Term insurance

Key Characteristics of Term Life Insurance

• Pure protection: No cash value or maturity benefits
• High coverage at lower cost: Designed to provide large life cover at affordable premiums
• Fixed premiums: Premium amount remains the same throughout the policy term
• Flexible policy terms: Choose coverage for 10 to 40 years
• Tax benefits: Premiums may qualify for tax deductions under Section 80C, and death benefits are tax-free under Section 10(10D), as per applicable laws
• GST Benefit: Term insurance premiums are currently exempt from GST.

• Singular Purpose: Life Protection 
  Term insurance is designed with one clear goal: to protect your family financially in case you are not around. It stands between uncertainty and your family’s financial security.
  That’s why ACKO Life's sole focus is to provide straightforward life protection, without any hidden agendas. We offer only term life insurance, built purely to do what life insurance is meant to do: protect.
• Clarity for Loved Ones
  A simple and transparent policy structure makes it easier for families to understand the cover. During difficult times, this clarity helps them claim the benefit without added confusion or stress.
• Purity is Care
  By removing unnecessary features, it stays simple, affordable, and easy to manage over the long term.
• The Good in Unmixing
  When life insurance is kept separate from investments, expectations are clear from the start. This creates transparency and builds trust in how the policy works.
   

The cost of term insurance depends on a few basic factors, such as your age, the amount of life cover you choose, the policy term, and your health and lifestyle. Since term insurance focuses only on life protection, it is generally more affordable than other types of life insurance.
The easiest way to know how much your term insurance will cost is to calculate it based on your age, income, and coverage needs.

Life often comes with long-term responsibilities. These can include repaying loans, supporting your children’s education, managing everyday household expenses, and taking care of ageing parents.

Without adequate life insurance, families may have to:

• Rely on savings
• Sell assets
• Depend on others for financial support

Term insurance helps provide financial stability during such times by ensuring your family has a dedicated life cover. It is designed to replace lost income and support your loved ones in maintaining their standard of living, even in your absence.

1. Pure Term Insurance Plan (Level Term Insurance)

This is the most basic and popular type of term plan where the sum assured remains fixed throughout the policy term.

Features:

• Fixed death benefit for the entire policy term
• Lowest premium among all types
• Simple and understandable

Best for: Anyone looking for inexpensive life coverage without additional features.

2. Term Insurance with Return of Premium (TROP)

TROP provides life cover and also returns all your premiums if you survive the policy term.

Features:

• Get back 100% of premiums if you outlive the term
• The premiums are higher, about 1.5 to 3 times more expensive than pure term plans.

Best for: People who want life protection along with the assurance of getting their money back at the end of the term.

3. Increasing Cover Term Plan

With an increasing term insurance plan, your coverage automatically increases every year to keep pace with inflation or growing responsibilities.

Features:

• The coverage increases by a fixed percentage, usually between 5% and 10% annually.
• Helps cover future needs as your income and expenses grow
• Premium usually remains the same or increases slightly.

Best for: Young professionals who expect their income, lifestyle, and financial needs to increase over time.

4. Decreasing Cover Term Plan

With a decreasing term insurance plan, your coverage amount decreases gradually during the policy term, matching your loan balance.

Features:

• Good option to cover liabilities like home or business loans
• Lower premiums as compared to regular term plans
• The coverage decreases as your outstanding debt goes down.

Best for: Borrowers who want protection for large loans that reduce over time.

5. Convertible Term Plan

It allows you to convert your term plan into a whole life or endowment policy later, without the requirement of any medical tests.

Features:

• Easily convert to a permanent life insurance plan
• No fresh medical check-up needed
• Useful if your long-term financial goals change

Best for: Individuals who are unsure of their needs in the future and would like flexibility to switch plans later.

6. Group Term Life Insurance

It is a term life insurance policy provided by the employer to employees as an additional benefit.

Features:

• Employer pays the premium
• Coverage is usually 3-5 times your annual salary
• No medical test needed for basic cover
• Coverage ends when you leave the company

Best for:  Employees desiring basic life insurance through their workplace.

ACKO Life Insurance does not offer plans with a return or savings element, as such features add cost and complexity. The focus remains only on pure life protection.

With Return of Premium plans, there are a few things to keep in mind.

• Higher premiums: You pay about 1.5 to 3 times more compared to pure term insurance. 
• Lower life cover for the same cost: Higher premiums may reduce the amount of protection your family receives.
• No growth on the refunded amount: The premiums paid remain locked in and do not grow over time. With lower premiums under pure term insurance, you can save money to invest separately and earn returns over time.
• Added complexity: The refund element makes it harder to clearly understand what you are paying for protection.

1. Find out the Right Coverage Amount

The first step is to figure out how much term insurance coverage you actually need. The coverage amount is also known as the sum assured (the money your family would receive if you pass away). So, it’s one of the most important decisions because it directly affects your family’s financial security and also your policy premium.

