Best Term Insurance Plans in India 2020-2021-How do I choose the Best Term Insurance Plan?

Choosing the Best Term Insurance Plans in India 2020 may seem like a daunting task for you. Since there are a plethora of options that offer you Term Life Insurance at a very low cost. Term Life Insurance is very popular due to its low-cost option and maximum coverage.

In this post, you would come to know What is the Term Insurance Plan? How do I choose the Best Term Insurance Plan? Best Term Insurance Plans in India 2020?, What is the benefit of term plan?

⇒ What is the Term Insurance Plan?

Term Insurance Plan is an insurance which covers the risk of one’s life for a specified period of time on payment of lumpsum or regular premiums. This is a simple form of life insurance with low cost and the high coverage amount.

This is called a Plain Vanilla Term Insurance Product due to its simplicity. Plain vanilla means all the financial benefit is predefined and is disclosed at the onset before selling. There is no hidden agenda or any add ons in it.

Insurance is one of the best ways to secure your family’s future in your absence. A term life insurance offers you maximum life coverage at a very low premium. The most important feature of a term insurance plan is that it is a cost-effective insurance plan that focuses only on insurance and not investment.

This is quite unfortunate to say that in India many of us don’t differentiate and interchangeably use Investment and Insurance. If anyone approaches us for an insurance product, the first sentence we ask him is ‘Kitna Dene Se Kitna Milega’?.

This means how much I have to pay and how much I will get? But we never ask him what will be the risk coverage amount, what will be the policy term, and what will be the payout upon death.

A term life insurance is quite different from that of traditional life insurance. In term life insurance if during the risk coverage period the insured person dies, the predetermined sum assured is paid to the nominee of the insured person.

But during the policy term, if no unprecedented incident occurs (no death), no maturity value will be paid to the policyholder. Since term life insurance provides pure life risk coverage at a very nominal premium and provides maximum coverage as compared to traditional life insurance, it is gaining momentum day by day.

Term Life Insurance Policy = If No Death = No Maturity Value. But there are now few exceptions with Return of Premium Plans). We call it a plain vanilla product. Insurance is taken utmost care and investment does not get any priority.

Term insurance emphasizes solely on risk coverage and therefore its inherent nature is insurance and not an investment.

⇒ How do I choose the Best Term Insurance Plan?

It is needless to say that Term Life Insurance is a very low-cost product and covers a huge life risk at a very low premium. This provides insurance even up to 100 years of age. One can buy it online very conveniently at home.

Online Term policy is very cheaper and no undue influence by the offline agents due to non-engagement of middleman in online policy. So everybody currently is giving preference to online term insurance policies.

Currently, there are 24 insurance operators across India operating Life Insurance business. All of them sell both online and offline insurance policies. So, one very pertinent question is coming to your mind that How do I choose the Best Term Insurance Plan in India 2020?

Basically, term insurance comprises of 3 components such as 1. Sum Assured, 2. Premium, and 3. Policy Term.

When people are left with too many options, they just get confused in choosing the Best Term Insurance Plan in India 2020. There are 24 life insurance companies selling both online and offline insurance. But the question is are all of them good? Are all of them bad?

The answer is neither all good nor all bad. Then how to decide? You need to know which is best suited for you. I mean which policy meets your requirement.

For example, if you don’t like a particular policy to charge you an extra premium for accidental death, you may skip that.

⇒What is the benefit of Term Plan?

Yes, the question is why one should opt for term life insurance plan while there is most popular traditional life insurance plans.

One should definitely opt for term life insurance plan because it actually provides adequate life coverage. It considers insurance as insurance and not investment, unlike traditional endowment policies.

Now, let’s see what are the benefits of term plan:

• A term insurance policy offers high-risk coverage value at a very low premium which attracts youngsters most;
• Term insurance offers you the additional sum assured on payment of lower additional premium such as accidental death coverage;
• Also, term insurance pays the predetermined sum assured in case of disability or on the diagnosis of some critical illness;
• It offers the flexibility of receipt of sum assured after death either in a lump sum or in monthly payments;
• The premium amount is different for a smoker and non-smoker. So, the non-smoker person gets the advantage of a lower premium;
• It allows policy term up to the age of even 100 years;
• It offers an online facility in buying the term plan. As there is no agent and it offers a discount of up to 5% for online policy buying.

