| What is term life insurance premium? A term life insurance premium is the amount you pay, usually monthly or annually, to keep your term life policy active. It covers the cost of providing life cover for a fixed period. If the insured dies during the term, the insurer pays the sum assured to the nominee. Premiums vary based on age, health, policy term, and the amount of coverage. |
In FY24, India’s insurance penetration stood at just 3.7% of the GDP—with 2.8% from life insurance and a mere 0.9% from non-life insurance—highlighting a massive gap in financial protection across the country. While awareness is gradually increasing, a large number of Indians still remain underinsured or entirely uninsured.
One way to gauge this is by examining per capita premiums, which indicate the amount of money individuals spend on insurance. These nudged up only slightly—from ₹8,035 (US$92) in FY22 to ₹8,297 (US$95) in FY23—indicating that despite rising incomes and risks, most people aren’t investing enough in insurance. That’s where term life insurance plays a crucial role, offering high coverage at relatively low premiums, making it one of the most accessible ways to secure your family’s future financially.
If you need help choosing the right policy, feel free to chat with us on WhatsApp or book a call at a convenient time—no spam — just honest insurance advice.
Overview
The blog offers a comprehensive guide to term life insurance premiums, covering its definition, working mechanism, and structure. It explains how premiums are calculated, lists average premiums by age, compares top term plans in 2025, and helps readers choose the right policy.
What is term life insurance?
Term life insurance is a pure protection plan that provides financial security to your family in case of your untimely death during the policy term. It offers a fixed sum assured to the nominee in the event of the insured's passing away, but no maturity benefit if they survive the term. It’s affordable and ideal for covering life’s uncertainties.
How does term life insurance work?
Term life insurance is a pure risk cover that provides a predefined sum assured (death benefit) to the nominee if the insured dies during the policy term. The policyholder selects the sum assured, policy duration (e.g., 10 to 40 years), and premium payment frequency (regular, limited, or single pay). Premiums are based on age, health, lifestyle, and term length. If the insured survives the term, no maturity benefit is paid unless the plan includes a Return of Premium (ROP) option. Riders like accidental disability coverage, critical illness, or waiver of premium can enhance coverage.
In short, term life insurance offers financial protection by paying a death benefit if the insured passes away during the policy term. It has no maturity value unless the Return of Premium option is chosen.
What is term life insurance premium?
A term life insurance premium is the amount paid by the policyholder to keep the term plan active. It is calculated based on factors like age, sum assured, policy term, health status, and lifestyle habits. The premium ensures the insurer provides a death benefit to the nominee if the insured passes away during the policy term. Once a term insurance plan is purchased, its premiums remain locked in for the entire policy term/tenure.
How do term life insurance premiums work?
Term life insurance premiums are the cornerstone of maintaining your policy and ensuring uninterrupted coverage for your loved ones.
- Premium Payment Frequency: You can choose to pay premiums monthly, quarterly, half-yearly, annually, or as a one-time lump sum (single pay), depending on the policy terms.
- Calculation Factors: Premiums are determined based on age, sum assured, policy term, gender, occupation, health history, and tobacco consumption habits. Loading charges (additional premiums) may apply for pre-existing diseases and lifestyle habits.
- Payment Terms: Policies offer Regular Pay (throughout the term), Limited Pay (for a shorter duration), or Single Pay.
- Non-Payment Consequences: Missing payments can lead to a policy lapse, ending coverage unless revived during a specified period.
Understanding how these premiums work helps you make informed decisions about your policy structure, affordability, and long-term financial planning.
To sum it up, term life insurance premiums depend on factors like age, health, and sum assured, and can be paid regularly, for a limited period, or in one lump sum. Missing payments may lead to a policy lapse.
Average Term Life Insurance Premiums at Different Ages
| Rs. 1 crore cover for Male, non-smoker, salaried, till age 65 | Average premium across 5 popular insurers |
|---|---|
| Age: 25 | ₹12,141 |
| Age: 30 | ₹14,782 |
| Age: 35 | ₹18,816 |
| Age: 40 | ₹23,970 |
| Age: 45 | ₹33,642 |
To summarise, term insurance premiums rise sharply with age, from just ₹12,141 at 25 to ₹33,642 by 45. Buying early can lock in low premiums and long-term savings.