2. Choosing the Right Policy Term

The next thing you’ll want to do is choose how long you want your term insurance coverage to last. The policy term means how many years your plan will provide protection, and there are some simple ways to decide this:

• Until retirement: This is the most common choice (e.g., 30-year term for a 30-year-old)
• Until a major financial goal has been reached, such as children's education or home loan repayment.   
• Until dependents become financially independent: 20-25 years.

3. Selecting Premium Payment Option

Now that you have determined your term insurance coverage and policy term, your next step is to choose your premium payment option. The premium payment option can impact your budget, payment convenience, and long-term financial planning; thus, it is best to choose a premium payment option that you are comfortable with. You can choose either:

1. Regular Pay:

• Pay monthly, quarterly, or yearly throughout the policy term. 
• Many people prefer the annual payment option because it offers convenience and may come with small savings.
• It is suitable if you have a steady, ongoing income.

2. Limited Pay (10-15 years):

• Pay for a shorter duration and get life coverage for the entire policy term.
• Higher annual premium but lower total outgo
• Suitable for high-income earners

4. Medical Underwriting

When you buy a term insurance plan, you’ll need to go through a quick medical check-up. This step is called medical underwriting. This is an important step of the process because it ensures your premiums are based on your actual health conditions.

• Health details help determine premiums
• Medical tests may be required for higher cover
• Honest disclosure is important

5. Policy Issuance

Once your application and medical underwriting are done, your term insurance policy is issued. This is when your coverage officially starts, and you will receive your policy document (digitally or physically) with all the details about your plan.

1. Huge Coverage at Low Cost

Among all life insurance products available, term insurance provides the highest coverage at the lowest premium.

Comparative costs (aged 30 male, ₹1 crore term insurance  cover):

• Term insurance: ₹8,000-10,000/year
• Traditional endowment plan: ₹3-6 lakh per year (estimated range for ₹1 crore cover; varies by insurer and policy term)

2. Financial Security for Dependents

Term insurance focuses only on protection, which allows higher coverage at lower premiums compared to other life insurance plans. Here’s how term insurance helps your loved ones in real life:

• Gives immediate money to manage funeral or emergency expenses
• Helps your family repay loans like home or personal loans
• Acts as an income replacement
• Keeps your children’s education plans secure
• Ensures your spouse’s retirement plans remain safe and steady

3. Tax Benefits: Dual Advantage

• Section 80C Benefits: Premiums paid are deductible up to ₹1.5 lakhs annually.
• Section 10(10D) Benefits: Tax-free death benefit to nominees.

4. Debt Protection

Household debt refers to the total amount of money families owe to banks or financial institutions, which includes home loans, car loans, education loans, personal loans, and credit card loans. How term insurance helps:

• Prevents a forced sale of property
• Protects co-borrowers from the burden
• Maintains the credit score of the surviving family members

5. Peace of Mind

Term insurance removes that persistent thought in the back of one's mind: "What would happen to my family were I not around?" Here's how such peace of mind helps in daily life:

• If you're less stressed about the future, you can then focus more on your career and goals.
• When you feel secure, it leads to stronger and happier family relationships.
• You can plan long-term without fear of leaving unfinished responsibilities.

6. Flexible Payout Options (Death Benefit)

Choose how your family receives money:

• Lump Sum: The whole amount in one payment. It is suitable for immediate debt clearance. 
• Income Benefit (Instalments): Monthly/annual payouts for a specified period. It ensures a steady income flow and prevents the misuse of a large amount.
• Combination: 50% in lump sum + 50% in instalments. 

This includes:

• Cigarettes, cigars, pipes
• Chewing tobacco, gutka, paan masala
• Electronic cigarettes
• Any other form of consumption of nicotine

You want to ensure your family's financial security in the event of your passing. However, you need to determine how much coverage you require or what the cost will be. That's where a Term Insurance Calculator comes in. In simple terms, a Term Insurance Calculator helps you determine how much insurance you need and how much it will cost. It's like a virtual assistant that takes the guesswork out of protecting your loved ones financially.

• Provide basic information about yourself, such as your age and gender, and how much money you want your family to receive if you pass away.
• Answer a few simple questions about your habits and health conditions.
• Then, the calculator performs some quick calculations and provides an estimate of how much you'll pay for the insurance each month or year. It also indicates how long the coverage will last (typically a specific number of years).

• Young and Healthy People: Buying term life insurance when you're young and healthy can be cheaper. It's like locking in a good deal for the future.

• Earning Members: If you're the one who earns for your family, term life insurance is essential. It ensures your family won't face financial difficulties if you're no longer there to support them.

• People with loans or EMIs: If you have loans or debts, like a home/personal/car loan, term life insurance can cover those debts so your family doesn't get burdened.

