Term Insurance

Term insurance is life insurance with nothing else attached. You pay a premium for a chosen period — the term — and if you die during it, the insurer pays the cover amount to your nominees. If you outlive the term, nothing is paid. Because there is no savings or investment component, the premium for a given level of cover is far lower than for endowment or other savings-linked policies.

Protection comes before growth. A long-term investment plan assumes the income that funds it will keep arriving; term insurance covers the case where it doesn't.

Anyone whose income others rely on: a spouse, children, parents, or a lender on a home loan. Someone with no dependants and no shared debts may need little or no life cover. The question is not "how old am I?" but "who would be left short, and by how much?"

There are three common ways to estimate it:

• Income replacement — the present value of the income your family would lose, for as many years as they would need it.
• Human life value — a version of the same idea that accounts for your expenses, income growth and working years remaining.
• Needs-based — add up what your family would need (years of household expenses, outstanding loans, future goals such as education) and subtract assets already available.

The Insurance Cover Calculator works through the needs-based method, shows your existing cover and the indicative gap, and explains its methodology. Every input is yours to change.

Cover is most valuable while people depend on your income — typically until your children are independent and major loans are repaid, often around your planned retirement age. Cover far beyond that costs more for less purpose.

• Your age when you buy — premiums are fixed for the term at most insurers, so buying earlier locks in a lower rate.
• Health, medical history and family history.
• Tobacco use.
• Cover amount and term.
• Occupation and lifestyle.
• Riders added.

Answer every question on the proposal form fully and honestly — medical history, tobacco and alcohol use, other policies, occupation. Undisclosed facts are a leading reason claims are disputed. Insurance law limits how long after issue a life policy can be challenged for misstatement, but it is far better never to rely on that.

1. Inform the insurer as soon as practical — online, by phone or at a branch.
2. Submit the documents — usually the claim form, death certificate, policy document, the nominee's identity and bank details, and medical or police records where relevant.
3. Assessment — the insurer reviews the claim and may investigate, particularly in the early years of a policy. IRDAI rules set timelines for insurers to decide and pay.
4. Payment — the cover amount is paid to the nominee.

Keeping your family informed about the policy and where its documents are is the simplest way to make step 1 possible.

• Accidental death benefit — extra payout if death is due to an accident.
• Critical illness — a lump sum on diagnosis of a listed illness.
• Waiver of premium — future premiums waived on disability or critical illness.
• Return of premium — premiums refunded if you survive the term, at a much higher premium. Compare it with buying plain cover and investing the difference.

CompoundX currently offers insurance education and need estimation only. Insurance can be sold only by insurers and IRDAI-registered intermediaries; if CompoundX holds such a registration, it is shown on our Disclosures page. Our tools help you understand how much cover your family may need; a CompoundX expert can explain the concepts.

The claim settlement ratio is the share of claims an insurer paid in a year, by number. It is a useful signal, but incomplete:

• Look at the ratio by amount as well as by number — large claims matter most.
• Look at several years, not one.
• Look at how quickly claims are settled and how many are pending.

A strong ratio does not make up for incorrect disclosure on your own proposal.

Name nominees and keep them current. A policy taken under the Married Women's Property Act can ring-fence the payout for your spouse and children, keeping it out of reach of creditors. Tell your nominees the policy exists and where the documents are.

Under IRDAI rules, you have 30 days from receiving the policy document to review it. If the terms aren't what you expected, you can return the policy and receive a refund of the premium, less deductions the rules permit, such as for medical tests and the cover provided.

• Premiums may qualify for a deduction under the old tax regime, within the overall limit for such investments and payments.
• The death benefit paid to nominees is generally exempt from tax.
• Individual life insurance premiums have been exempt from GST since 22 September 2025.

Tax rules change and depend on your circumstances. This is general education, not tax advice — check the latest provisions or speak to a tax professional.