Later at 42, she adds another Rs. 50 lakh term insurance cover for future education expenses of her 2 children. Currently, Anuradha holds three policies: Rs. 50 lakh + Rs. 1 crore + Rs. 50 lakh = Rs. 2 crore total cover amount. If Anuradha passes away during the policy term, nominees of Anuradha’s term insurance covers can claim death benefits from all three plans mentioned above, provided full disclosures were made at the time of their purchase.

During purchase of a term life policy, your premium is usually determined after assessing your risk profile, which is calculated on the basis of your age, your current health status, medical conditions if any and lifestyle habits that are impacting your health. If you were a non-smoker and a non-drinker back then when you had originally bought the term insurance, your risk profile would have been estimated differently compared to what your current risk profile is after developing those habits. Good news: Your premium does not automatically change immediately based on the lifestyle habits you adopt. Term life policy gives you enough predictability and long-term affordability by locking in the premium determined for you at the start of the tenure (provided you pay it regularly). In other words, your current policy with the insurer remains intact without any modifications even after you have developed these habits. What’s ideally recommended?: You are expected to inform the insurer about significant and major developments to your health or anything to do with your changed lifestyle, either during periodic medical reviews (as and when required), policy renewal or while making a claim to the company. It is considered to be an important responsibility at your end because if something happens to you and your untimely death gets connected to your lifestyle changes (smoking, drinking etc.), your family’s claim for the payout can be denied or delayed depending on the case and the investigation findings. Therefore, honesty is always the best policy when it comes to term insurance. In case you were a smoker / drinker right from the start but had informed the insurance company otherwise (during purchase of the policy), this amounts to non-disclosure (hiding of such crucial information) which again leads to several complications during the claim, most of them putting your family’s peace of mind, protection, finances and future at a huge risk. This, in turn, destroys the whole purpose of why you had purchased a term life policy in the first place. In short: Being transparent at all times ensures that your family doesn’t have to go through any such stress later. Upon intimation of your newly-developed habits and health changes, your insurer may reassess your risk profile. You can also expect your premium to increase accordingly.