• Taxpayers: If you're looking to save on income tax while securing your family's future, term life insurance is a smart choice. Premiums paid are eligible for tax deductions under Section 80C, and the payout to your family is tax-free under Section 10(10D).

• Homemakers / Non-Working Spouses: Homemakers play an important role in running the household and supporting the family. Term insurance for non-working spouses helps ensure that daily needs like childcare, groceries, and household support are taken care of, in case of an unforeseen event.

• Working Women: In today’s workforce, women stand shoulder-to-shoulder with men. Term insurance for working women offers tax savings and helps secure a family's financial future. Additionally, many plans include riders, such as critical illness coverage, for life-threatening illnesses commonly affecting women.

• Newly Married Couples: When you're beginning your married life, term insurance provides financial protection for your spouse in case something happens to you. Buying early also means lower premiums.

• Single Parents: If you're a single parent, your children depend on you entirely. Term life insurance can give you peace of mind, knowing that your kids will have financial support if something happens to you.

• Estate Planners: If you want to leave your heirs and inheritance or financial legacy, term life insurance can help ensure they receive it.

• Business Owners: If you own a business, term life insurance can be crucial to ensure the smooth transition of your business or to cover business debts in case something happens to you.

• People with Ageing Parents or Dependents: Many Indians support their parents or siblings financially. A term plan ensures that your dependents won’t be left helpless in your absence. 

To take a term insurance policy, you must fulfil certain eligibility criteria defined by the insurer. Knowing these criteria helps you select the appropriate plan.

• Age Limit: The majority of insurers provide term plans to people aged between 18 and 65 years.

• Income Criteria: Your income determines the maximum coverage amount you can choose.

• Medical Fitness: Certain policies could ask for a medical test to evaluate your well-being.

• Nationality & Residency: Applicable for Indians and NRIs according to insurance company guidelines.

• Occupation & Lifestyle: Hazardous occupations or lifestyles like smoking could impact premium charges.

Note: Satisfying these conditions gives you a seamless approval process and brings you closer to ensuring your dear ones' future.

• Death Certificate:  This is the most important requirement. This document verifies that the life insured has passed away as documented by the local municipal authority or hospital where the death occurred.

• Policy Document: You'll also need a copy of the term life insurance policy, which will provide documentation for the coverage amount as well as the name of the beneficiary.

• Medical Records: If the cause of death was medical, the insurance company may ask for the medical documents or reports related to the illness or cause.

• Nominee/Beneficiary ID: The nominee or beneficiary who will receive the insurance payout will also need to provide proof of their identity.

• Bank Details: You will also be required to submit the bank account information for the insurance money to be deposited. This is usually done through a cancelled cheque or a bank statement.

Additional documents (based on death circumstances):

For natural death:

• Hospital records and medical reports
• Attending physician's certificate
• Medical history

For accidental death:

• FIR copy
• Postmortem report
• Police investigation report

For death abroad:

• Death certificate from that country (translated and attested)
• Proof of travel
• Embassy/Consulate certificate

Notify the insurer

• Call customer care
• Email to the claims department
• Visit the nearest branch
• Get the claim number

Submission of the claim form

• Download or obtain the claim form
• Fill out the claim form and include the nominee’s information
• Include all required documents
• Physically submit or complete the submission online if available

A verification process

• Verify documentation
• Investigate if necessary (for claims made during the first three years of the policy, or circumstances appear questionable)
• Verify medical records
• Review the police report if the death was accidental

Claim Assessment

• Review against policy terms
• Check exclusions
• Verify premium payment status
• Calculate the payable amount

Claim Settlement

• Approval notification
• Payment processed (7-15 days after approval)
• Amount credited to the nominee's account
• Settlement letter issued

Note: Always keep copies of all submitted documents and maintain regular follow-up with the insurer’s claims team for updates.

• Who Can Buy?: If you are an Indian citizen living outside India for work, studies, or business, you can still buy a term plan from Indian insurance companies.

• Online Process: Most companies allow you to apply online. You don’t need to come to India.

• Medical Tests: Some companies may ask for medical tests. You can take them in your country, and the report can be sent digitally.

• Payment: You can pay using NRE or NRO bank accounts.

• Claim Process: If something happens, your nominee (usually a family member) will get the claim amount.

What are the benefits of buying NRI term insurance in India?

Buying a term insurance plan in India is a smart choice for NRIs (Non-Resident Indians). Here are some of the benefits of buying NRI term insurance:

• Affordable Premiums: Term plans in India are high affordable, especially when bought at a younger age.

• Large Cover Amounts: You can get a high sum assured (like ₹1 crore term insurance, 5 crore term insurance, or even 20 crore term plans at affordable premium rates to protect your family’s future. Some insurers offer a GST waiver for NRIs as per the tax laws.

• Tax-Free Payout: The claim amount received by your nominee is tax-free in India under Section 10(10D) of the Income Tax Act.

• Claim Support in India: Your nominee in India can easily file a claim and receive the money.