⇒How much life insurance is enough?

One opts for term life insurance due to its high life coverage. This attracts investors most. But the question is how much life insurance is enough. What is the ideal amount?

Though we all need term insurance to secure the future of our loved ones, the financial amount must not necessarily be the same for all. It depends on various other factors such as your current annual income, current financial position, your loan/debt exposure, your profession and etc.

In deciding the adequate amount for term insurance, experts suggest that one should ideally choose 10 to 12 times of his annual income. This is considered as an adequate amount.

⇒ Deciding factors to choose the Best Term Insurance Plans 2020

I have taken into consideration only three determining factors for choosing the 5 Best Term Insurance Plans in India 2020. Such as:-

1. Claim Settlement Ratio;
2. Low premium cost and high coverage value;
3. Policy Features.

1.Claim Settlement Ratio(CSR): As per the guidelines of the IRDAI, if an insured person has continued the policy for at least 2 years by paying the premium regularly, no claim can be rejected afte2 years from the policy date for reasons of misinformation or suppression of facts.

Therefore, one can not say that CSR is the only determining factor here. But it is one of the factors that are being considered.

So from the above data, you can see that out of the total 24 companies, 15 companies have achieved CSR above 96%, 7 companies achieved CSR above91-95% and only 2 companies below 91%.

• 15 Companies- CSR-96% to 99% Green coloured cells
• 7 Companies- CSR-92% to 95% Yellow coloured cells
• 2 Companies- CSR-Below 91% Red coloured cells

Therefore, the higher the CSR, the lower the claim rejection ratio. This brings the customers’ trust in the company. However, it acts as an indicator and not the one and only deciding factor.

Now, let’s see the top 5 Best Term Insurance Plans in India 2020 in terms of Claim Settlement Ratio 2018-19.

2. Low premium cost and high coverage value: This point is also considered as one of the deciding factors for 5 Best Term Insurance Plans in India 2020. Usually, you should consider a term life insurance policy which has a low premium cost and provides high coverage value.

But one should not consider the low premium as the only one criteria. You must look for additional features and high coverage value along with the premium cost. Because term insurance is meant for cost-effectiveness. You should always compare the policies before you purchase one for yourself.

3. Policy Features: While buying any term life insurance policy you should look for one that provides additional features along with basic features. All the top companies definitely come with this. Therefore, you must compare and buy one that is best suited for you.

⇒ Which Term Insurance is Best 2020? / Best Term Insurance Plan 2020

Based on the above factors I have shortlisted the following plans as my 5 Best Term Insurance Plans in India 2020. All of the plans are different from each other.

Each has got some unique features. The main objective is a low cost, high coverage, decent CSR and additional features with no cost or at a very low cost.

⇒ Top 5 Best Term Insurance Plans in India 2020-2021

1. Max Life Online Term Plan Plus

2. HDFC Life Click 2 Protect 3D Plus

3. ICICI Prudential iProtect Smart

4. TATA AIA Life Insurance Sampoorna Raksha

5. LIC Tech Term Insurance Plan

Now let’s see what will be the premium amount for a healthy 30 years, Non-smoker, Male opts for ₹ 1 Cr. term life insurance for a period of 30 years.

Now, let’s go through the Top 5 Best Term Insurance Plans in India 2020

⇒5 Best Term Insurance Plans in India 2020-2021

⇒Top 1: Max Life Online Term Plan Plus

Entry Age	Min 18 years and Max 60 years
Maturity Age	Max 85 years
Policy Term	Min 10 years Max 50 years
Premium Payment Term	Equal to Policy Term or pay until the age of 60
Sum Assured	Minimum Rs.25 Lakh and Max Rs. 100 Cr.
Claim Settlement Ratio	98.74%(No.3) for F.Y 2018-19

Max Life Online Term Plan Plus comes with three different options based on death claim settlement such as a. Life cover, b. Monthly income,c. Increasing income.

