Term plan is one of the most affordable and efficient ways to ensure that your loved ones are financially secure in your absence. As we move into 2025, the awareness around term insurance and its significance has grown significantly. With evolving lifestyles, increasing health risks, and economic fluctuations, investing in the best term insurance plan is a smart move.
This comprehensive guide will help you understand what a term plan is, why it's essential, how to choose the best one, and what options are available, including popular LIC term insurance and private term life insurance plan providers.
A term plan, also known as term life insurance, is a type of life insurance that offers coverage for a specific time period, known as the term. If the insured person dies during the policy term, the nominee receives the death benefit (sum assured). If the policyholder survives the term, no payout is made, unless the plan includes return of premium options.
A term life policy is a pure protection plan—there is no savings or investment component, which keeps the premium low while offering a high coverage amount.
Absolutely. A term insurance plan provides high coverage at low cost and is ideal for financial security.
If you have a basic term plan, no payout is made. However, ROP (Return of Premium) plans refund the premium paid.
Many insurers offer options to enhance your term life policy cover upon milestones like marriage, childbirth, or income hikes.
Your nominee must submit a claim form, death certificate, ID proof, and policy document to initiate the claim. Most insurers settle valid claims within 15–30 days.
Why You Should Choose a Term Insurance Plan in 2025
Here are some compelling reasons why a term insurance plan is one of the best financial decisions you can make in 2025:
You can get substantial life coverage for an affordable premium. A term life policy with a sum assured of ₹1 crore can cost as little as ₹500–₹1000 per month, depending on your age and health profile.
A term plan ensures that your dependents are not left financially vulnerable in your absence. It can cover day-to-day expenses, children’s education, home loans, and other liabilities.
Premiums paid towards a term insurance plan qualify for deductions under Section 80C of the Income Tax Act. Additionally, the death benefit is usually tax-free under Section 10(10D).
Add-ons like accidental death benefit, critical illness cover, waiver of premium, and disability rider can be included to increase the policy's utility.
With insurance evolving, there are now multiple types of term life insurance plan options to suit different financial needs:
The most basic type. The sum assured remains the same throughout the policy term.
In this type, the sum assured increases annually at a fixed rate, catering to the rising cost of living.
Here, the sum assured decreases over time, usually aligned with reducing liabilities like a home loan.
This term plan returns the premium amount at the end of the policy term if the policyholder survives. It combines protection with savings but is more expensive than a regular plan.
Allows the policyholder to convert their term life policy into a permanent life insurance policy in the future without medical examination.
The best term insurance plan depends on several factors such as age, income, lifestyle, number of dependents, and future financial responsibilities. However, here are some parameters to identify a top-tier term plan:
High Claim Settlement Ratio (CSR)
Affordable Premiums
Long Policy Tenure (up to 85 years or even lifetime)
Flexible Payout Options (lump sum, monthly income, or a combination)
Comprehensive Riders
Ease of Purchase and Claim Process
India has a mix of public and private insurance companies offering reliable term life insurance plans. Here are some of the top names:
The Life Insurance Corporation of India (LIC) is one of the most trusted names in India. LIC term insurance plans offer unmatched reliability and are ideal for those looking for traditional and government-backed solutions.
Popular LIC Term Plan:
LIC Tech Term Plan – A pure protection plan with high coverage at an affordable premium, available online.
Offers customization with various plan options and riders.
One of the highest CSRs in the industry.
Offers a return of premium option and critical illness benefits.
Flexible payout structures.
Covers death, disease, and disability under one policy.
Provides whole life cover up to age 99.
Offers level cover, increasing cover, and additional benefit options.
How Much Term Insurance Do You Need?
A thumb rule for choosing the right coverage in a term insurance plan is:
Coverage = 10 to 15 times your annual income + outstanding loans + future responsibilities
For example, if your annual income is ₹10 lakhs and you have ₹30 lakhs in liabilities and future goals like education or marriage costing ₹20 lakhs, you should aim for a cover of at least ₹1.5 crore
Younger Age = Lower Premiums
Healthy individuals in their 20s and 30s can lock in lower premiums for higher coverage.
Buying a term life insurance plan early also ensures better health eligibility and long-term protection.
Lower premium due to the absence of middlemen.
Convenient and time-saving.
Easy comparison of plans.
Personal interaction and help with paperwork.
Suitable for people who are not tech-savvy or want in-person advice.
Verdict: For most tech-savvy buyers in 2025, online is the best option.
Common Mistakes to Avoid When Buying a Term Plan
Underinsuring yourself by choosing a small sum assured.
Not disclosing health conditions or habits like smoking.
Ignoring policy exclusions.
Not adding essential riders.
Failing to inform your nominee or not updating nominee details.
Assess your insurance needs.
Research different term life policies using trusted insurance portals.
Compare plans based on premium, coverage, claim settlement ratio, and riders.
Choose a reputed insurer, such as LIC or a leading private insurer.
Fill in the application form accurately.
Pay the premium and complete medical tests (if required).
Receive your policy document via email and hard copy.
