Best Term Insurance Plans in India

Aditya, a client of ours, called us up and told us this -

“A couple of months ago, I was diligently surfing the internet, scourging to locate the best term insurance plans in India. I recently had a massive health scare, and that left me wondering about what could have happened to my family if I hadn’t made it through. After all, I had a 4-year-old kid and a spouse to care for. That’s why I started thinking of their future financial security and decided to go for the most effective, customisable, and affordable life insurance policy - a term insurance plan.

But when I looked around for the best term insurance plans in India, I was bombarded by sponsored pages and spam calls from policy sellers, which scared me off. Then, I learned about Ditto and its policies of unbiased free consultations with guarantees of no spam calls, which seemed promising. Can you help me out?”

Staying true to our marketed reputation, we offered him our expert advice after considering his age, income slab, educational qualification, existing financial obligations, and current financial bandwidth (to afford the premium without putting redundant pressure on his savings).

Here’s what our advisor offered as a list of the top term insurance plans in India for 2024 -

Best Term Insurance Plans in India for 2024

Heads Up: It takes an average person up to 5 hours to read & analyse a policy and 10 hours or more to compare different plans and make a decision. This is why we propose a better alternative - taking a 30-minute FREE consultation with Ditto’s certified advisors. We have a spam-free guarantee, and we’ll never push you to buy a plan.

Don’t delay this - we have limited slots every day, so book a quick call here before they run out. As you can see, a varied permutation and combination of income, coverage, and tenure still yields you affordable access to a high-end coverage amount.

What are term insurance plans?

Term insurance plans provide financial security by replacing the income of the insured if they pass away unexpectedly. If the insured person dies, their loved ones receive a lump sum payout to ensure they remain financially stable. This payout can support various financial goals in the absence of the primary earner.

The amount provided by the insurance company, based on the policy and premium paid, helps the dependents manage their expenses. This money can be used for many needs, such as funding children's education, covering major life events, or purchasing assets. Considering that you are a young individual with a steady source of income with dependents or loved ones, term insurance policies are your ideal way out to help your family in case of your unfortunate absence.

Buying term insurance is a significant financial decision, so it’s important to know how to choose the best plan for your needs. Term insurance is highly customisable and designed to ensure your financial stability and that of your loved ones. Picking the right plan is key.

What are the required eligibility criteria for availing of term insurance policies?

1. Age of the policyholder - You can buy a term insurance policy starting at age 18. The maximum age to get a life term insurance policy is 60 years.
2. Income of the policyholder - In the case of salaried individuals, Regardless of whether you work for the government or a private company, your monthly salary is reported to the Income Tax Authority. In the case of business owners, Even if you run a business and your monthly earnings aren’t fixed, your declared annual income is sent to the insurance authorities. The insurer then offers you term coverage options based on your income. (P.S.: Keep in mind that your maximum term insurance coverage depends on factors like your income and age.)
3. Health conditions of the policyholder - When applying for term insurance, you must fully disclose all your medical conditions. Insurers use this information to decide whether to offer you a policy and to determine your premium. Pre-existing conditions and potential future health issues can affect both your eligibility and the cost of your coverage.
4. Policy Period of the term insurance plan - The longer you want your policy to last, the higher the premium will be. This is because extending coverage into older years increases the risk for insurers, so they charge a higher premium to offset that risk.

P.S. Please remember that while some life insurance providers may offer you term insurance policies that cover you till you are 99 or 100 years old (also called whole life insurance plans) and offer you additional perks in the form of dividends and cash value, you may not want to purchase such plans.  These policies, on account of offering you extensive life insurance coverage (in terms of years), charge higher premiums since there is a guaranteed payout involved.

5. Gender of the policyholder - Women typically pay lower premiums for the same term coverage as men, thanks to their higher life expectancy. Term insurance providers also offer coverage to individuals who identify as third/other gender, with premiums matching those of men. Here is a quick look at how the premiums differ in the case of men and women policyholders

6. Occupation of the policyholder - Your profession and its associated risks play a key role in determining your eligibility for a term insurance policy. For example, people working in high-risk jobs like mining, armed forces, or oil and petroleum refineries are less likely to qualify for term insurance due to the higher risks and uncertainties involved in their careers.

7. Educational Qualifications of the Policyholder - If you have higher qualifications, it suggests you can maintain a strong income, which makes term insurance providers more likely to offer you the best plans, even if your current income isn't high.

If you combine the eligibility criteria of educational qualification, profession, and income slab of the policyholder, the entire criteria look something like this -

What are the best term insurance plans in India?

1. Max Life Smart Total Elite Protection: Similar to Max Life’s Smart Secure Plus policy, this plan is comprehensive and has a few caveats. It is a slightly modified version of the Smart Secure plan, featuring an additional Smart Exit Option. The plan also offers a variety of riders, including:

• Waiver of Premium (due to accident or critical illness)
• Total and Permanent Disability rider
• Critical Illness benefits (64 and 22 ailments)
• Accidental Death Benefit
• Zero Cost Option, and more.

