In life, there are no warning bells before things start to change course. For most, it’s the real-life triggers that drive them towards their financial planning journey. Whether it is a new family member, a home loan, or aging parents, these events can sharpen an individual’s need for financial protection.
A financial product like term insurance is specially designed for these crossroads of life. An affordable and efficient safety net that ensures life goals stay on track even when life itself doesn’t. Despite it being a great financial instrument, term insurance only accounts for 5% of policy sales in the market today. While many still don’t realise its potential benefits or feel restricted due to emotional barriers, you have made the right call by wanting to learn more about it.
But finding the right cover isn’t just about buying a policy with the highest coverage amount; it’s about finding a plan that fits your life at its current pace, your ongoing financial obligations, and your long-term goals. Specially if you are the primary income earner in your family, there’s a lot that goes into making sure you and your loved ones stay protected during unforeseen circumstances.
Please read this blog to the very end, as we walk you through the benefits, importance, and features of term insurance and list our top 10 picks for term insurance plans available in India in 2025.
What Is Term Insurance?
A term insurance plan is a pure life insurance policy that provides financial cover for a specific period and can be renewed depending on the policyholder’s requirements. While there are many types of life insurance policies, a term life insurance policy is the most cost-effective way to secure the financial stability of your family.
The policy is purchased by the insured individual, who extends the coverage to their chosen nominee. The nominee receives the death benefit if the insured person passes away during the policy period. However, term insurance does not offer maturity benefits, which means if the policyholder survives the policy period, they won’t get the lump sum benefit amount at the end of the policy term.
Despite not offering maturity benefits, term insurance is still a viable financial tool to secure your loved ones. It is particularly effective for sole breadwinners who have dependent family members. Here is a list of attractive benefits that a term insurance plan offers and why you should add it to your financial toolkit:
Also read: Top 10 Health Insurance Companies in India
A Comparative View of Top 10 Term Insurance Plans In 2025
| Term Insurance Plan | USP | Provider Claim Settlement Ratio (%) | Basic Monthly Premium Cost (Rs.) |
| Axis Max Smart Term Plan Plus | Best claim settlement, competitive premium cost | 99.79 | 823 |
| Tata AIA Sampoorna Raksha Promise | Instant payout worth Rs. 3 lakh on claim intimation | 99.13 | 608 |
| ICICI Prudential iProtect Smart | Smart exit benefit (100% or 200% premium return on early exit) | 99.17 | 598 |
| HDFC Life Click 2 Protect Super | Term return of premium and whole life insurance plan variants available | 99.50 | 798 |
| Bajaj Allianz Smart Protect Goal | Up to 55 critical illnesses covered | 99.23 | 570 |
| Tata AIA Maha Raksha Supreme Select | Can be availed by NRIs as well | 99.13 | 768 |
| Future Generali Care Plus | Plan customisation and flexible premium payment options | 96.08 | 630 |
| Bharti AXA Life Flexi Term | Hospi cash rider and premium waiver rider can be availed | 99.05 | 751 |
| Kotak e-Term Insurance | Flexible payout options; special exit at 60 | 98.25 | 654 |
| SBI Life eShield Next | Pocket-friendly premium; seamless claims assistance | 98.99 | 709 |
*Plan specs like premium, coverage, and benefits may vary depending on factors like age, gender, occupation, health status, etc. For accurate plan details, contact the insurer via the customer care helpline number or website.
Let’s look at the detailed analysis of our top 10 term insurance plans for 2025…
Benefits Of Term Insurance
1. Financial Security
Whether you have a dual-income household or are the sole breadwinner, your family’s income loss may result in financial hardships. This may affect daily expenses, loans, children’s education, or maintaining the living standard.
Term insurance comes in handy in such situations, as the insurer pays your family (nominee) a lump sum amount (sum assured) that helps them manage their expenses even in your absence. It’s the best kind of protection you can offer to your loved ones.
2. Tax Benefit
By paying premiums for your term insurance plan, you can save on income tax, and here are the ways you can do it:
- Under Section 80C of the Income Tax Act of 1961, individuals can reduce their taxable income by Rs. 1.5 lakhs for premiums paid towards term insurance. However, Rs. 1.5 lakh is the overall deductible limit under Section 80C, and it also applies to other investments like Public Provident Funds (PPFs) and tax-saving Fixed Deposits (FDs).
- Under Section 10(10D) of the Income Tax Act, the death benefit received by the nominee will be completely tax-exempt. This means that the amount they will get from the term insurance will be the portion of their earnings that won’t be taxed.
- Under Section 80D of the Income Tax Act, premiums paid towards health insurance are deductible. But if you opt for health-related riders, like critical illness cover, surgical care cover, etc., as part of your term insurance cover, you can also avail deductions under Section 80D.
3. Cost-Effective Life Insurance
Term insurance plans don’t generally offer maturity benefits or cash value benefits, which is why they are more cost-friendly alternatives to other life insurance plans like endowment plans or unit-linked insurance plans (ULIPs). This is also why insurers can offer a large sum assured despite the low policy premiums. Term insurance is the most economical way to get a bigger life cover.
4. Income Replacement
While nothing can replace the loss of life, your family can still thrive financially, even in your absence. A loss of income can be a big dent in your family’s well-being, causing unnecessary roadblocks in their day-to-day life and long-term goals. A term insurance payout can act as an income replacement for your family’s financial loss.
5. Flexible Payout Option
Speaking of income replacement, your nominee should have the flexibility of opting for a payout at their convenience. Term insurance offers this kind of flexibility, where the beneficiaries of the policy can opt for either a lump sum payout or a monthly payout.
