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5-Year Term Life Insurance: The Complete Guide

22-09-2022 |

Life insurance is a great way to protect yourself and your family from uncertain events that lead to financial complications. Generally, when you purchase a term life insurance policy, the main aim is to provide insurance coverage for your family for as long as the policy term will enable.

The tenure of a term life insurance policy starts with 5 years, and this is the shortest policy term for which you can avail of life insurance coverage. Many people may wonder if such a short-term insurance policy can be of any benefit. Well, here is how you can find out if a 5-year term insurance policy can be useful for you!

What is 5-Year Term Life Insurance?

A 5-year term life insurance is as simple as a regular term plan with a longer policy term. As it may be clear, such a term insurance policy offers pure life insurance coverage to the insured for a policy term of five years online. When buying a 5-year term plan, it is important to choose a policy that enables you to convert the term plan after the said period of 5 years when the policy expires.

Once you purchase the 5-year term policy, you will have to start paying the premiums as per the premium payment frequency selected by you. Hence, if you have chosen a Single Pay premium, you need only pay a single lump sum amount while purchasing the policy.

Likewise, if you choose Regular Pay or Limited Pay, you can pay your premiums each month, quarter, year or half-yearly until the end of the policy term or for a short policy term. During the premium payment term, in case of your untimely demise, the death benefits will be paid out to your family, even if the premium payments may not be complete. This is, however, subject to policy terms and conditions.

At the end of these 5 years, the plan will simply expire, and you can choose to convert the policy to another life insurance plan as per your needs. But if you happen to pass away in this tenure of 5 years, your family will receive the predetermined sum assured as the life insurance policy death benefit.

Salient Features of a 5-Year Term Policy

Even though term insurance plans are simple, they are quite popular and have certain features that help them stand out from other forms of life insurance plans. The features are:

  • Term insurance is uncomplicated without any additional components other than a simple life insurance cover.
  • You can buy a term plan early in life to further lessen the premiums.
  • If you have a convertible 5-year term plan, you can convert the policy to another form of life insurance at the end of the policy term.
  • The choice of flexible policy terms and premium payment terms makes term insurance suitable for all policyholders.
  • A short 5-year term policy offers adequate life insurance coverage to your family if you choose an appropriate sum assured.

If you are planning to purchase a 5-year term insurance plan from Tata AIA Life Insurance Company, you can observe term insurance to find an online term insurance policy that covers your insurance needs and ensures complete protection for your family.

5 Benefits of Term Insurance

There are several term insurance benefits that you can consider before buying a 5-year term insurance plan. Here are some of the main benefits:

  • Less Premiums

    The premiums for a 5-year term plan may be slightly more than a regular term plan, but the premiums are still quite affordable. You can get extensive life insurance coverage for your loved ones by paying reasonable premiums over the policy term of 5 years.

  • Life Cover

    The 5-year insurance policy will offer death benefits to your loved ones if you pass away during the policy term. Even though the policy tenure may be brief, the life cover still protects your family during this tenure and ensures that they will be supported financially in your absence.

  • Tax* Benefits

    The policy premiums paid on a term plan are eligible for tax* benefits under Section 80C of the Income Tax* Act. Likewise, the death benefits that are paid out to the nominee/family on the death of the insured are exempt from taxes under Section 10(10D) of the Income Tax* Act.

  • Optional Riders#

    A term plan offers simple but extensive life insurance coverage. And should you feel the need to enhance your term insurance benefits and coverage, you can always opt for optional riders# that can increase the coverage of your base plan and cover you against specific unforeseen risks and events.

  • Buy Online

    Term insurance plans are easily available online, where you can choose the policy coverage, the premium payment term and the policy term as per your needs and then make the premium payment online. Buying a 5-year term plan online lets you buy a term policy of your choice.

Should You Buy a 5-Year Term Plan?

Even though term plans are preferred by many policyholders, there are also people who avoid term insurance since these policies do not offer maturity benefits. However, the aim of a 5-year term plan is to offer comprehensive and extensive protection to your family.

Moreover, the rider# benefits that you can include in your base policy can help increase the term plan coverage. That way, in case of accidental death and disability and other unfortunate risks, you can have additional protection to secure your loved ones.

Adding a short-term insurance policy to your portfolio does help you save on tax* benefits and offers financial assistance to your family in case of an emergency. Hence, the benefits need not necessarily materialise as savings or investments at the end of the policy term.

Conclusion

A simple term life insurance can offer comprehensive protection to your family. You can use a 5-year term life plan as your first term policy to secure your loved ones for a brief term until you are sure of purchasing another term plan with a longer tenure.

Similarly, if your existing term plan reaches its expiry close to your maximum entry age, you can secure your dear ones with a 5-year term life policy if you are not looking for a longer policy term or premium payment term.

 

L&C/Advt/2022/Sep/2237

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Need more information?

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

Looking to get a new plan? 

Connect with us now

+91

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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5 Reasons to Buy a Term Plan if You Head a Young Family
Read More
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Read More
How to Increase Term Plan Coverage after Purchasing a Policy?
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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA), Tata AIA Life Insurance is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

1. Can I buy 5-year term insurance if I already have an existing term insurance policy?

Rather than owning multiple term insurance policies, it is better to have a single term insurance plan that offers comprehensive life insurance coverage to your family. If you purchase a 5-year term plan and then decide to purchase another plan, you can continue enjoying term insurance coverage even after your first policy expires.

2. When should I purchase a 5-year term plan?

Purchasing any life insurance policy, especially a term plan, at a young age will help you avail of less premiums. You should purchase your term insurance plan in your early 20s and benefit from extremely affordable premium payments.

Disclaimers:

  • Insurance cover is available under the product.
  •  The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch

Need more information?

Let us help you

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

Looking to get a new plan? 

Connect with us now

+91

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.