Term Insurance

A term insurance policy can be defined is an agreement between a policyholder and an insurance company. As part of this agreement, the insurance company agrees to provide financial protection to the dependent (s) /nominee(s) of the life insured in the form of death and/or income benefits in return for premium payments, if certain specified events occur. Below are the key steps of how a term insurance plan works:

Just like other life insurance plans, term insurance policies have a very simple and transparent working procedure. Here is a step-by-step procedure that highlights the working of a term insurance plan in India:

• Policy Purchase: An individual is expected to undergo medical tests for health assessment and begin paying the premium.
• During Policy Term: The insured person (or policyholder) continues to pay the premium throughout the policy term to maintain the life coverage.
• Death During Term: If the insured person passes away during the term of the policy, then the nominee is eligible to receive the death benefits.
• Outlives Policy: If the insured outlives the policy term, the policy will lapse, and the insured's family will not receive any death benefits. However, if they have selected the term plan return of premium option, then they are eligible to receive the premiums if they outlive the policy term.

The recent GST changes have brought term life insurance plans GST to 0%, and given a major boost to the insurance industry while encouraging buyers. This will not only lead to higher penetration of insurance throughout India, but also ensure that financial health of every family is protected.

Earlier, policyholders had to pay 18% GST on term insurance premiums, resulting in higher total cost of protection. With GST now removed, term insurance has become more affordable than ever for millions of families.

For example, if someone was paying ₹10,000 (₹8474.60 base premium + ₹1525.40 GST) annually earlier, the same plan could now cost ₹8,474.60. This essentially means overall cost of term insurance premium has become cheaper, especially for young earners and middle-income families.

A country where life insurance awareness is growing but coverage is still low, this GST reform will prove to be beneficial.

Effective from 22nd September 2025, GST on individual life and health insurance policies was effectively reduced from 18% to 0%. Check out the table below to find the updated GST rates for term insurance plans:

Term life insurance adoption in India is evolving, with changing consumer preferences, affordability considerations, and growing awareness of financial protection shaping buying decisions.

Following GST reforms, trends across customer segments can offer insights into how interest in term insurance increased among NRIs, women, self-employed individuals, and different age and coverage groups.

Choosing a term life insurance plan means understanding the key details: coverage amounts, premium, benefits, and your rights as a policyholder.

Just like there are various types of life insurance available in the market, similarly, there are different types of term insurance plans available too. While the basic benefits and features remain the same across all term insurance plan variants, there are some additional features that different one from another. These are explained in the table below: 

Choosing the right term life insurance plan means matching the policy type to your life stage, financial goals and risk profile. Let us understand the main types of term plans available for you in detail below.

‘Term life insurance’ or simply ‘term insurance’ is the purest form of life insurance, which offers financial protection for a specific period, typically 60 to 70 years of age, against a periodic premium. Such plans are designed to provide financial protection to your dependents in the event of your death. On the other hand, whole life insurance provides financial protection to an individual for up to 100 years of age as well as includes a component of savings that may accrue a particular cash value.

The following are some general differences between term life insurance and whole life insurance:

Securing your family in your absence should be your top priority and a term life insurance plan is the risk-free way to do so. Term plan ensures that the financial security of your family is maintained even after your death. Moreover, it does not affect your current lifestyle as it can be easily afforded given the coverage you’re opting for.

Also, you can easily understand the policy terms and choose your plan online with different insurance providers such as Axis Max Life Insurance, which offers a variety of term insurance plans in India. You can purchase a best term plan as per your requirements.

Global longevity trends show that people today are living significantly longer than previous generations. According to research from The Geneva Association, rising life expectancy is reshaping the insurance industry and contributing to what is often referred to as the “longevity economy.”

While longer lives are a positive development, they also influence how insurers assess mortality risk and price term insurance policies.

A 2025-published peer-reviewed study based on data from the National Family Health Survey (NFHS-5) conducted during 2019-2021, examined differences in life expectancy and premature mortality among insured and uninsured populations in India. Using household mortality data, the researchers estimated person-years and deaths across age groups.

The study found that individuals with health insurance had a higher life expectancy (around 70 years) compared to the uninsured (around 67.7 years), along with significantly lower premature mortality.

India continues to face a significant mortality protection gap. This refers to the shortfall between the financial resources a family would need if the primary earner passes away and the life insurance cover actually in place.

According to insights from PwC India on bridging gaps in the Indian insurance sector, insurance penetration in India remains modest relative to the size of its population and economic exposure.

A large portion of households either do not have adequate life cover or rely on savings that may not be sufficient to sustain long-term financial needs. This widening protection gap places millions of Indian families at financial risk.