A lump sum payout can help families meet bigger and more immediate financial obligations like funeral expenses, loan payments, and children’s education. Monthly payouts, on the other hand, can ensure continuity in household income to ensure day-to-day expenses are met.
6. Riders And Add-Ons
While term insurance only provides the standard death benefit, policyholders have the option to add benefits or enhance coverage with riders. These add-ons can significantly increase the premium cost, but can also provide better financial support. Depending on the specific needs and requirements, policyholders can opt for the following riders:
- Critical Illness Rider: Policyholders can get extended coverage for specific critical illnesses. A pre-determined sum is assured specifically for critical illnesses like kidney failure, heart attack, cancer, etc. The policyholders can utilise this payout for treatment and timely recovery.
- Accidental Death Benefit Rider: This add-on pays the nominee an additional sum in case of an accidental death. This is in addition to the base sum assured of the term insurance policy. This provides an extra financial cushion for an unprecedented and untimely demise.
- Return of Premium: Term insurance payouts can only be used upon the policyholder’s death during the policy period. However, with the Return of Premium (ROP) options, policyholders can receive the survival benefit (premium paid toward the policy) upon the completion of the policy period.
Who Should Buy Term Life Insurance?
1. Working Women
Many term life insurance plans offer great discounts and benefits to women, making it a lucrative investment for the future. Additionally, a term plan offers benefits like a critical illness rider that can protect them against many debilitating illnesses that commonly affect women.
2. Single Parents
Being a single parent can be a handful and financially taxing. A term plan is a cost-effective way to protect your kid’s future, specially if you are a single parent and sole income earner. So that even in your absence, you can shield them from rough patches in life.
3. Sole Breadwinners
If you are the sole earner of your family, then you should definitely get term life insurance. It will protect your loved ones against all financial odds in your absence. Additionally, buying a basic term life insurance with death benefits will not cost you a fortune.
4. People With Big Debts
If you have long-term debt like a home loan or a car loan, then term insurance is a must. In case of an untimely demise, the final payout from the policy can help the beneficiaries pay off any pending debts and reduce their financial burden.
Factors That Affect Term Insurance Premium
1. Age
The reason why age is considered a premium defining factor is that a young individual is less prone to falling ill or passing away prematurely. The insurance framework categorises these young individuals into a low-risk group, which implies that this cohort is less likely to make an insurance claim.
On the other hand, old people and people with pre-existing conditions are categorised as high-risk and are more likely to make claims against their insurance policy.
That being said, investing in a term plan in your 30s is more rewarding than it is in your late 40s, as it comes with a higher coverage amount (sum assured) at a lower premium cost.
2. Lifestyle and Habits
Poor lifestyle and habits like smoking and drinking have been scientifically proven to reduce life expectancy. Smokers are more likely to contract various critical illnesses like lung cancer and heart disease. The high risk associated with this cohort is proportionate to their premium cost for term insurance.
3. Occupation
The nature of your work can also bear some impact on your term insurance premium. Not all jobs possess the same level of risk, as a construction worker may be at a higher risk exposure than a person working a desk job.
If you work in a high-risk job and you want to purchase a term policy, you will notice that your policy premium will be slightly more expensive than it will be for an individual with a low-risk job, and vice versa.
4. Sum Assured
Your premium is also subject to increase in direct proportion to the amount you get insured against. The larger your sum assured is, higher the premium you have to pay. However, if you wish to get a substantial term plan with a low premium, then you should buy it at an early age.
5. Policy Tenure
When it comes to life insurance, the policy term is generally longer. It is obvious that any policy purchase will be made keeping in mind the years one may have ahead of them or the retirement age.
Let’s say, if you are buying a term insurance plan at the age of 36, you will at least get coverage for the next 15-20 years. Some may even go for a 30-year tenure. And longer the policy period is, the higher your premium will be.
Regardless of your age, occupation, and health status, term insurance is a worthy investment in yourself and your loved ones. You can get the most out of your policy by carefully aligning your financial needs to your insurance coverage. Fortunately, most of the aforementioned plans offer great customisation and payment flexibility that can easily meet your requirements.
How Much Term Life Insurance Coverage is Sufficient?
Most financial experts recommend having a term insurance cover 10 times your annual income. So, if you earn Rs. 12 lakhs a year, then you should at least get a cover of approximately Rs. 1.5 Cr. However, this thumb rule doesn’t account for the inflation and different life stages that you may go through. With these evolving stages, your financial goals may also reset, and therefore, you need a more detailed approach to determining the appropriate sum assured in your term plan.
In which case, you can use the Human Life Value (HLV) method to calculate the required coverage. The HLV method takes into account your family contribution, your earning years, inflation, and liabilities to give you the most reliable estimate. It is always a good practice to consult a financial expert before making a long-term financial investment like a term plan.
When Is the Ideal Time to Get a Term Life Insurance Cover?
With term insurance, it’s never too late. However, the sooner you buy it, the better your coverage will be. You’ll have lower premiums but better benefits. Your 30s are the most financially critical years, as you get a longer runway to plan and secure your and your family’s future.
Additionally, everyone has different financial goals, so a one-size-fits-all solution rarely works. You can, however, consider buying a term plan during these critical stages of life: when you have dependents, when you take out a big debt, or when you are planning to start a family.
Summing It Up
A term insurance plan is an essential financial cover that can make a world of difference for you and your family during critical times. While we did our best to guide you through this process, you must conduct your research and compare policies from different insurance providers on their respective websites. If you found this blog useful, then head over to Onsurity’s resource hub for more informative content on insurance, health, and employer-sponsored benefits.