→a. Life cover option: Under this option, only the basic life cover amount or sum assured will be paid to the nominee as a lump sum amount on the death of the life insured.

→b. Monthly income: Under this option, you nominee is entitled to receive a Lump sum amount equal to 100% of Sum Assured along with an equal monthly income which is 0.4% of the Sum Assured for 10 Years, in case the Life Insured dies during the policy term.

→c. Increasing income: Under this option, your nominee is entitled to receive a Lump sum amount equal to 100% of Sum Assured.

Along with the lump sum amount this policy will pay a monthly income which is 0.4% of the Sum Assured for 10 Years which will be increased by 10% every year, in case the Life Insured dies during the policy term.

Premium for 1 Cr. sum assured	Life cover option	Monthly income	Increasing income
Premium for 30 yrs old, Non smoker and policy term 30 yrs.	Rs.8,378	Rs.11,092	Rs.12,272

As you can see from the above chart that for a non-smoker 30 years male for policy term 30 years and sum assured Rs. 1 Cr. the premium amount comes to Rs.8,378, Rs.11,092 and Rs.12,272 respectively for the 3 different payout options.

• This policy offers maximum coverage up to the age of 85 years;
• The premium amount is quite low and the cost-benefit ratio is very much high;
• The premium gets tax benefits U/S 80C and the death benefits get tax benefits U/S 10(10D);
• This policy offers a waiver of premium on the diagnosis of certain critical illness;
• It acknowledges payment of death benefits on committing suicide after one year from the commencement of the policy.

⇒Top 2: HDFC Life Click 2 Protect 3D Plus

Entry Age	Minimum 18 years and Maximum 65 years
Maturity Age	Minimum 23 years and Max 85 years
Policy Term	Min 10,15 years and Max 67 years
Premium Payment Term	Equal to Policy Term or pay until the age of 65
Sum Assured	Minimum Rs.50 Lakh and Max No limit
Claim Settlement Ratio	99.04%(No. 2) for F.Y 2018-19

HDFC Life Click 2 Protect 3D Plus comes with four different options based on different needs such as a. Life option, b. Extra Life Option, c. 3D Extra Life Option and d. Lumpsum+ Monthly Income Option.

→a. Life Option:

• Under this option, only the basic life cover amount/sum assured will be paid to the nominee as a lump sum amount on the death of the life insured.
• This policy is bundled with inbuilt terminal illness benefit i.e. the entire sum assured amount is paid out on diagnosis of a terminal illness.
• This policy offers an inbuilt waiver of premium option for the rest of the policy term on accidental permanent disability.

→b. Extra Life Option: (Additional accidental death benefit)

• Under this option, the sum assured amount will be paid to the nominee along with additional accidental death benefits on the accidental death of the life insured.
• This policy is bundled with inbuilt terminal illness benefit i.e. the entire sum assured amount is paid out on diagnosis of a terminal illness.
• This policy offers an inbuilt waiver of premium option for the rest of the policy term on accidental permanent disability.

→c. 3D Life Option:

• Under this option, the sum assured amount will be paid to the nominee on the death of the life insured.
• All the future premiums are waived off on diagnosis of any of the approved 34 critical illnesses.
• This policy is bundled with inbuilt terminal illness benefit i.e. the entire sum assured amount is paid out on diagnosis of a terminal illness.
• This policy offers an inbuilt waiver of premium option for the rest of the policy term on accidental permanent disability.

d. Lumpsum + Monthly Income Option:

• This policy is best suited for an insured who wants his nominee to receive a Lumpsum benefit and a regular stream of monthly income.
• A part of the sum assured on death is paid to the nominee as Lumpsum Benefit + equal/increasing monthly income is paid to the nominee for the predetermined income period.
• The policy gets terminated on death/ diagnosis of the terminal illness of the insured person.
• This policy offers a waiver of all future premiums & the policy continues to be in force on the insured becoming disabled permanently.

