Top 5 Term Insurance Plans in India

by SMCIB on Tuesday, 09 January 2024

Top 5 Term Insurance Plans in India

Imagine you're shopping for a new shirt. You don't just buy the first thing that catches your eye; you consider the brand, quality, fabric, fit, and style, as well as how it will coordinate with the rest of your wardrobe. So, you take your time finding the best one that suits your taste and needs.

Similarly, when we talk about life insurance, there are numerous policies available in the market, from term insurance to whole life insurance to guaranteed income plans, and so on - that cater to different needs and goals. In this article, we’ll focus on term insurance plans.

Buying a term insurance plan is an important financial decision as it provides financial security to your loved ones in case of an unfortunate event. Therefore, it is essential to evaluate various factors such as the type of policy, coverage amount, premium, the insurer's credibility, etc. before making a final decision. To make sure your loved ones are protected  - always.

Hence, to help you narrow down your options, we have compiled a list of the Top 5 term insurance plans in India. Whether you are looking for basic coverage or a more comprehensive plan, these top-rated options will ensure that your loved ones have solid financial backing in place.

So, let’s begin!

What is Term Insurance?

A term insurance plan is a simple and straightforward tool that will provide your loved ones with a fixed sum of money if you pass away during the policy term. The claim settlement will depend on the claim payout option you choose when purchasing the policy. They can use the money for their daily expenses (rent, bills, school fees, groceries, etc.), long-term financial goals (higher education, buying a vehicle, etc.), to pay off any loans or debts, and so on. It keeps them shielded from financial hardship.

As term insurance is a pure risk cover, if you survive the policy term, it will not pay out any benefits to you. 

For example, Aditya, a 30-year-old male, buys term insurance for his dependent spouse and kids. He chooses a cover amount of Rs 50 lakhs and a policy duration of 30 years. He appoints his spouse as the nominee. If Aditya passes away during these 30 years, his spouse will be eligible to receive the cover amount (Rs 50 lakhs) as the death benefit. However, if Aditya survives the policy duration, he won’t get anything from the insurer.

Who Should Buy Term Insurance?

Term insurance is worth considering if –

?You Have Or Have Visibility Of Financial Dependents Who Rely On Your Income

Having financial dependents means that you have people in your life who rely on your income to meet their financial needs. This can include your spouse, children, parents, or any other family member. It ultimately becomes your responsibility to ensure that they are taken care of in case of any unfortunate event. 

And, term insurance is a useful tool in this case. It ensures that they can maintain their current standard of living and achieve their financial goals even in your absence. Some of these goals include - 

➔    Short-term goals like paying utility bills, rent, etc.
➔    Long-term goals like funding children’s higher education, their wedding, etc.

?You Have Taken A Large Loan Or Have Other Financial Obligations

If you have taken a large loan, such as a home loan, it is essential to consider purchasing a term insurance policy. This is because, in the event of your passing away during the policy term, the outstanding debt may become a financial burden for your family to bear. If you have a term insurance policy in place, the claim payout can be used to pay off the outstanding loan amount. And this will relieve your family from the financial obligation of repayment.

Benefits Of Term Insurance

Here are the various advantages of term insurance -

1️⃣ Provides Financial Protection to Your Family
A term insurance policy promises financial protection for your loved ones. In case of your unfortunate demise during the policy term, it can serve as a reliable income replacement and also ensure your family's financial stability. This ensures that your family can continue to pursue their dreams and maintain their desired lifestyle.

2️⃣ Simplest Form Of Life Insurance
Term insurance is the most uncomplicated type of life insurance. With this policy, you can ensure that your family receives a sum of money in the event of your passing away during the policy period. All you have to do is make timely premium payments, to keep the policy benefits intact. This straightforward concept of term insurance makes it an excellent option for those seeking life insurance coverage without any additional frills. 