In India, non-communicable diseases, road accidents and extreme weather events are important public-health concerns. These risks highlight why families may need to plan for the financial consequences of losing an earning member.

• Non-communicable diseases (NCDs): A major cause of premature death
  
  India's Ministry of Health and Family Welfare estimates that NCDs account for approximately 63% of all deaths. These include cardiovascular diseases, cancer, diabetes and chronic respiratory diseases.
  
  WHO estimated India's probability of dying from one of four major NCDs between ages 30 and 70 at 23.7% in 2019. This highlights that serious health risks are not confined to old age.
  
  Source: Ministry of Health and Family Welfare


• Diabetes: A growing health concern in India
  
  The ICMR-INDIAB study, reported by the Government of India in 2023, estimated that 101 million people in India had diabetes, while another 136 million had prediabetes. Uncontrolled diabetes can lead to cardiovascular, kidney and other complications, increasing the risk of premature illness and death. These figures underline the importance of health awareness and long-term family protection planning.
  
  Source: Press Information Bureau


• Cancer: A significant health burden
  
  According to the Ministry of Health and Family Welfare, estimates from ICMR indicated more than 1.4 million new cancer cases in India in 2023. Cancer can affect people during their working years as well as later in life.
  
  Sources: Press Information Bureau


• Road accidents: Sudden loss of life and income
  
  India's Ministry of Road Transport and Highways recorded 1,72,890 road-accident deaths in 2023, up 2.6% from 1,68,491 in 2022.
  
  Source: Ministry of Road Transport and Highways


• Extreme weather and disaster-related deaths
  
  The India Meteorological Department reported approximately 2,400 deaths from extreme weather events across India in 2024, including deaths associated with lightning, thunderstorms, floods, heavy rainfall, landslides and heatwaves.
  
  Source: India Meteorological Department

India’s recent health data shows a dual reality. On one hand, mortality indicators have improved over time. On the other, new health risks, particularly non-communicable diseases (NCDs) and post-pandemic mortality shifts, are reshaping long-term financial exposure for families.

Analysis of NFHS-5 (2019–2021) data published on PubMed Central highlights continuing improvements in several mortality indicators across age groups.

However, broader India NCD mortality studies show that lifestyle-related illnesses now account for a growing share of deaths, especially among working-age adults.

This evolving risk profile directly affects long-term financial planning.

Healthcare costs in India have been rising steadily, with medical inflation often exceeding general inflation. Advanced diagnostics, specialised procedures, and long-term chronic disease management significantly increase out-of-pocket expenditure.

For example:

• Cardiac procedures
• Oncology treatments
• Long-term diabetes management

can impose substantial financial strain even on insured households due to deductibles, exclusions, or income loss during recovery.

While health insurance helps cover treatment expenses, it does not replace lost income during prolonged illness or in the event of death. This is where long-term financial planning becomes critical.

Rising costs in healthcare, education, daily expenses, and loan repayment can increase your family’s future financial needs.

₹1 crore may seem like a large amount today, but its value can reduce over time due to inflation. A cover that feels sufficient now may not provide the same support after 15-20 years because of reduced purchasing power. This is why many professionals recommend choosing a sum assured based on current and future financial responsibilities.

Insurers offer an increasing cover feature in some policies. Under this feature, the sum assured increases as the policy continues. This helps the cover keep up with inflation over time. Such features are available in some of the Axis Max Life Insurance plans, depending on policy terms and conditions. It is recommended to review your term policy cover after major life changes. These can include marriage, having a child, a salary increase, or taking a home loan. This helps ensure your family remains adequately protected.

The COVID-19 pandemic demonstrated how sudden health crises can alter mortality patterns. Post-COVID mortality shifts included excess deaths and temporary declines in life expectancy, highlighting systemic vulnerability to unexpected shocks.

Beyond acute infection, post-COVID health complications created ongoing medical and financial pressures for many households. The pandemic reinforced two realities:

• Mortality trends can shift rapidly due to unforeseen events.
• Families dependent on a single or primary income earner face heightened financial fragility.

The COVID-19 pandemic led to measurable shifts in India’s mortality patterns. According to a study by the International Institute for Population Sciences (IIPS), as reported by The Times of India, India’s life expectancy declined by approximately 1.6 years during the pandemic period. This marked a significant reversal after decades of steady improvements in longevity. The decline was driven by excess mortality during 2020-2021, highlighting how sudden public health crises can disrupt long-term demographic trends.

The key takeaway is not just the temporary dip in life expectancy, but the unpredictability of mortality risk. The pandemic demonstrated that:

• Mortality patterns can change rapidly due to unforeseen events.
• Even working-age individuals are vulnerable during systemic health crises.
• Families dependent on a primary earner face immediate financial instability in such situations.

