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Nobody wakes up one morning and thinks, today seems like a great day to buy insurance. Most people just avoid it. Some think it is too complicated to understand. Others feel they are too young for it. And then there are people who keep postponing because life stays busy and insurance never feels that urgent.
Until one day, it does. The truth is, term insurance is one of those things that feels quite boring when everything is going fine. But if something unexpected happens, it can become one of the most important financial decisions someone ever made.
That is exactly why understanding what term insurance actually matters. Not because insurance companies are saying so. Not because finance influencers keep talking about it online. But because your family may someday depend on the financial protection it gives.
The good news is that term insurance is actually much simpler than most people think. There are no complicated investment strategies involved in it. It is just protection.
In this guide, we will explain what term insurance is, how it works, its benefits, the different types available, and how someone can choose the right coverage for themselves and their family.
Before we get into the details of term insurance, let’s first understand the most basic and important question: What is term insurance?
In simple terms, term insurance is life insurance covering you for a fixed period of time. Should anything happen to the policyholder within the policy term, he/she is entitled to a death benefit which goes to the beneficiary of his/her choice, or his/her family members.
That is the basic idea. You pay premiums, and in return get covered for something much bigger than those sums.
As opposed to many other types of life insurance, term insurance does not offer financial gain and/or returns whatsoever. It is meant to secure your family from a financial loss if something were to happen to you.
By submitting your details, you agree to PNB MetLife's Privacy Policy and authorize PNB MetLife and/or its authorized service providers to verify the above information and/or contact you to assist you with the policy purchase and/or servicing. You have the option to opt-out of this contact authorization by un-checking the box. The authorization provided by you herein will supersede all earlier authorizations/registrations made by you in this regard.
One of the biggest reasons why term insurance is so popular is quite simple. It gives a very high coverage amount for a relatively affordable premium.
For example, a young working professional may be able to get a 1 crore term insurance plan by paying a manageable annual premium. Similarly, many people today are also choosing a 2 crore term insurance plan because rising living costs mean families often need larger financial protection than before.
Compare that with other insurance products that combine insurance and investment together. You will usually notice that term plans offer much higher life cover at a lower cost.
That is why financial planners often recommend buying protection and investments separately. Use term insurance for protection. Use investments for wealth creation. Trying to combine both does not always work out that efficiently.
The process is actually pretty straightforward. Suppose you are 30 years old and you purchase a term insurance policy with a coverage amount of ₹1 crore for 30 years.
You have to pay a fixed amount every month for a certain number of years. In return, you get protection. If you continue paying them and unfortunately pass away during those 30 years, your nominee receives the sum assured, which in this case is ₹1 crore.
The money can be used by your family for anything. For example:
Basically, the payout helps to make sure your family's financial life does not completely collapse because of a sudden loss of income.
Now here is something many people do not realise. If you survive the entire policy term, most standard term plans do not provide any maturity benefit. The coverage simply ends. Some people see this as a disadvantage. But that misses the point.
Nobody complains when their house insurance is not used because the house never catches fire. The same logic applies here also. The purpose of term insurance is protection, not profit.
A lot of people assume insurance is only necessary after marriage or after having children. That is not always true. The moment someone depends on your income, term insurance plans becomes worth considering seriously. You need term insurance in these situations:
In all these situations, your income is doing very important work. If that income suddenly disappears, your family's financial situation can become very difficult quite quickly. Term insurance steps in to fill that gap. It is basically income protection for people you care about.
Not every term insurance plan works exactly the same way. Insurance companies offer different variations depending on individual needs. Here are some of the most common options:
As the name suggests, level term insurance plans provide coverage for a fixed amount of money chosen during the policy purchase phase. If you purchase a ₹1 crore policy today, coverage remains ₹1 crore until the policy expires. It is simple, easy to understand, and works well for most people.
In this plan, the coverage amount gradually increases over time. This can be useful because expenses and inflation also tend to increase over the years. What feels like a large amount today may not feel as large twenty years later.
Here, the coverage amount reduces over time. These plans are often linked to loans because the outstanding loan balance also decreases gradually over time.
These policies return the full premium amount to the policyholder if he or she survives until the end of the contract. Premiums are usually higher than in regular plans due to added costs.
Some term plans include various riders to cover any other potential scenarios not included in the basic plan. For instance, a critical illness rider will provide coverage if you are diagnosed with a specific serious disease. An accident rider ensures that your family gets money even if your death is not directly related to your illness or any medical problems you may have.
People often focus only on the coverage amount and forget to understand the actual advantages properly. Here are some of the biggest benefits:
This is actually the primary purpose of the term insurance. You want to make sure that the lives of your family members are not going to change drastically after you pass away. A proper policy can give you peace of mind knowing that they will have the means necessary to survive and reach any milestones they may have set.
Term insurance plans tend to cost less compared to other life insurance solutions.