3️⃣ Affordable Premiums
Term insurance is one of the most popular life insurance types available in the market, owing to its cost-effectiveness. It generally comes with the lowest premiums as compared to other types of plans and is an economical way to secure your family's future financial needs.

4️⃣ Highly Customisable
Term insurance policies are highly customisable to meet your financial goals. This enables you to design a policy that perfectly aligns with your family's unique requirements.

For instance, 
➔    One of the best customisation options offered by term insurance includes limited pay. This option allows you to finish your premium payment faster within a limited number of years and is particularly useful if you foresee an unstable income in the future. 
➔    If you want to enhance your coverage, you can go for the increasing cover option, which will increase your cover amount over time. This can be a great advantage if you are anticipating a rise in your financial obligations in the future or if you want to protect your coverage from the onslaught of inflation. 
➔    You can also customise how you want your family to receive the claim amount using various claim payout options - providing them with the necessary support during difficult times. You can choose the claim amount to be paid as a lump sum amount, monthly payouts, a combination of both, etc.

5️⃣ Riders
Riders are add-ons that provide extra coverage during specific circumstances. They can be easily added to your base term insurance policy by paying an additional premium, without any extra paperwork or medical tests. With term insurance, you have access to a range of riders, including critical illness rider, accidental death benefit rider, waiver of premium rider, accidental disability rider, and many more. 
For example, Rakshan recently purchased a term insurance policy. To enhance his coverage, he also added a critical illness rider to his base policy. A few months later, Rakshan got diagnosed with lung cancer. The disease was listed in his policy document and his critical illness rider gave him a payout. This helped him cover his treatment costs and other expenses associated with his illness.

6️⃣ Covers Death Globally
Another major advantage of term insurance plans is their global coverage for all types of death - except for suicides within the first year of policy purchase.

7️⃣ 3-Year Claim Payout Guarantee
As per Section 45 of the Indian Insurance Act of 1938, the insurer cannot deny or investigate a death claim based on allegations of fraud, misstatement, or suppression of facts. So, as long as the premiums are paid on time, your family is guaranteed to receive the claim payout once the policy has completed 3 years.

8️⃣ Dual Tax Advantages
Term insurance provides dual tax benefits that can be availed under various sections of the Income Tax Act of India of 1961.
➔    Under Section 80C of the Income Tax Act, you can claim tax deductions up to Rs 1,50,000 for the annual premiums paid under your term insurance policy.
➔    Under Section 10(10D) of the Income Tax Act, if in case you pass away during the policy term, the claim payout received by your family will be completely tax-free.

Top 5 Term Insurance Plans in India

Let's take a look at the top 5 term insurance plans in India that can help you secure your family's future -

  HDFC Life Click 2 Protect Super Life Aditya Birla Sun Life DigiShield Canara HSBC iSelect Smart360 Max Life Smart Secure Plus TATA AIA Sampoorna Raksha Supreme
Minimum Age at Entry 18 years 18 years 18 years 18 years 18 years
Maximum Age at Entry 84 years 65 years 65 years 65 years 65 years
Maximum Maturity Age 85 years 85 years 99 years 85 years 100 years
CSR (Claim Settlement Ratio) of the insurer (FY 2021-22) 98.66% 98.07% 97.10% 99.35% 98.53%


  1. The minimum and maximum sum assured + features that you can choose under these plans will vary, so make sure you go through the plan brochures carefully to know about the same. You can easily view various plans along with their brochures by visiting the SMC Term Insurance page and entering a few personal details.
  2. The data in the table (except for CSR) is for a 30-year-old individual who has chosen the regular pay premium payment option.

To conclude,

A term insurance plan is a vital aspect of financial planning. It provides valuable protection for you and your loved ones during an unfortunate event. With the numerous benefits that term insurance offers, it continues to stand as an excellent financial tool for securing your future. Moreover, by choosing from the top term insurance plans available in India, you can ensure that your family can continue living their current lifestyle and fly to their dreams, even in your absence.

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