While life expectancy may recover over time, the financial shock to households during periods of elevated mortality can be severe. For urban families with loans, education commitments, and dependent parents, an unexpected loss of income can have long-term consequences. In this context, term insurance plays a critical role. It acts as a financial buffer during uncertain periods by ensuring that dependants receive a structured payout if the primary earner passes away.

The pandemic highlighted the importance of planning not only for gradual health risks but also for sudden mortality shocks.

Life expectancy has increased globally over the past two decades, reflecting improvements in health and survival. However, the COVID-19 pandemic disrupted this progress. According to the World Health Organization (WHO), global life expectancy at birth reached 73.3 years in 2023, nearly returning to the pre-pandemic level of 73.4 years recorded in 2019.

Healthy life expectancy, which estimates the number of years people can expect to live in full health, has recovered more slowly. In 2023, it stood at 62.8 years globally, remaining 0.4 years below its 2019 level.

India’s life insurance sector has grown steadily over the past two decades. Premium collections have increased at an average rate of around 13% annually, closely aligned with overall economic growth. In FY25 alone, total life insurance premiums reached approximately ₹8.85 lakh crore, highlighting the scale and importance of the sector.

The number of insured lives has also expanded significantly, from about 15 crore in FY15 to nearly 40 crore in FY25. This shows that awareness about financial protection is improving across the country.

Yet, a Large Protection Gap Still Exists:

• Despite this growth, India remains an underpenetrated insurance market
• Insurance penetration stood at 2.80% in 2023, compared to around 5.65% in developed economies.

This means that while more people are buying insurance, many households are still either uninsured or underinsured. In many cases, coverage amounts are not sufficient to fully protect families against long-term financial risks.

A well-structured financial plan is not built only on investments and savings. It is built on risk management first, followed by wealth creation. Term insurance plays a foundational role in this structure by protecting the most valuable financial asset of any household, the earning ability of the primary breadwinner.

Before money can grow, it must be protected. Term insurance ensures that long-term goals do not collapse if income suddenly stops.

An increasing cover term insurance plan adjusts the sum assured throughout the policy term. This allows the policyholder to stay at pace with inflation and increased financial obligations without having the need to buy a new policy. The rise can occur at set time periods or at an agreed-upon percentage, depending on the insurance company and the product.

Pure term insurance focuses on providing financial protection to your family, while savings and investment-oriented life insurance plans combine life cover with a savings or investment component. The right choice depends on whether your primary goal is protecting your dependants, building savings, or combining both.

While both term life insurance and SIPs have their own financial roles, they complement each other in a broader financial plan. Term insurance protects your family's financial future in the event of your untimely demise. On the other hand, SIPs help build long-term wealth to achieve goals such as retirement, children's education or home ownership.

The best term insurance cover will depend on factors like annual income, financial obligations, future plans and dependants. As a general rule, financial planners often recommend a cover of 10–15 times the annual income, although the actual requirement may vary based on individual circumstances.

Before you decide to get a term insurance plan, it’s important to tick off a few factors that ensure you’re buying protection that works for your needs.

The best time to buy a term insurance plan is as early as possible. When bought at a young age, preferably in one's 20s or early 30s, they can save significantly on the premium. This way, you get coverage for a longer duration at affordable premiums.

A 1 crore term plan bought at the age of 25 years by a healthy, non-smoker female might cost you somewhere around Rs. 1100 per month whereas the same 1 crore term plan purchased at the age of 45 years can cross Rs 3,000 monthly. So, if you delay in purchasing a term policy, you should be prepared to pay a higher premium. Therefore, to gain the maximum benefits of a term insurance plan, you should prefer to lock-in the low rates early in life.

The below table further illustrates why buying a term insurance plan at an early age can be beneficial. The below premium amounts are based on the assumption that the insured individual is covered till the age of 85 years:

Apart from selecting an adequate sum assured, there are several aspects which need to be kept in mind when finalising a term insurance plan. Check them out below:

A term insurance plan helps protect your family's financial future by providing a death benefit if the life assured passes away during the policy term. The benefits payable under a term insurance policy depend on the coverage selected, the policy being in force, and the T&C specified by the insurer.
br> While term insurance can provide financial support to your loved ones, it is important to understand its coverage limits and exclusions before getting a policy. Some benefits, such as an additional payout for accidental death or a critical illness benefit, may require optional riders. Certain situations may also be subject to specific policy conditions.

Financial planning today is no longer about predictable life paths. Careers change frequently, health risks are evolving, economic cycles are volatile, and family structures have shifted. In this environment, financial security depends not only on growing wealth but on preparing for uncertainty.

