How to Choose the Best Term Insurance in 2025

Q: 2. What happens if I outlive my term life insurance?

When you buy term life insurance, you are protected for a particular time. For instance, if you buy a plan with a policy term of 30 years when you are 25 years old, the term life insurance plan will cover you till your turn 55 years old. Post the policy duration, the term insurance plan will cease to exist and its coverage will end. If you survive the policy term, your nominee will not receive any benefits. In order to let the coverage going, you can either pick a plan that offers a long policy period that covers you for life or opt to increase your life cover at different stages in life.

Q: 3. How long should be the duration of your term plan?

In order to ensure protection of your family, you must pick an optimal policy duration of your term plan. There are several aspects that need to be looked at while selecting a term. You can start with your age. The younger you are, the longer the period you need protection for and vice versa. Your gender too plays a crucial role here, as women generally live longer than men1. Similarly, your lifestyle habits, the ages of your dependents, etc. also decide the length of your policy term

Choose the best term insurance plan — **How to choose the right term insurance plan?**

**How to choose the right term insurance plan?**

**Here are 5 things you should know**

**Here are 5 things you should know**

Term insurance is a type of life insurance that offers financial coverage against the unfortunate demise of the insured during the policy term. It is a cost-effective way to provide financial protection for your loved ones. Buying a term insurance ensures peace of mind and tax^~ savings.

Before buying a term insurance plan, it is important to thoroughly research various insurance providers in the market and consider your insurance needs. Additionally, you must compare the features and benefits of different policies to ensure that you find the best coverage at the most affordable price.

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How to choose the best term insurance plan in India?

1. Claim Settlement Ratio of Insurance Companies :

This ratio reflects the percentage of claims paid out of the total claims filed in the year. The higher the ratio, the easier it’ll be for your dependents to claim the insurance in your absence and continue to live their lives comfortably.

The purpose of term life insurance is to secure your dependents’ future. The higher the claim settlement ratio, the better are the chances of ensuring that your family’s future is secure.

While the claims settlement ratio is important, what’s equally important is to check the total number of claims that were settled by the insurer. Only when a substantial number of claims are settled, the Claim Settlement Ratio acquires significance. For example,

Fact: ICICI Prudential Life has a Claim Settlement Ratio of ^*. The claim statistics are for FY2023 and are computed on individual basis claims settled over total individual claims for the financial year. For details, refer to the Annual Report 2022-2023 on our website.

2. Solvency Ratio:

The solvency ratio tells you whether the insurer you choose will be financially capable of settling your claim if the need arises. The Insurance Regulatory and Development Authority of India (IRDAI) mandates that every life insurer should maintain a solvency ratio of at least 1.5.

Fact: ICICI Prudential Life has a solvency ratio of 1.92^{^}.

In case of a natural disaster, a life insurer will receive a large number of claims in a short period. Since a huge volume of claims will have to be settled quickly, it is in such situations that the solvency ratio becomes vital. The financial security of your family will depend on the financial stability of your life insurer. Even though natural disasters may seem unlikely, ignoring this crucial aspect could compromise your family’s financial security.

3. Critical Illness Cover:

A term insurance plan secures your family’s financial future in case of an unfortunate event. But the death of a significant earning member is not the only time a family’s financial security comes under threat. Critical Illnesses like cancer or brain surgery can cost a lot of money and cripple the family’s finances. Critical illness benefit pays the cover amount immediately on diagnosis of any of the covered critical illnesses. The critical illness cover amount helps cover the high cost of treatment & ensures your family has enough money to sustain their normal day-to-day life. Premiums paid towards the critical illness cover are also eligible for deduction under Section 80D^~.

4. Additional Covers available:

All term insurance plans will provide a basic life cover^`. If the financial security of your family is your goal, then you must make sure that you choose a term insurance plan with comprehensive coverage and benefits. We have listed a few optional add-on benefits that you must look at while comparing term life insurance plans online:

Waiver of Premium: Life insurance cover will continue without the need to pay the future premium in case of permanent disability.
Accidental Death: This benefit increases the sum assured to be paid to your family members in case of death due to an accident. Most good term insurance plans will offer you an accidental death cover equal to the base sum assured.
Income Benefit: Some term insurance plans allow your family members to receive a regular income from the plan rather than a lump sum amount. This benefit comes in handy if you want your term insurance plan to provide monthly income to your family in your absence.

Some other benefits you can look at are terminal illness benefit, flexibility to increase the sum assured at major milestones and increasing monthly income benefit.

5. Premium Cost:

Once you have evaluated term insurance plans based on the above parameters and narrowed your choices down to a few, then you can look at the cost to make your final decision. However, make sure you don’t compromise on any of the points mentioned above just because of cost. Remember term insurance premiums are eligible for tax^~ deduction under Section 80C^~.

Fact: If cost is a major area of concern, then you can always select a monthly payment option. Set a standing instruction so that the premiums are auto-debited and you don’t have to pay the premiums every month manually.