Insurance companies currently offer rather high sum assured amounts that cover your financial needs regardless of them.
You are free to pick up any policy term, payment terms, amount of coverage, and riders to make sure the product meets your needs in the best possible way.
This one does not appear in policy brochures enough. Knowing your family will have financial support if something happens to you creates a different kind of confidence altogether. You cannot eliminate uncertainty from life. But you can prepare for it at least.
Apart from providing financial assistance during the difficult times of losing a dear person, term insurance plans also provide several term insurance tax benefits for the customers. Premiums and death benefit may be exempted from taxes according to the prevailing regulations.
The term insurance tax benefits might differ over time and according to changes in the law. Therefore, you should check current regulations prior to buying such a plan only because of tax benefits.
Nevertheless, term insurance tax benefits are also a reason why so many people buy term insurance.
This is where many people make mistakes. Some choose random numbers. Others buy whatever coverage amount a friend recommended to them. A better approach is to calculate your family's future financial needs properly.
You should include existing loans, regular expenses, education plans for children, other future commitments, inflation rates, and existing investments.
This is where a term insurance premium calculator can be extremely helpful. A good life insurance calculator estimates how much coverage may be suitable based on your income, liabilities, and family responsibilities.
The goal is not to buy the biggest policy possible. The goal is to buy enough protection.
While people usually think about insurance for young professionals, there are actually options for term insurance for senior citizens as well. However, the insurance will typically become somewhat more expensive because of advanced age and associated health risks.
For example, buy term insurance plans to ensure their spouses' financial security. Others use this opportunity to manage their financial obligations or help their family members in other ways.
Different terms, eligibility criteria, and premiums may be offered, so choosing an appropriate product will be essential in this case.
These are some of the most common mistakes that almost every insurance buyer makes:
Most earning individuals with financial dependents should at least consider it. If someone relies on your income, term insurance deserves a place in your financial plan. This includes:
So, by now, you must have understood what term insurance is. It is a type of life insurance aimed at securing the financial future of your family in case of something happening to you. It does not claim to make you wealthy. There is only one thing that is more important than everything: the financial security of people who rely on you.
Regardless of whether it is a 1 crore term insurance policy, a 2 crore term insurance option, an evaluation of critical illness riders, or benefits of term insurance for tax, everything has one main goal - protection.
Nobody can predict the future. Nobody can foresee what is going to happen. But nobody says you need to prepare yourself for the worst. All you have to do is to take responsibility for your own family members and secure their future in the best way possible. That is what term insurance is for. PNB MetLife offers multiple types of term insurance policies to cover you and your family. Visit our website and check all our insurance offerings now!
Yes, you can. Company insurance may stop if you change jobs, your personal cover stays with you.
Usually no. In most plans, the premium stays same throughout the policy term.
Yes, many people buy multiple policies over time as their income and responsibilities grow.
You'll need to appoint an adult guardian who can receive and manage the claim amount on the child's behalf.
Not normally, but they may verify information through medical records and other official documents if needed.
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Term Insurance Plans - The key to secure your family’s future
Maximize Savings with Term Insurance Tax Benefits in India
Learn How to Calculate Term Insurance Cover in Easy Steps
Guide to Buy Best Term Insurance Plans for Bankers
Find Out Suitable Duration for Term Insurance Policy
Piyush Kataria, SEO Manager at PNB MetLife, is a seasoned digital marketing strategist with over a decade of experience in optimizing websites for search engines. His expertise extends to keyword research, content strategy, technical SEO, and link building, all of which have been instrumental in driving organic traffic growth at PNB MetLife. With a strong foundation in life insurance, Piyush leverages his industry knowledge to create targeted and effective SEO campaigns.
Sakshi Malhotra is a seasoned marketing professional associated with the Life Insurance industry since 2007. At PNB MetLife, she heads Digital Marketing and Direct to Customer line of business. She is responsible for driving effective customer engagement through the company’s website and social media channels. In addition, she drives customer online buying journeys to help them buy the right product.
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
PNB MetLife India Insurance Company Limited
Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
IRDAI Registration number 117 | CIN U66010KA2001PLC028883
For more details on risk factors, please read the sales brochure and the terms and conditions of the policy, carefully before concluding the sale.
Tax benefits are as per Income Tax Laws in force & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details.
Goods and Services Tax (GST) if applicable, levied at prevailing rate subject to change from time to time.
The marks "PNB" and "MetLife" are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
Call us Toll-free at 1-800-425-6969, Phone: 080-66006969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203.
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By submitting your details, you agree to PNB MetLife's Privacy Policy and authorize PNB MetLife and/or its authorized service providers to verify the above information and/or contact you to assist you with the policy purchase and/or servicing. You have the option to opt-out of this contact authorization by un-checking the box. The authorization provided by you herein will supersede all earlier authorizations/registrations made by you in this regard.
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