Best Term Insurance Plans in 2025
| Insurance Plan | Insurer Metrics Average (FY 22-25) |
Coverage and Riders |
|---|---|---|
| Axis Max Life Insurance Smart Term Plan Plus | CSR: 99.6% ASR (21-24): 96.2% Solvency Ratio: 1.9 Complaint Volume: 5.7 |
Accidental Death Benefit, Critical Illness Cover (64 illnesses), Regular or Smart Cover (1.5X coverage for first 15 years), Women's Perks (Lifeline Plus & Maternity Cover), Waiver of Premium on Disability or Critical Illness, Zero-Cost Exit Option, No Inflation-linked Top-Up |
| Bajaj Allianz Life eTouch II | CSR: 99.21% ASR(21-24): 93.5% Solvency Ratio: 4.4 Complaint Volume: 4 |
Accidental Death Benefits, Life Stage Benefit (increased coverage after marriage/childbirth), Critical Illness Coverage (60 illnesses), Waiver of Premium on Permanent Disability (accident-related), Zero Cost Option |
| ICICI Prudential iProtect Smart Plus | CSR: 98.03% ASR(21-24): 95.1% Solvency Ratio: 2 Complaint Volume: 11 |
Accidental Death Benefit, Life Stage top up option, Terminal Illness Payout, Critical Illness Cover (60 illnesses), Zero Cost Option, Premium Break benefit |
| HDFC LIFE Click 2 Protect Super | CSR: 99.55% ASR(21-24): 93.9% Solvency Ratio: 1.9 Complaint Volume: 1.3 |
Accidental Death Benefits, Total Permanent Disability, Inflation-linked cover, Critical Illness Cover (60 illnesses, 90-day waiting period), Terminal Illness Benefit, Waiver of Premium on Critical Illness and Disability, Return of Premium Option. |
| TATA AIA Sampoorna Raksha Promise | CSR: 99.21% ASR(21-24): 95.1% Solvency Ratio: 1.8 Complaint Volume: 3 |
Accidental Death Benefit, Critical Illness Coverage (40 illnesses), Total Permanent Disability, Waiver of Premium on Critical Illness/Permanent Disability, Life Stage Benefit, Partial Terminal Illness Payout |
The table above allows you to compare top term insurance plans of 2025 based on claim settlement, solvency, complaints, and rider benefits, such as critical illness, accidental death, and premium waivers, to find the best fit for your needs.
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Conclusion
To wrap it all up, here’s why term insurance remains a cornerstone of sound financial planning:
- Term life insurance offers high coverage at affordable premiums, making it a smart and essential financial tool for protecting your family’s future.
- Premiums vary based on key factors like age, health, lifestyle, and coverage amount—understanding these helps you plan better and avoid surprises.
- Choosing the right policy with suitable riders and features ensures comprehensive protection.
Compare plans and seek expert guidance from Ditto to make the best choice.
In short, a well-chosen term plan not only secures your loved ones but also brings peace of mind, now and for the years ahead.
FAQs
What happens if I miss a term life insurance premium payment?
If you miss a premium, your policy may lapse after the grace period (typically 15–30 days). You can revive it within a specific timeframe by paying the pending premiums and fulfilling any necessary health requirements.
Is term life insurance premium tax-deductible?
Yes, premiums paid for term life insurance are eligible for tax deduction under Section 80C of the Income Tax Act, up to ₹1.5 lakh annually (old regime).
Does the premium change during the policy term?
No, once the policy is issued, the premium remains fixed throughout the term (for regular and limited pay options), unless you opt for a flexible coverage structure or make changes to the policy.
How can I reduce my term insurance premium?
You can reduce your premium by buying early, opting for a regular pay mode, maintaining a healthy lifestyle, and avoiding smoking or high-risk habits.
Is the Return of Premium (ROP) option worth it?
Return of Premium (ROP) plans refund the total premiums you’ve paid (excluding taxes) if you survive the policy term. However, this isn’t as beneficial as it sounds. You don’t earn any interest, profit, or bonus on the refunded amount; it’s simply your own money returned after years, with no real growth. Plus, the premiums for ROP plans are significantly higher than regular term plans. Instead of opting for ROP, it’s far more cost-effective to buy a pure term plan and invest the premium difference in instruments like PPF or mutual funds for better returns and liquidity.
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