The ICICI Pru iProtect Smart Plan offers a high life cover^` at an affordable premium. The plan also offers additional riders such as critical illness^# rider (optional), accidental death benefit^{^^} rider (optional), waiver of premium in case of permanent disability^## and terminal illness^$ at nominal costs and a life cover^` till the age of 99.

6. Consider Your Current Lifestyle:

If you are wondering how to choose term insurance, it is essential to consider your current lifestyle and select a plan that aligns with it. You must consider your lifestyle choices, such as occupation, habits, health and hobbies, as these factors can impact the type and amount of coverage you need. For instance, individuals with high-risk occupations, engaging in hazardous activities, such as construction, mining and others, may require a higher coverage to mitigate potential risks. Similarly, those with pre-existing health conditions may need to explore a term insurance plan that offers additional coverage with add-on riders.

7. Analyse Your Income:

Your income level not only determines your ability to pay the premium but also influences the amount of coverage you require. Therefore, analysing your income is a critical aspect of selecting an appropriate term insurance plan in India. When choosing a term insurance plan, it is important to consider your current income, job stability, future earning potential and financial liabilities like loans. It is advised to opt for a coverage amount that adequately replaces your income and ensures your family's financial stability in your absence. The coverage should be adequate to pay pending loans, cover daily essentials and cater to future goals.

It is also essential to assess the affordability of the premium and choose a plan that fits your budget. Ultimately, you must select a term insurance plan that offers the right balance of adequate coverage and affordability.

Term Insurance Terminology:

Below are some commonly used terms for term insurance:

Premium: The premium is the amount the policyholder pays to the insurance company in return for the insurance coverage. It can be paid in a single instalment or on a monthly, quarterly or annual basis
Death benefit: The death benefit is the amount of money paid to the beneficiaries in the unfortunate event of the policyholder's demise during the policy term. It is a fixed amount that can be given to the beneficiary in a lump sum, as regular income or a combination of the two
Policy term: The policy term refers to the duration for which the policy remains active and provides insurance coverage`
Rider: A rider is an optional add-on that can be purchased and added to your term insurance policy that can enhance your policy coverage
Beneficiary: The beneficiary is the person nominated by the policyholder to receive the death benefit in the event of the insured's demise
Grace period: The grace period is the period given to the policyholder to make the premium payment in case of delay. It is the duration after the due date during which the policyholder gets extra time to clear the previous payments. The policy remains in force during this time unless the policyholder fails to make the payment
Policyholder: The policyholder initiates the purchase of the life insurance policy and pays the premium to maintain coverage
Surrender value: If you decide to exit the policy before maturity, the surrender value is the amount you will receive from the insurer
Free look period: The free look period allows you to review and return the policy for a full refund if you are unsatisfied with it. It can typically last 15 to 30 days from receiving the policy document but may differ from policy to policy and insurer to insurer

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FAQs

1. Is it worth it to get term life insurance?

A term life insurance policy can offer you many benefits. As the sole breadwinner of your family, the money from a term life insurance plan can be a substitute for your income in your absence and help your family lead a comfortable and dignified life. The premiums for term life insurance plans are also quite affordable. In fact, term insurance is the most inexpensive form of life insurance. In return, you get a high life cover^` and many other advantages, such as a critical illness cover, a permanent disability cover, an accidental death cover, and other benefits.
The critical illness cover takes care of health insurance by covering you against expensive and life-threatening ailments. The accidental death cover offers your family a sum of money in the unfortunate case of death in an accident. The disability cover waives off all future premiums if you suffer from a permanent disability and are unable to work.

2. What happens if I outlive my term life insurance?

Generally, pure term insurance plans offer a life cover^` that is payable to the nominee only in the case of an unforeseen event during the policy term. So, if you survive the term and the plan matures, your cover will automatically end. If you wish to keep it running, you can pick a policy with a longer tenure that keeps you covered for life.
Alternatively, there are term plans with a return of premium also available in the market where the premiums are slightly higher but there is a money-back at the end if you survive the policy tenure.

3. What should be the duration of your term plan?

In order to ensure the protection of your family, you must pick an optimal policy duration for your term plan.
There are several aspects that need to be looked at while selecting the policy term. You can start with your age. The younger you are, the longer the period you need protection for and vice versa. Your gender too plays a crucial role here, as women generally live longer than men¹. Similarly, your lifestyle habits, the ages of your dependents, and other factors. Also, decide the length of your policy term.

4. Do term insurance premiums increase every year?

The premiums for an existing term insurance plan do not increase every year. The plan you purchase today will have the same premiums a few years from now as long as your policy is active and unchanged. The premiums will only alter if you purchase a new plan altogether.
Your premium may also rise if you increase your life cover^` or enhance the coverage of your policy with additional add-on benefits.

