Term insurance is one of the most important financial planning tools that millions of Indians overlook every year. Only about 31-34% of Indians currently have term insurance, leaving countless families vulnerable to financial hardship in the event of an untimely death of the breadwinner. This detailed guide explains why term insurance is a must-have in 2025, who should consider buying it, and how you can get the best coverage at the lowest premium.
What Is Term Insurance and Why Is It Important?
Term insurance is a simple and affordable life insurance policy that provides financial protection to your family for a fixed period or “term.” If the insured person passes away during the policy term, the nominee (usually family members) receive a lump sum sum assured amount which can support their living expenses, pay off debts, or meet future financial goals.
The key benefits are:
- No savings or investment component: You only pay for pure risk cover, which makes premiums very low.
- High coverage at affordable cost: You can secure crores of rupees in cover for just a few hundred rupees per month.
- Peace of mind: Protect your loved ones financially if you are no longer there to support them.
Who Should Buy Term Insurance?
Term insurance is essential for anyone with financial dependents or liabilities. This includes:
- Sole breadwinners of families
- Individuals with home loans, car loans, or other liabilities
- Those with family members dependent on their income
- People who want to secure their family’s future goals like children’s education, marriage, or medical expenses
If you do not have any financial dependents or liabilities, term insurance may not be necessary, but for most people, it is critical.
When Should You Buy Term Insurance?
The best time to buy term insurance is as early as possible after you start earning. Buying at a younger age has several advantages:
- Lower premiums: The younger and healthier you are, the less you pay.
- Premium lock-in: Many plans lock your premium at the age you buy, meaning it won’t increase later.
- Avoid health issues: Buying earlier reduces the risk of denial or high premium due to later health problems like diabetes or hypertension.
For example, a healthy 28-year-old will pay much less than a 45-year-old with pre-existing conditions.
How to Choose the Best Term Insurance Company and Plan?
Choosing the right company and plan is crucial to ensure a hassle-free claim process. One important factor is the Claim Settlement Ratio (CSR) — the percentage of claims that the insurer has successfully paid out over the last 3-5 years.
- High CSR means the company is reliable and fast in claim settlement.
- Axis Max Life Insurance, for example, has an excellent CSR of 99.7%, making it one of the top performers.
A Deep Dive into Axis Max Life’s Smart Term Plan Plus
Axis Max Life’s Smart Term Plan Plus offers a variety of benefits and six distinct plan variants to suit different financial needs:
- Regular Cover: Basic term cover for the entire policy term.
- Early ROP Plus (Return of Premium): Pay premiums for a defined period (e.g., 15 years), and if you survive till the end, get 50% of the premiums paid back while the cover continues.
- Smart Cover: Offers 150% of the sum assured as a benefit if death occurs within the first 15 years.
- Whole Life Cover: Coverage continues till age 100 with a return of premiums feature.
- Return of Premium: Simple variant where you get all your premiums back if no claim is made.
- Income Protection Cover: Provides monthly income to your family instead of a lump sum, with options to increase the monthly amount by 10% every 3 years (inflation proof).
Additional Features and Riders Available
Axis Max Life Smart Term Plan Plus includes attractive add-ons (riders) that provide extra protection:
- Critical Illness Rider: Pays a lump sum on diagnosis of covered critical illnesses like cancer, heart attack, or kidney failure.
- Waiver of Premium: If you suffer permanent disability or critical illness, future premiums are waived but cover continues.
- Terminal Illness Rider: Pays the full sum assured if diagnosed with a terminal illness.
- Life Line Plus: Specifically for female policyholders, allows top-ups if the husband is the policyholder.
- Instant Claim: If a claim is accepted, an initial amount (e.g., ₹2 lakhs for claims above ₹1 crore) is paid within 1 day of filing claim to ease financial stress.
Premium Payment Options & Hacks
You can pay your premium in several flexible ways:
- Regular pay (monthly, quarterly, yearly premiums)
- Limited pay options: For example, pay premiums for only 5, 7, or 10 years but get coverage for longer.
- Single pay: One-time lump sum premium payment for full coverage.
Smart premium hacks include locking premium at a young age and choosing limited pay options to reduce the premium burden.
How Much Coverage Should You Buy?
Coverage should be calculated based on:
- Your annual income: Multiply by 15 to 20 times to cover lost future income.
- Outstanding liabilities: Home loans, personal loans, credit card dues, etc.
- Living expenses for 10-20 years: Rent, groceries, schooling, medical costs.
- Future goals: Children’s education, marriage corpus, parent’s medical needs.
- Inflation buffer: Account for rising costs over time (e.g., 6-7% annually).
Example: Raj, a 28-year-old teacher with an annual income of ₹6 lakhs, home loan of ₹15 lakhs, annual living expenses of ₹3 lakhs, and future goals requiring around ₹30 lakhs, calculates coverage around ₹2 crores including inflation buffer.
Common Myths and Misconceptions About Term Insurance
- Term insurance is expensive: Not true. Plans exist for under ₹600/month that offer coverage of ₹1 crore.
- Only the rich need insurance: Every earning individual with dependents or loans should have term cover.
- It’s complicated and full of jargon: Modern insurers offer simple to buy, transparent policies with online applications and quick claim processes.
Step-by-Step Process to Buy Axis Max Life Smart Term Plan Plus
- Assess your financial needs and coverage amount needed.
- Compare plan variants and riders based on your requirements.
- Fill in the application form online or via a financial advisor.
- Undergo minimal health checks if required.
- Pay your first premium.
- Keep policy documents safely and inform your nominees.
Why Axis Max Life?
- 99.7% claim settlement ratio
- Multiple plan variants to choose from
- Flexible premium payment options
- Riders to customize protection
- Free health management services
- Instant claim payment options
- Ideal for middle-income families to secure future
Final Words: Don’t Leave Your Family’s Future to Chance
Millions of Indian families face financial distress after a breadwinner’s untimely death simply because they did not buy term insurance. For the price of a few cups of coffee, you can secure your family’s future, pay off debts, and ensure their dreams continue.
Buying term insurance early, with the right coverage and from a trusted insurer like Axis Max Life Smart Term Plan Plus, is one of the smartest financial decisions you can make in 2025.