Purchasing life insurance is one of the smartest financial decisions you will ever make. Properly chosen coverage is a source of comfort, knowing your family will be financially secure when you’re gone. For those who want simple coverage, term life insurance continues to be a sensible and cost-effective option. But with so many available options, how do you choose the right term life insurance plan for you?
This post outlines how to make a well-informed decision and what life insurance buyers should know before getting started.
What is term insurance? Straightforward but efficient
Term insurance is the simplest form of life insurance. It offers financial protection for a limited duration. In case the insured individual dies within the policy term, the nominee is given a death benefit. When the insured individual lives beyond the term, no payment is given unless the policy has a return of premium option.
The product is intended to offer high coverage at an affordable cost, providing clean protection with no investment elements or savings advantages.
Life insurance versus other options
Other forms of life insurance, for example, endowment plans, money-back policies or ULIPs, integrate protection with savings or investment. Term insurance does not. It removes the investment aspect to provide higher cover at a lower premium.
If your primary goal is to secure your family’s financial well-being during your absence, a term plan can be the cheapest and most targeted solution.
What life insurance consumers need to know
If you’re new to life insurance or term plans specifically, here are some key points to keep in mind before you make a choice. It’s not all about signing up for the most affordable policy online — it’s all about investing in long-term coverage that actually protects your financial obligations and loved ones’ welfare.
1. Establish your purpose
Begin by determining why you require insurance. Do you want to safeguard your family’s lifestyle, pay off outstanding loans, prevent disruptions to your children’s education, or merely establish a security umbrella for future uncertainties?
Every purpose requires a somewhat unique approach. For example, insuring liabilities such as a home loan may be until the loan period elapses, while insuring your family’s sustenance costs may need an extended period of coverage. Specifying your purpose ensures that your policy features match actual needs.
2. Determine the cover amount
Experts often recommend coverage worth 10 to 15 times your annual income. However, this is just a starting point. You must also factor in your spouse’s dependency, your children’s age and education needs, any existing debts, and your family’s current standard of living.
A financial advisor can help you work out a more tailored number. Additionally, consider inflation. What seems like sufficient cover today may fall short 10–20 years later. Some policies allow the sum assured to increase periodically to counteract this — a helpful feature for young professionals expecting their financial responsibilities to rise.
3. Select the right policy term
Your policy term should ideally span until your major financial obligations are completed. This may be until your children finish their higher education or until your spouse reaches retirement age. For most salaried individuals, this would mean coverage until age 60 or 65.
Let’s say you’re 30 today and plan to retire at 60. A 30-year term plan would ensure that your family is financially secure throughout your working life. Longer terms may cost slightly more in annual premiums, but the extended coverage is well worth it for peace of mind.
Features that define the best term insurance plan
Once you are clear about your needs and expectations, evaluate the available options based on features that offer flexibility, reliability, and future-readiness. The best term insurance plan is one that balances affordability with long-term value and adapts to changes in your life.
1. Affordability and flexibility in premiums
Term insurance is relatively affordable, especially when compared to endowment or money-back plans. Still, it’s important to look beyond just the lowest premium. Policies that offer flexible payment options — such as limited pay, monthly, quarterly, or annual modes — are easier to manage and adapt better to your cash flow preferences.
2. Claim settlement ratio
The claim settlement ratio (CSR) indicates the number of claims an insurer has honoured compared to the claims received in a financial year. A high CSR, such as 99.65 per cent, shows that the insurer has a proven track record of settling claims efficiently and fairly.
Beyond just the ratio, it’s advisable to understand how the insurer handles claim processes. Do they offer a dedicated claim assistance team? Is the process digital and hassle-free? A smooth claims experience is as important as the coverage itself, especially during a family’s time of need.
3. Additional riders
Riders are optional benefits you can add to your base policy for enhanced protection. Some of the most useful ones include:
Critical illness rider: Pays a lump sum amount on diagnosis of specific illnesses like cancer, stroke, or heart disease. This payout can help cover treatment costs and compensate for income loss during recovery.
Accidental death benefit: Provides an additional sum assured in case the insured dies due to an accident. This is especially relevant for individuals with high travel frequency or hazardous occupations.
Waiver of premium: Ensures that your policy remains active even if you’re unable to continue paying premiums due to disability or critical illness. It keeps protection intact without additional financial burden.
While adding riders increases the premium slightly, it expands the coverage meaningfully and should be considered seriously.
4. Policy continuance in difficult times
Certain advanced term plans come with built-in policy continuance features. For instance, if the policyholder suffers from a life-threatening illness or a permanent disability, the insurer may waive future premiums while continuing the policy benefits.
This is a crucial feature that ensures your life insurance remains valid even when you’re financially vulnerable. It can be particularly helpful if you are the sole breadwinner in your family and need uninterrupted coverage regardless of changing health conditions.
Conclusion
The best term insurance plan is not necessarily the cheapest or the one with the highest coverage. It is the one that aligns with your personal circumstances, provides peace of mind and can support your family in the long run.
Buyers should understand their needs, compare offerings, read policy documents carefully, and look beyond marketing claims. Reliable insurers like Axis Max Life Insurance offer term and life insurance plans tailored for a variety of goals, helping policyholders protect what matters most.