What Is Term Insurance?

A rider^ in term insurance is an add-on cover that can enhance the financial benefits of term insurance during the policy tenure based on certain scenarios. It can be availed at an additional cost and is apart from the regular life cover offered. 

For example, a rider that covers critical illnesses can provide a lump sum or regular income for a defined income period when the policyholder is diagnosed with a critical illness such as cancer during the policy period. The rider benefit can be used to pay for the medical or hospitalisation expenses to reduce the financial burden.

A term insurance premium is an amount you regularly pay throughout the term insurance policy tenure or as a single payment during policy inception, for which your insurance provider will agree to provide the sum assured to your nominee in the event of your unexpected demise during the policy period.

Based on Income Tax Act 1961, under Section 80C, the premium you pay for the term life insurance will qualify for the tax^# deduction benefits, and under Section 10(10D), the payouts will qualify for the tax exemption benefits, subject to the tax provisions and conditions.

Riders are added to the term insurance policy during policy inception. However, you can add it to the existing policy if your insurance provider has the option to do so, for example, during the annual premium payment.

The documents required to purchase a term insurance policy are as follows:

• Proof of income - Salary slips, ITR Returns filed.

• Proof of identity - Passport, Aadhaar Card, etc.

• Proof of address - Aadhaar Card, Ration Card, etc.

• Medical reports

You can purchase a joint term insurance policy and include your spouse for the joint life coverage. In the event of your unexpected death, the term policy will continue to exist, and upon the unexpected demise of your spouse, the benefits will become payable to your nominee.

A term insurance policy covers death irrespective of where it happens, whether inside or outside India.

The minimum and maximum age can differ between the insurance providers and their term insurance policies. Most commonly, it is 18 years and 65 years of age. This can vary as per the plan option chosen.

A woman's role in the family is distinct, and her family might depend on her financially or non-financially. In either case, the family will require financial compensation to manage her absence making term insurance coverage necessary. 

For example, suppose a woman is a housewife responsible for household activities, and she meets with an unexpected demise. In that case, her family will have to find an alternative to manage her responsibilities at home, which becomes a financial liability. A lump sum death payout can help reduce this financial burden.

NRIs can purchase term insurance in India. Geographical boundaries do not restrict or pose a hindrance to purchasing term insurance in India. While In India, Life insurance policy can be purchased in India easily through quick, digital process. When outside India, NRI can purchase the life insurance policy online from their current place of residence subject to our Board approved underwriting policy.

Term insurance provides life cover for a certain period, and whole life insurance provides financial coverage for life until death. The better option among the two will depend on your individual financial commitments. 

For example, whole life insurance will be a good choice if you have a dependent family throughout your life. On the other hand, if you have a family who can take over your responsibilities or you have sufficient financial resources for future financial commitments, term insurance can be a better choice.

When you purchase term insurance online:

1. You can compare the features and benefits of the different types of term plans and their options to choose a suitable policy. 

2. It is cost-effective compared to purchasing it offline. Furthermore, you can get additional discounts when you purchase term insurance online.

3. It is less time-consuming to purchase term insurance online.

A critical illness benefit in term insurance is an add-on cover that provides an additional financial benefit during the policy tenure to pay for the hospitalisation expenses if you are diagnosed with a critical illness such as cancer, cardiac arrest, etc.

You can receive the payout as a lump sum or a regular income for a defined period.

You can claim term insurance benefits in simple steps online:

• Navigate to the Tata AIA Life Insurance Online Claim Intimation page.

• Provide the details such as Policy No., DOB, Mobile No., and Email ID of the claimant.

• Get authenticated for the claim settlement process.

• Download the applicable claim form based on your requirement, such as death claim form, disability claim form, etc.

• Fill out the necessary details.

• Upload the claim request form and the necessary documents, such as the death certificate, FIR for an accident, etc., and complete the claim settlement request process.

• Upon verification, you will get an intimation of the claim settlement progress.

You can also claim the term insurance benefits offline by contacting us at the nearest branch office or our toll-free number.

The term insurance premium is not refundable. However, if you wish to cancel the term policy during the free look-up period, you will receive a refund of the premium paid. Furthermore, you can opt for the return of premium option to receive a refund of the premium as a maturity benefit at the end of the policy tenure if you outlive the policy period.

A free look-up period in term insurance is a period of 30 days starting from policy inception provided by the insurance provider if you had purchased the policy online, within which you can terminate the term insurance policy. You can cancel the term insurance policy if you are not satisfied with the policy terms and conditions and receive a refund of the premium amount paid.

You can cancel term insurance at any time. If you cancel it during the free look period, you will get a refund of the premium paid. And if you cancel it any time further, you will receive a surrender value that the term policy has generated until that time of the policy period. 

And the benefit will be less compared to the actual benefits the term policy was designated to provide for the policy tenure. Therefore, cancelling the term insurance policy at any time is not advisable.

Term life insurance coverage can be determined in the following ways:

• Based on Human Life Value -   You can determine the coverage required based on your income, expenses, loans and liabilities, and future financial commitments accounting for the inflation rate in this method. You can utilise our Tata AIA Life Insurance Human Life Value Calculator to determine this value.

• Based on expenses - You can also determine the sum assured based on your expenses, such as routine utility bills, loans and liabilities, and future financial goals.

• General thumb rule - You can also consider the general thumb of calculating the sum assured as 10 times your current annual income.

• Term insurance calculator - You can also utilise our Tata AIA Life Insurance Term Insurance Calculator to determine the sum assured and the applicable Term insurance premium for the required policy period.

The term insurance premium for a regular policy will stay the same unless any changes are made to the tenure, sum assured, coverage, riders, etc., of the policy. Any changes in the inclusive tax rate structure may also change the policy premium.