5. What are the types of death covered in term insurance?

When it comes to claiming settlement for the sum assured in a term life insurance plan, the following deaths are considered valid under the ICICI Pru iProtect Smart term plan:

Natural death caused by factors, such as age or a medical condition
Death due to a critical illness such as cancer, stroke, and others
Death due to an accident is also covered. Some plans also offer additional payouts to the nominee in the event of an accidental death
Death due to a natural calamity like an earthquake, flood, hurricane, tsunami, etc. is also covered under the plan

The following deaths are not included in a term life insurance plan:

Self-inflicted harm or death caused by suicide is not covered under term insurance, for a certain duration from the policy inception/revival
Death in a homicide that involves the nominee is not covered under a term insurance plan. In such cases, a proper investigation will be conducted

It is important to know these aspects before purchasing a plan. You can also read the policy document to be sure of which kinds of deaths are not included in your term insurance.

6. How much money should I have as a sum assured for my term policy?

The sum assured is the amount of money your family would get from your insurance plan in your absence. The sum assured you would need would depend on various factors, such as the number of members in your family, their lifestyles, future goals, and other factors. Many experts suggest that your sum assured should be calculated by taking your annual income and multiplying it by 10. You would also need to add inflation to this. The final result that you get can be sufficient to meet your family’s future needs.
Keep in mind that the sum assured should reflect your family’s requirements. On an average, most people pick a sum assured equivalent to 10 – 20 times their annual gross income².

7. When is the right time to buy term insurance?

The best term insurance plans are the ones that are bought at a young age. The premiums are a lot more affordable when you are young since the chances of suffering from health ailments are low. As a result, you can get a term plan at a lower premium and save a lot of money.

Points to remember about our ICICI Pru iProtect Smart Term Plan
Solvency Ratio of 1.92^{^}
Critical Illness Cover for 34 critical illnesses^#(optional)
Accidental Death Cover^{^^} up to 100% of the base sum assured (optional)
Waiver of Premium^## on permanent disability

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Disclaimer

¹ Why men often die earlier than women - https://www.health.harvard.edu/blog/why-men-often-die-earlier-than-women-201602199137

² How much life insurance do you really need? - https://economictimes.indiatimes.com/wealth/insure/how-much-life-insurance-do-you-really-need/articleshow/22065416.cms?from=mdr

^{^}ICICI Prudential Life | Solvency ratio for FY2023-24 https://www.iciciprulife.com/content/dam/icicipru/about-us/FinancialInformation/AnnualReports/annual_reports_fy2024.pdf

^`Life cover is the benefit payable on the death of the life assured during the policy term.

^#Accelerated Critical Illness Benefit (ACI Benefit) is up to ₹ 1 Crore (Subjected to underwriting guidelines). Accelerated Critical Illness Benefit (ACI Benefit) is optional and available under Life & Health and All in One options. This benefit is payable, on the first occurrence of any of the 34 illnesses covered. Medical documents confirming the diagnosis of critical illness need to be submitted. The benefit is payable only on the fulfilment of the definition of the diagnosed critical illness. The ACI Benefit is accelerated and not an additional benefit, which means the policy will continue with the Death Benefit reduced by the extent of the ACI Benefit paid. The future premiums payable under the policy will reduce proportionately. If ACI Benefit paid is equal to the Death Benefit, the policy will terminate on payment of the ACI Benefit. To know more in detail about the ACI Benefit and terms & conditions governing it, kindly refer to the sales brochure. ACI Benefit term would be equal to the policy term or 30 years or (75-Age at entry), whichever is lower.

^{^^}Accidental Death Benefit (ADB) is up to ₹ 2 crore (subject to underwriting guidelines). ADB is available in Life Plus and All in One options. In case of death due to an accident, Accidental Death Benefit will be paid out in addition to Death Benefit. Accidental Death Benefit will be equal to the policy term or (80-Age at entry), whichever is lower.

^##On the diagnosis of Permanent Disability (PD) due to an accident, the future premiums under your policy for all benefits are waived. To know more about the definitions and terms & conditions applicable for permanent disability due to an accident, kindly refer to the sales brochure of ICICI Pru iProtect Smart.

^~Tax benefits are subject to conditions under Sections 80C, 80D, 10(10D), 115BAC and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for more details.

^$A Life Assured shall be regarded as Terminally Ill only if that Life Assured is diagnosed as suffering from a condition which, in the opinion of two independent medical practitioners specialising in the treatment of such illness, is highly likely to lead to death within 6 months. The terminal illness must be diagnosed and confirmed by medical practitioners registered with the Indian Medical Association and approved by the Company. The Company reserves the right for independent assessment.

ICICI Pru iProtect Smart UIN (A Non-Linked Non-Par Life Individual pure risk premium product).

`Life cover is the benefit payable on the death of the Life Assured during the policy term.

^!jClaim settlement ratio is for Financial Year FY2023-24 and is computed on individual basis claims settled over total individual claims for the financial year. For details, refer to ICICI Prudential Annual Report 2023-24 in Public Disclosure section on ICICI Prudential website.

ADVT No: W/II/0088/2022-23

ADVT No: W/II/0200/2024-25

How to choose the right term insurance plan?

Here are 5 things you should know

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