Premium for Rs. 1 Cr. sum assured	Life Option	Extra Life Option	3D Life Option	Monthly Income Option
Premium for 30 yrs old, Non smoker and policy term 30 yrs.	Rs.9,717	Rs.10,356	Rs.10,134	Rs.13,361

As you can see from the above chart that for a non-smoker 30 years male for policy term 30 years and sum assured Rs. 1 Cr. the premium amount comes to Rs.9,717, Rs.10,356, Rs.10,134 and Rs.13,361 respectively for the 4 different options.

Also, the options are very flexible and realistic in nature. Though this policy offers Return of Premium option, I have ignored that and given preference to the basic investment needs i.e. plain vanilla option.

• This policy offers maximum coverage up to the age of 85 years;
• The premium amount is quite low and the cost-benefit ratio is very much high;
• The policy is renowned for its flexibility of different options for different customer needs;
• The premium gets tax benefits U/S 80C and the death benefits get tax benefits U/S 10(10D);
• This policy offers a waiver of premium on the diagnosis of certain critical illness;
• This policy allows one to increase the sum assured on happening of the following life events without any extra cost such as-

1. for marriage:-50% of Sum Assured subject to a maximum of Rs. 50 lakhs.
2. birth of 1st child:-25% of Sum Assured subject to a maximum of Rs. 25 lakhs.
3. birth of 2nd child:-25% of Sum Assured subject to a maximum of Rs. 25 lakhs.

⇒Top 3: ICICI Prudential iProtect Smart

Entry Age	Minimum 18 years and Maximum 60 years
Maturity Age	Minimum 23 years and Max 99 years
Policy Term	Minimum 5 years and Max 85 years less age of entry
Premium Payment Term	Equal to Policy Term or pay until whole life i.e. 99 years less age of entry
Sum Assured	Subject to minimum premium and Max No limit.
Claim Settlement Ratio	98.58%(No. 4) for F.Y 2018-19

ICICI Prudential iProtect Smart comes with four different options based on different payout options such as a. Lumpsum payout, b. Regular income, c. Increasing income and d. Lump sum+ regular income.

→a. Lumpsum payout: Under this option, the nominee receives the entire benefit as one payout on death of the insured.

→b. Regular income: Under this option, the nominee receives the entire benefit as equal monthly payout for a period of 10 years on death of the insured.

→c. Increasing income:

• Under this option, the nominee receives the entire benefit as equal monthly payout for a period of 10 years on death of the insured.
• Additionally, the monthly benefit amount increases by 10% simple interest every year over the 10 years period.

→d. Lumpsum+ regular income:

• Under this option, the nominee receives the benefit amount up to 95% as one payout on death of the insured.
• The balance 5% amount as equal monthly payout for a period of 10 years on the death of the insured.

Premium for Rs. 1 Cr. sum assured	Lumpsum payout	Regular income	Increasing income	Lump sum+ regular income
Premium for 30 yrs old, Non smoker and policy term 30 yrs.	Rs.9,739	Rs.8,279	Rs.9,641	Rs.9,008

As you can see from the above chart that for a non-smoker 30 years male for policy term 30 years and sum assured Rs. 1 Cr. the premium amount comes to Rs.9,739, Rs.8,279, Rs.9,641 and Rs.9,008 respectively for the 4 different payout options.

Also, the options are very flexible and realistic in nature. This policy also covers death caused by accident. This means this policy allows you to double the death benefits on paying off the additional nominal premium amount and death caused by accident.

• This policy offers maximum coverage up to the age of 85 years;
• The premium amount is quite low and the cost-effective;
• The policy is very popular in online buying mode for its flexibility of different payout options;
• It provides accidental death coverage on an additional nominal amount of premium payment;
• The premium gets tax benefits U/S 80C and the death benefits get tax benefits U/S 10(10D);
• This policy offers a waiver of premium on the diagnosis of certain critical illness;
• This policy is specially designed for the women and the premium amount is lower in comparison to male insured;
• Further, it provides coverages for critical illnesses like breast cancer and cervical cancer for women.