Drawback: The plan requires policyholders to have a minimum annual income of ₹10 lakhs and provides coverage of a minimum of ₹2 crores.

2. HDFC Life Click2Protect Super: HDFC Life offers several variants of its Click2Protect product, most of which are slightly more expensive than other plans on the market. Click2Protect Super is the costliest of these variants. However, its features are appealing enough to justify the higher premiums. The policy includes some of the best riders in the industry:

• Waiver of Premium on Total and Permanent Disability
• Renewability Option at Maturity
• Waiver of Premium on Critical Illness
• Spouse Cover Option
• Return of Premium
• Life Stage Option

The policy includes a smart exit perk with an in-built terminal illness benefit and comes in three variants:

• Life: This option pays out the sum assured as a lump sum upon the policyholder’s death. It also includes a terminal illness benefit, providing the sum assured if the policyholder is diagnosed with a terminal illness and has fewer than six months to live.
• Life Plus: In addition to the death and terminal illness benefits, this variant offers an accidental death benefit. If the policyholder dies in an accident, the nominee receives an extra amount on top of the base sum assured.
• Life Goal: The sum assured payable upon death changes with each policy year based on the Level Cover Period chosen at the plan's start.

Drawback: The plan is a bit expensive.

3. Bajaj Life eTouch: This term insurance plan stands out as one of the most affordable options on the market. Its popularity stems from several attractive features, including:

• Three variants: Life Shield, Life Shield Plus, and Life Shield Return of Premium.
• A selection of riders depends on the chosen variant, such as death benefits, terminal illness coverage, waiver of premium, accidental death benefit rider, and return of premiums.

Drawback: The plan lacks a Critical Illness Rider.

4. ICICI Prudential iProtect Smart: ICICI Prudential offers a single, comprehensive term insurance plan called the iProtectSmart. This policy is not only affordable but also includes a range of built-in features:

• Life Stage Benefit Option
• Waiver of Premium in case of total permanent disability
• Zero Cost Term Plan Option

The iProtectSmart policy also provides the following riders:

• Accidental Death Benefit
• Critical Illness Benefit

Drawback: Recently, the insurer has experienced a decline in overall operational efficiency.

5. Tata AIA Maha Raksha Supreme: Among the most affordable term insurance plans available, the Maha Raksha Supreme policy provides an extensive range of features:

• Critical Illness Benefit covering 40 ailments
• Accidental Death Benefit
• Waiver of Premiums in cases of accidental total and permanent disability or diagnosis of a critical illness
• Critical Illness Rider
• Total Permanent Disability Rider

Drawback: The plan is available only to individuals with an annual income above ₹15 lakhs and offers coverage of ₹2 crores or more.

How to choose the best term insurance policies in India?

STEP 1: Decide upon the best sum assured for yourself

One of the most important questions you'll need to answer when choosing a term life insurance policy is how much coverage you need. You’ll want to figure out how much money will support your loved ones for the next decade or so if you’re not around. It’s not an easy decision, as there are many factors to consider when choosing the right coverage amount.

1. Consider Your Life Stage and Dependents - Imagine you bought a term life insurance policy at 24 with a coverage of INR 1 crore. You made a smart choice back then. But as you get older and take on more responsibilities, like a spouse and kids, will that coverage still be enough?

Term insurance providers usually stick to the coverage amount you initially chose and are often reluctant to make changes. However, if your policy includes a life-stage benefit feature, you can increase your coverage during major life events when you need extra support.

So, when selecting your coverage, remember to include a life-stage benefit. It’s the safety net that will ensure your family’s future is well-protected.

2. Analyse Your Income - Your current income supports your family and meets their financial needs, so it’s a key factor in deciding how much coverage you should choose for your term insurance plan.

3. Inflation - Since term insurance is meant to provide long-term financial support, it's important to consider inflation. Even if you pay your premiums faithfully, you don’t want your loved ones to end up with a payout that’s significantly reduced by inflation over the years.

4. Take a look at your Existing Financial Liabilities - Term life insurance policies can be a financial lifesaver, as you can step in to replace your income if something happens to you. When deciding on the sum assured, consider your current financial liabilities, including your family's future financial needs, current EMIs, returns from your various investments, monthly expenses, and any short-term financial goals.

By taking all these factors into account, you’ll ensure that the sum assured covers all the financial responsibilities you would have handled.

5. Assess your Current Lifestyle - Your current lifestyle uses up a chunk of your monthly salary. Before buying a term insurance policy with riders, it’s important to consider your spending habits and overall standard of living. Make sure to balance these expenses so you can choose a coverage amount that fits your budget without putting a strain on your finances.

So, all that you need to do is take a look at our free term insurance cover calculator wherein you will need to enter details like -

• Age when you are availing of the term insurance plan
• Age till which you want the term life insurance plan to cover you
• Current monthly/yearly income
• Existing EMIs/loans
• Approximate monthly expenditures

STEP 2: Seek out the best term life insurance provider

With 24 term life insurance providers and numerous policies available, choosing the right one can be overwhelming. This policy will act as a financial safety net for your family if you're not around, so you want to ensure it truly meets your needs. To find a reliable insurer, here’s what you should look for:

1. High Claim Settlement Ratio: The Claim settlement ratio in term insurance suggests the number of claims settled across a year measured against the total number of claims raised in the year.

