How to Buy Term Life Insurance in India
In this guide
Step-by-step Process
Understand What Term Insurance Is
Term insurance is pure life cover — it pays a death benefit to your family if you die during the policy term. There is no maturity payout if you survive (unlike endowment or ULIP plans). It is the cheapest form of life insurance. A ₹1 crore cover for a 30-year-old non-smoker typically costs only ₹700–₹1,000/month.
Calculate How Much Cover You Need
Minimum recommended: 10–15x your annual income. Example: ₹10 lakh/year income → ₹1–1.5 crore cover. Also factor in: outstanding loans (home loan, car loan), children's education costs, spouse's financial dependence, and parents' care costs. Don't under-insure — premiums are cheap; the risk of not having enough cover is expensive.
Compare and Choose a Plan
Key factors: (a) Claim Settlement Ratio (CSR) — prefer 98%+; (b) Solvency ratio (financial stability of insurer); (c) Premium amount; (d) Policy term (cover until age 60–70 minimum, or 85 if possible); (e) Riders available — accidental death, critical illness, waiver of premium. Compare on Policybazaar or directly on insurer websites.
Fill Application and Medical Disclosure
Apply online or through an agent. You MUST honestly disclose: smoking/tobacco habit, alcohol consumption, existing medical conditions (diabetes, BP, heart disease), family medical history, and any hazardous occupation. Non-disclosure is the #1 cause of claim rejection. A medical check-up may be required for high cover amounts (usually above ₹1 crore).
Inform Your Nominee and Store Documents
After policy issuance: (a) Inform your nominee (spouse/parents) about the policy — tell them where documents are stored; (b) Store policy in DigiLocker; (c) Update nominee if life circumstances change (marriage, divorce, child birth); (d) Set up auto-pay for premium to avoid lapse. An unclaimed policy is worthless — your family must know it exists.
Documents Required
- ✓Aadhaar card
- ✓PAN card
- ✓Income proof (salary slips / ITR)
- ✓Medical reports (if required for high cover)
- ✓Nominee details and ID proof
Official Government Portals
Common Questions
Should I buy term insurance with or without return of premium?
Return of Premium (TROP) plans return your total premium if you survive the term, but cost 2–3x more than pure term plans. Financial advisors generally recommend pure term plans — take the premium difference and invest it in mutual funds for better long-term returns.
Can I have multiple term insurance policies?
Yes. You can hold multiple term insurance policies from different insurers. Total cover across all policies should ideally not exceed 20–25x your annual income. All policies must be disclosed to each insurer at time of purchase. All valid nominees will receive the death benefit from each policy independently.
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