⇒Top 4: TATA AIA Life Insurance Sampoorna Raksha

Entry Age	Minimum 18 years and Maximum 70 years
Maturity Age	Minimum 28 years and Max 100 years
Policy Term	Minimum 10 years and Max 85 years less age of entry
Premium Payment Term	Equal to Policy Term or 50 years
Sum Assured	Minimum Rs.50 Lakh and Max No limit.
Claim Settlement Ratio	99.07% (No.1) for F.Y 2018-19.

TATA AIA Life Insurance Sampoorna Raksha comes with four different variations based on different payout options such as:

→a. Option 1 – Sum Assured on Death payable to the nominee as Lump Sum benefit on the death of the insured.

→b. Option 2 – Sum Assured on Death as Lump Sum benefit on the death of the insured & monthly income for the next 10 years payable to the nominee.

→c. Option 3 – Enhanced Sum Assured on Death payable to the nominee as Lump Sum benefit on the death of the insured.

→d. Option 4 – Enhanced Sum Assured on Death payable to the nominee as Lump Sum benefit on death & monthly income for the next 10 years.

Premium for Rs. 1 Cr. sum assured	Option- 1	Option-2	Option- 3	Option -4
Premium for 30 yrs old, Non smoker and policy term 30 yrs.	Rs.9,440	Rs.10,042	Rs.11,092	Rs.15,812

As you can see from the above chart that for a non-smoker 30 years male for policy term 30 years and sum assured Rs. 1 Cr. the premium amount comes to Rs.9,440, Rs.10,042, Rs.11,092 and Rs.15,812 respectively for the 4 different payout options.

Also, the options are very flexible and realistic in nature. This policy also covers death caused by accident. This means this policy allows you to double the death benefits on paying off the additional nominal premium amount and death caused by accident.

• This policy offers maximum coverage up to the age of 85 years;
• The premium amount is quite low and the cost-effective;
• This policy offers death benefit from day 1 without having to wait for any exclusion period;
• The policy is very popular in online buying mode for its flexibility of different payout options;
• It provides accidental death coverage on an additional nominal amount of premium payments that you can see from the above
• The premium gets tax benefits U/S 80C and the death benefits get tax benefits U/S 10(10D);
• This policy offers a waiver of premium on the diagnosis of certain critical illness;
• This plan pays out a lump sum amount on diagnosis of pre-approved 59 Minor, Moderate or Major stage Critical Illnesses and surgical procedures including Heart and Cancer-related ailments.

⇒Top 5: LIC Tech Term Insurance Plan

Entry Age	Minimum 18 years and Maximum 65 years
Maturity Age	Minimum 28 years and Max 80 years
Policy Term	Minimum 10 years and Max 40 years
Premium Payment Term	Equal to Policy Term
Sum Assured	Minimum Rs.50 Lakh and Max No limit.
Claim Settlement Ratio	97.79% (No.5) for F.Y 2018-19.

LIC Tech Term Insurance Plan is a non-linked, non-participating pure risk online term insurance plan which provides financial stability to the family of the insured on his unfortunate death.

This policy comes with 2 individual options such as a. Option-I, b. Option-II.

Option-I: Level Sum Assured– Under this option, the basic sum assured is paid to the nominee of the insured person on his unfortunate death. The sum assured amount remains the same during the policy term.

Option-II: Increasing Sum Assured– Under this option, the basic sum assured is paid to the nominee of the insured person on his unfortunate death till the 5th year of the policy.

Thereafter the basic sum assured increases by 10% every year from the 6th policy year till 15th year till it becomes double of the basic sum assured.

Premium for Rs. 1 Cr. sum assured	Level Sum Assured	Regular income
Premium for 30 yrs old, Non smoker and policy term 30 yrs.	Rs.11,007	Rs.17,842

As you can see from the above chart that for a non-smoker 30 years male for policy term 30 years and sum assured Rs. 1 Cr. the premium amount comes to Rs.11,007 and Rs.17,842 respectively for the 2 different payout options.

This policy is very popular among the existing LIC customers. Because the trust factor works well for the company. LIC is the major market stakeholder of this entire term life insurance business.