Claim settlement ratio = Total no. of Claims Settled / Total no. of Claims Raised X 100

This is an indicator of the credibility of the insurance provider and proof of their claimed promises as to how they prioritise their policyholders. However, the CSR of a term insurance provider isn’t enough to determine its reputation.

2. High Amount Settlement Ratio: An insurer's Amount Settlement Ratio (ASR) measures how many claims they settle compared to the total number of claims they receive in a year. An ASR above 90% is excellent, showing that the insurer is good at handling claims now and likely to continue doing so in the future.

This high ASR is reassuring for policyholders since life insurance involves long-term commitments. Choosing an insurer with a high ASR gives you peace of mind, knowing they’ll handle claims efficiently, which is crucial in case of a loss.

3. Low Complaint Volume: You can gauge the credibility of a term insurance provider by looking at the number of complaints they receive, which often involve issues like delayed claim settlements or claim rejections. This complaint volume gives you a good sense of how efficiently the insurer operates. The lower the complaint volume, the more credible the insurer is.

STEP 3: Feature/ benefit to increase/decrease the cover amount

Typically, term insurance coverage is quite fixed, so your premium remains the same throughout the policy period. Insurers are usually hesitant to adjust the coverage amount, even if they face issues related to the lump sum and associated risks.

However, some top insurers and quality riders offer flexibility, allowing you to adjust your coverage amount as needed. You might wonder why you’d want to change your coverage. Let’s explore that:

1. Increase the term insurance cover - Inflation, new and major life events, and the addition of dependents would suggest the need to boost the term insurance coverage bandwidth.
2. Decrease the term insurance amount - Considering that you are through with paying your EMIs and have less number of dependents on you (your children become financially independent), why would you still want to continue with a higher coverage amount requiring spiked premiums? Rather you can choose a lower coverage amount and premium and invest the additional amount in meeting your short-term goals and dreams.

STEP 4: Look into the available term insurance riders available

As mentioned earlier, term insurance plans are highly customisable thanks to various add-ons. While there are many riders available, not all are essential. Here are a few that are worth considering:

• Life Stage Benefit: When choosing a term insurance plan, it's important to prioritise flexibility. A fixed coverage amount might not be enough during major life events like a wedding, higher education, or childbirth. During these times, you'll want your insurer to offer options to adjust and increase your coverage to meet your evolving financial needs. A life stage benefit rider can help you achieve this flexibility.
• Waiver of premiums: We highly recommend this rider because it allows you to skip premium payments if you become unable to work due to an accident or illness. This way, your family remains financially protected even if you're left unable to pay the premiums.
• Accidental Death Benefits: No one wants to face the death of a loved one, but when it’s due to a critical illness, there’s often some level of preparation. In contrast, an accidental death can come as a shock, both emotionally and financially. Adding an accidental death benefit rider to your term life insurance plan provides extra coverage beyond the standard sum assured. This additional amount helps offset the financial impact of losing the policyholder unexpectedly, offering a bit more support to your loved ones.
• Critical Illness Rider: A health insurance plan to deal with the charges incurred over hospitalisation bills due to a critical ailment is the first step in dealing with a critical illness. However, when it comes to handling the issue of loss of income due to repeated hospitalisations and lack of the ability to work, only a term insurance policy with a critical illness rider can help.

With this rider, the insurer offers the loved ones a part of the term cover in cash. This amount can be used to cater to hospital bills, daily expenses for the family, and more in the temporary absence of the breadwinner of the family.

However, since the amount is taken out of your term cover, you will be looking at a reduced coverage amount.

• Terminal Illness Rider: Diagnosis of a terminal illness for any individual is a huge psychological hit that paralyses one with fear. Thinned-out hope and marginal chances of getting a convenient treatment option - raise concerns. But what if you come to know of a treatment option that ensures positive results of a cure but is just pricey? The term life insurance plan that you had been saving for so long comes to the rescue.

With a terminal illness rider in place with your base policy, in case you are diagnosed with a terminal ailment and are acknowledged by the insurer, you get a lumpsum amount out of your term cover. This will help you meet your treatment bills and travel expenses among other things.

(The inclusion of these riders into your term insurance policy fetches a very small addition to the premium to be paid and yet yields a very high value to the policy that is targeted at safeguarding the future of your loved ones.)

The aforementioned factors will help you choose the ideal term insurance coverage. And, of course, you can always reach out to the insurance experts who can guide you with the perfect term insurance plans that best cater to your financial requirements and those of your loved ones.

However, before you buy term insurance, you need to familiarise yourself with one more aspect —the eligibility criteria required to purchase the best term life insurance in India.

Why Talk to Ditto for Your Term Insurance?

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Conclusion

To land with the best plans, you can always use our free term plan comparison tool and decide upon the policy that would best suit your family's financial requirements in the future during your absence and your current financial plans, ensuring easy premium payment without much financial burdening.