What Is Term Life Insurance?

Term life insurance provides pure life coverage for a specific period — typically 10, 20, 30, or 40 years. If the policyholder passes away during the policy term, the nominee receives the full sum assured as a tax-free payout under Section 10(10D) of the Income Tax Act. Unlike endowment or ULIP plans, term insurance has no maturity benefit — you pay a low premium and get maximum coverage.

Tax Benefits: Section 80C and Section 10(10D) ✅ Section 80C — Premium Deduction Premiums up to ₹1.5 Lakh/year are deductible from taxable income. This can save you ₹46,800 in tax if you're in the 30% bracket. ✅ Section 10(10D) — Tax-Free Payout The entire death benefit (₹1 Crore+) received by your nominee is 100% tax-free. No income tax, no capital gains tax. How Much Cover Do You Actually Need?

Financial planners recommend the Human Life Value (HLV) method:

Common Mistakes to Avoid Buying too late: Every year you delay increases your premium by 8-10%. Underinsuring: ₹25-50 Lakh seems sufficient today but inflation erodes purchasing power over 20 years. Hiding medical history: Non-disclosure leads to claim rejection. Always be honest. Ignoring claim settlement ratio: A cheap plan is useless if the company rejects 10% of claims. Not comparing plans: Premium for the same cover can vary by 30-40% across companies. Frequently Asked Questions What happens if I survive the policy term?

In a pure term plan, you get nothing back — the plan simply expires. However, some companies offer a Return of Premium (TROP) variant where you get all premiums back at maturity. TROP plans cost 2-3x more, so most experts recommend investing the difference in mutual funds instead.

Can I have multiple term insurance policies?

Yes, you can hold multiple policies from different insurers. This is actually a smart strategy — as your liabilities decrease over time, you can let shorter-term policies lapse while keeping the longer ones active.

Is medical check-up mandatory?

For covers up to ₹50 Lakh-1 Crore (varies by insurer), many companies offer no-medical-exam policies for applicants under 35-40 years. For higher covers, a medical test is mandatory.

How long does claim settlement take?

As per IRDAI regulations, insurers must settle claims within 30 days of receiving all required documents. Most top insurers process claims in 7-15 working days.

The Complete Guide to Term Life Insurance in India 2025: Plans, Premiums & How to Choose

By Admin • Feb 23, 2026 • 📖 4 min read • ✅ Updated Feb 24, 2026

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Written By

Admin

Insurance & financial content specialist at PolicyBaazar. Helping Indians make informed insurance decisions with expert analysis and unbiased reviews.

📅 Published: Feb 23, 2026 🔄 Updated: Feb 24, 2026 📖 870 words ⏱️ 4 min read

The Complete Guide to Term Life Insurance in India 2025: Plans, Premiums & How to Choose

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