• This policy offers maximum coverage up to the age of 80 years;
• The premium amount is quite low as compared to doubling the basic sum assured for increasing sum assured under option II;
• The policy is sold only in online mode and no intermediary in between. So, it costs you very low;
• The premium gets tax benefits U/S 80C and the death benefits get tax benefits U/S 10(10D);
• It allows payment of death benefits for committing suicide after 12 months from the policy date.

→Are term insurance plans good?

Yes certainly! Term insurance plans only focus on the insurance part. The entire amount goes into mortality portion and thus makes it a very low-cost product in comparison to traditional life insurance policies.

In today’s scenario, this is the best financial product to protect the future of your loved ones. This also gives a sense of satisfaction if you have already secured your family’s future by buying adequate term life insurance.

Further, one can buy it online at his own convenience and there is no middleman in between the insurance company and the policy buyer. Therefore, it is the cheapest form of online term life insurance policy. It also provides high life risk coverage at a very low cost. This makes term insurance plans good.

→Which term insurance is best 2020?

As I have mentioned earlier that one can find the best one as per his suitability. The best insurance policy for you can turn out to be worst for me. So, you should first determine your needs like how much coverage you need, how long you need and etc.

So, while choosing the best term insurance plans in India 2020-2021 you must find the best ones that suit your needs. The following 5 term life insurance policies I have selected based on certain factors that you may find suitable for your needs.

→Can I have 2 term insurance policies?

Yes, you can have 2 term insurance policies at a time. But while buying the 2nd one you have to declare that you already have another policy from another company.

Based on your declaration the second company will decide whether you are eligible for the amount of coverage you have opted for. So, the reason for opting for second insurance maybe the inclusion for some rider option/additional feature in your insurance portfolio.

→What kind of deaths are not covered in term insurance?

Generally, a term life insurance is bought to secure the future of your family. But that does not mean that the insurance companies would pay for any kind of death. The following types of deaths are not acknowledged by the insurance companies.

→Do you get your money back at the end of a term life insurance? / What happens to term life insurance if you don’t die?

Even a few years ago you would not get your money back at the end of a term life insurance. There is no maturity value for term insurance. Ideally, for a plain vanilla insurance policy, you would not get your premium amount back at the end of the policy term.

Because term insurance is meant for protection against risk only. It does not give leverage to investment by what so ever means. But for the last few years, the term insurance is no more a plain vanilla product.

For more penetration the insurance companies are coming with Return of Premium (ROP) policies. These policies are costly as at the end of the policy terms, if the insured person don’t die, he would get back the premiums so paid over the policy terms.

Therefore, for the return of premium policies, you would get your money back at the end of a term life insurance. But for only a protection plan, there is no option to get your money back if you don’t die during the policy term.

→When should you buy term insurance?

Ideally, the legal age for buying term insurance is 18 years. Also, there is a benefit of paying the lowest premiums if you buy term insurance at an early stage of your life. Further, the premium amount will remain the same until the policy term.

So, by paying a very nominal premium you can secure your family’s financial stability if you die during the policy term. Thus, the principal is the early you buy term insurance the lower premium can get you a high-risk coverage.

→Does term insurance premium increase every year?

The answer is NO. The term insurance policy premium does not increase every year. That means you are supposed to pay the same amount at the last policy premium what you paid at the first year of the policy term.

But the premium amount increases every year approximately by 5% to 12% on an average if you don’t take term insurance at an early age. For example, say you are a non-smoker and 30 years old and for Rs.1 Cr. basic sum assured your premium amount is Rs.10000.

Now, if you buy term insurance at the age of 31 years, the premium amount would increase by 5% to 12% every year increase to your age i.e the same policy you would buy at the premium of Rs.11000.

→What is a good rule of thumb for life insurance?

The good rule of thumb is buying term life insurance at an early stage of life. Secondly, the sum assured should be 10 to 15 times your annual income.

But if you have existing various other loan liabilities then this rule of thumb would not be suitable for you. In that case, you should consider buying a term policy at least 20 times of your annual income.

Disclaimer: I am neither directly nor indirectly associated with any of the companies mentioned above. I am also not promoting their products. I have just mentioned the facts before you. Customers are requested to consult their financial advisers before buying any term life insurance.