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TERM INSURANCE

5 Year Term Life Insurance Policy in India

Karan Sharma Karan Sharma 10 May 2019

Is a 5 year term life insurance policy better than a regular one? Read more to find out.

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Protecting your family is the highest priority call you can take. How can one achieve this? It is simple, buy a term plan. A term insurance plan provides protection and financial security to the family in case something happens to the policyholder within the policy term.

There are many insurance companies in India which provide a 5 year term life insurance plans. Before we look at individual policies, let us understand the basic features of a 5 year term life insurance policy.

Features of a 5 year Term Life Insurance Plan

Note: The features vary across different policyholders and per individual policy.

  • Death Benefit - In case anything happens to the policyholder within the policy term, the nominee of the policyholder will be entitled to a death benefit. The death benefit will be the chosen sum assured at policy inception.

  • Save Tax - The premium paid towards a term life insurance policy is eligible for tax deductions as per Section 80C of the Income Tax Act, 1961.

  • Rider Options - You can enhance the overall protection offered by your existing term plan by opting for additional riders.

  • Less Expensive - This is perhaps the best feature of a term plan. A five year term life insurance plan comes with low and affordable premium rates, depending on the age of the policyholder. You also have the flexibility to select payment modes and premium amount.

  • Financial Planning - A 5 year term life insurance plan can help you plan your future expenses in advance. Here are two prominent 5 year term life insurance plans in India. Note: All information has been sourced from the official website of the respective insurance providers.

Aegon Life iTerm Insurance Plan

This is a non-linked non-participating term insurance plan which provides financial security to your family in your absence. Under this plan, you can buy additional insurance cover in case the need arises in the future.

Benefits and Features

The benefits and features of this policy are:

  • Option of life coverage till the age of 100 years.
  • Option to pay premiums for a limited period (till age 60 years).
  • Flexibility to choose the death benefit payout - lump-sum payment OR as fixed monthly income for 100 months OR as a combination of the above.
  • Option to increase your life coverage.
  • Rider Options - Accidental death, Critical illness, Women specific Critical illness & Disability.
  • Lower premium rates for Females and Non-smokers.
  • Inbuilt Terminal Illness benefit - On diagnosis of any terminal illness, an amount equal to 25% of the Total Sum Assured will be paid immediately as a lump-sum.
  • The premiums paid and benefits received are eligible for tax benefits under Section 80C and 10(10D) of the Income tax Act, 1961.

Death Benefit - It is calculated as the sum of lump-sum Sum Assured and Income Benefit Sum Assured. In case of death of the Life Assured during the Policy Term, provided all due Premiums have been paid, the nominee will receive the Total Sum Assured which shall be payable in the following manner:

  1. Lump-sum Sum Assured will be paid immediately
  2. 1.2% of the Income Benefit Sum Assured will be paid monthly for 100 months. Post payment, the policy will terminate.

Eligibility Conditions

The eligibility conditions under this policy are:

EligibilityCriteria
Entry AgeMinimum - 18 years last birthday Maximum - 65 years last birthday / 55 years last birthday in case you opt to pay premiums till your age of 60 years
Maturity AgeMaximum - 100 years last birthday
Policy TermYou can opt for any Policy Term between 5 years to 67 years or fixed term coverage till age 100 years
Premium Payment TermSingle Pay/60 minus age at policy inception/Equal to Policy Term
Total Sum Assured
Minimum - ₹25 lakhs
Maximum - No limit
Premium Payment Mode* Single, Annually, Semi-Annually and Monthly
  • The modal loadings for modes other than annual mode will be:
  1. Semi-Annual Premium = Annualised Premium * 0.512
  2. Monthly Premium = Annualised Premium * 0.087

SBI Life eShield

This is an online pure term non-linked non-participating insurance plan which comes with two types of payout benefits.

Benefits and Features

  • Lower premiums for non-smokers.
  • Inbuilt Accelerated Terminal Illness Benefit.
  • Rider Options - SBI Life - Accidental Death Benefit Rider and SBI Life - Accidental Total & Permanent Disability Benefit Rider.
  • Medical Second Opinion Service.
  • The premiums paid and benefits received are eligible for tax benefits under Section 80C and 10(10D) of the Income tax Act, 1961. Death Benefit is as per the selected benefit structure.
  1. Level Cover Benefit - The sum assured remains the same throughout the policy term and is payable upon death of the policyholder where sum assured on death is higher of 10 times the Annualised premium, or 105% of all the premiums paid as on date of death, or Absolute amount assured to be paid on death, which is equal to the Effective Sum Assured+ as on the date of death.

  2. Increasing Cover Benefit - The sum assured automatically increases by a simple rate of 10% at the end of every 5th policy year. Eligibility Conditions

The eligibility conditions under this policy are:

EligibilityCriteria
Benefit structuresLevel Cover Increasing Cover
Age at Entry
Minimum: 18 years
Maximum: Level Cover: 65 years
Increasing Cover: 60 years
Age at Maturity
80 years for Level Cover Benefit
75 years for Increasing Cover Benefit
Sum Assured
Minimum: ₹35,00,000 Maximum: No Limit
Sum Assured would be in multiples of ₹1,00,000
Premium Payment ModeYearly, Half-yearly, Quarterly & Monthly
Premium for Non-Yearly ModesHalf-Yearly: 51.00% of yearly premium | Quarterly: 26.00% of yearly premium | Monthly: 8.50% of yearly premium
Policy Term
Minimum:
For Level Cover - 5 years
For Increasing Cover - 10 years
Max
For Level Cover - 80 years less Age at Entry
For Increasing Cover - 75 years less Age at Entry
Premium Payment TermSame as Policy term
Premium Amount
Minimum: Maximum: No Limit
Yearly - ₹2779
Half Yearly - ₹1418
Quarterly - ₹723
Monthly - ₹237

Lack of a term insurance plan can have a disastrous impact on the lives of your spouse and children. Thus, a term insurance plan is a must have in your investment portfolio. The two plans mentioned above are an excellent option if you are looking for a 5 year term plan.

Karan Sharma
Written by Karan Sharma
Content Specialist and Strategist, foolishly creative and always ready for a game of 'Call of Duty'.