Life insurance is one of the most important financial protections for any Indian family. A Term Insurance Plan provides a high life cover at an affordable premium and ensures your dependents remain financially secure if something unexpected happens.
This comprehensive guide by Saving Mantra explains:
- What is life insurance?
- What is a term plan and how it works?
- List of major life insurance companies in India
- Tax benefits under the Income Tax Act
- How premiums are calculated
- Common misconceptions
- Who should buy a term plan?
Designed to help you choose the right cover and stay financially protected.
1. What Is Life Insurance?
Life insurance is a financial contract between you and an insurance company. You pay premiums, and in return, the insurer provides a financial payout to your family in case of your death.
Key Features:
- Protects your family’s financial future
- Helps manage liabilities (loans, EMIs)
- Provides peace of mind
- Supports long-term financial planning
Life insurance is not an investment—it is protection first.
2. What Is a Term Insurance Plan?
A Term Plan is the simplest and most affordable type of life insurance.
How It Works:
- You pay a small premium annually or monthly
- The insurer gives a large life cover (sum assured)
- If the policyholder dies during the term, the nominee receives the payout
- If the policyholder survives the term → no maturity benefit (pure protection)
Why Term Plans Are Recommended:
- Highest coverage at lowest cost
- Essential for families with dependents
- Helps replace income if something goes wrong
- Ideal for salaried employees, business owners, parents, and young professionals
3. Major Life Insurance Companies in India (IRDAI Approved)
As of 2025, India has 24 life insurance companies.
Some of the biggest and most trusted ones offering term insurance include:
- LIC (Life Insurance Corporation of India)
- HDFC Life
- ICICI Prudential Life Insurance
- SBI Life
- Max Life Insurance
- Kotak Life
- Bajaj Allianz Life
- Tata AIA Life Insurance
- PNB MetLife
- Aditya Birla Sun Life Insurance
- Reliance Nippon Life Insurance
- IndiaFirst Life
- Canara HSBC Life
- Edelweiss Tokio Life
- Aviva Life Insurance
- Sahara Life (Under IRDAI monitoring)
These companies offer term plans with variants like:
- Level term insurance
- Increasing cover term plans
- Return of premium term plans
- Term plans with riders (critical illness, accidental cover, disability cover)
4. Why Do Indians Need Term Insurance?
4.1 Financial protection for family
Ensures stable income for dependents.
4.2 Covers loans & liabilities
Protects your family from home loans, business loans, personal loans, etc.
4.3 Income replacement
Acts as a financial safety net.
4.4 Extremely affordable
Premiums start as low as ₹400–₹600 per month for ₹1 crore cover (age 25–30).
4.5 Rising uncertainty
Health risks, accidents, and lifestyle diseases make term insurance essential.
5. Tax Benefits for Term Insurance in India
5.1 Section 80C – Premium Deduction
Premiums paid for a term insurance plan are eligible for deduction up to ₹1,50,000 per year.
5.2 Section 10(10D) – Tax-Free Payout
The death benefit received by the nominee is completely tax-free, subject to policy conditions.
5.3 Section 80D (If health rider added)
Premiums for riders like:
- Critical Illness
- Hospital Cash
- Surgical Care
may also provide tax benefits under Section 80D.
6. How Term Insurance Premiums Are Calculated
Insurance companies consider:
- Age
- Gender
- Income
- Lifestyle & habits (smoking/drinking)
- Medical history
- Job profile
- Policy tenure
- Sum assured
- Riders added
Buying early drastically reduces your premium.
7. Key Features to Look for in a Good Term Plan
- Claim settlement ratio above 95%
- Option for monthly income payout
- Zero-cost term insurance options
- Large life cover (50 lakhs to 2 crores minimum for young earners)
- Add-on riders (critical illness, accidental death, disability)
- Premium waiver benefits
- Option to increase cover with age or milestones
8. Common Misconceptions About Term Insurance
“I don’t need it; I’m young.”
Younger = cheaper premiums. Best time to buy is in your 20s.
“It has no returns.”
Term plan is not an investment—it’s financial protection.
“LIC is the only good insurer.”
India has 24 IRDAI-approved life insurers with strong claim ratios.
“My employer policy is enough.”
Employer policies end when you switch jobs.
9. Who Should Buy a Term Plan?
- Salaried professionals
- Business owners
- Parents with children
- Loan holders (home, car, business loans)
- Newly married individuals
- NRIs investing in Indian term plans
- Anyone with dependents
If your family relies on your income, you need term insurance.
10. How Saving Mantra Helps You Choose the Right Term Plan
We offer:
- Term Insurance comparison across all major companies
- Assistance with choosing the right sum assured
- Premium calculation support
- Understanding riders and add-ons
- Tax planning guidance
- Policy servicing and claim support
Saving Mantra ensures you select the most affordable, high-value, and tax-efficient policy based on your financial goals.
Disclaimer
This article is for educational and informational purposes only. Insurance needs vary based on age, income, lifestyle, health, and financial goals. This content should not be treated as professional financial or legal advice. Please consult an insurance expert before making decisions. Saving Mantra is not responsible for actions taken based on this article.