Term insurance plays a stabilising role by protecting households against risks that are difficult to predict but financially disruptive.

Mortality data in India consistently show that a significant share of premature deaths occurs during the working-age population, particularly between 35 and 60 years, the period when financial responsibilities are at their peak. According to our data, 65.4% of claims settled were for policyholders aged 31-50. This highlights the importance of having financial protection during a phase of life when many individuals may be managing home loan repayments, children's education, household expenses, and the financial needs of dependants.

These are the years when individuals are repaying home loans, funding children’s education, and supporting ageing parents.

This makes early financial protection critical. Delaying term insurance not only increases cost but also heightens the risk of remaining underinsured during the most financially vulnerable phase of life. Here’s why buying term insurance early strengthens long-term financial security:

NRIs can purchase a term life insurance policy in India under the FEMA (Foreign Exchange Management Act). Based on their requirements and demands, Indian insurance companies have customized term insurance plans for NRIs.

Here are the two different ways for NRIs to buy term life insurance in India:

• During their visit to India:

  Once underwriting is completed, a term insurance policy for an NRI is treated the same as one for an Indian citizen. When NRIs visit India, they can complete the underwriting procedure to secure the benefits of a term insurance plan in India.

• Via mail order business:

  If an NRI cannot travel to India, they can still buy a term insurance plan from India while staying in their country of residence. This can be done through a process called Mail Order Business. Under this process, the required documents are verified by authorized officials. These officials may include a notary, an Indian Embassy official, or an Indian diplomat. They help complete the verification required for the term insurance policy.

Buying term insurance is an absolute cake walk. It’s quick and simple for anyone to buy. You should start by comparing different insurance providers and their plans. Look for some deciding factors like premium cost, coverage amount, claim settlement ratio etc. You can also check premium calculators to help you estimate the ideal coverage basis your income and liabilities, and dependents.

If you have decided to go with Axis Max Life Term Insurance, the process is completely digital. You need to fill in some of your personal details and pay online. In some cases, insurer might need you to share your medical reports to determine your premium. This is the step-by-step process to buy term insurance on Axis Max Life website.

This is the step-by-step process to buy term insurance on Axis Max Life website.

Buying term insurance online from Axis Max Life Insurance is quick and easy and can be done in a few simple steps. These include:

Step 1: Go to the top of the page & enter details like Name, Date of Birth, Nationality, Phone Number, & annual income. Click on 'Calculate Now' to move to the next step.

Step 2: Select your gender, lifestyle habit, occupation, education, marital status etc.

Step 3: Now select if you’re diabetic or not, your marital status, and language. Click on ‘Check Coverage’ button.

Step 4: On this screen, you can choose any life cover amount you want, and the duration of your coverage. Now click on ‘Proceed’.

Step 5: Choose a rider or click on ‘Skip’ button. It’s recommended to choose a suitable rider to make your policy cover even more comprehensive.

Step 6: Enter all mandatory details to check your plan eligibility and click ‘Proceed’.

Step 7: In the next step, you have to make the payment. We will verify your documents. The policy document will be emailed to you after approval.

Below are the best term insurance plans available for policyholders, along with their features to help you make an informed decision.

Here’s a quick overview of the Axis Max Life term plans for 2026, highlighting life coverage, age limit, and death claim settlement ratio.

The wide range of term plans with various features might make it difficult or a layman to determine which term insurance policy would be suitable to his/her unique needs. Below are some benefits of a term plan that one should look out for when making the final selection of a suitable term insurance plan:

There are many misconceptions about term life insurance that lead many people to postpone purchasing term insurance. But term insurance is intended to offer monetary protection at an affordable price and can be tailored to meet various life stages and monetary requirements.

While both term insurance with critical illness rider and standalone health insurance plan offer financial security in the event of a medical emergency, they have distinct functions.

Many people opt for both a health insurance policy to cover medical costs, and a critical illness rider to cover income loss and other financial obligations during recovery.

Selecting the right term insurance policy is one of the best ways to provide financial security for your family. Hence, to make an informed term insurance purchase, here are some factors need to be considered:

Term life insurance premiums increase with age because health and mortality risk increases with your age. A person is less likely to die in his/her younger years than when in later life stages. Therefore, the risk of illness and death is increased.

Also, note that, as the customer's age increases, the qualifying medical exams also become stricter. So, it is best to buy a term insurance policy when you are young so that you can enjoy higher benefits for a lower premium.

One of the most common concerns people have when they buy term life insurance is: “What happens if I outlive the policy? Do I lose all the money I paid?”

In a standard term insurance plan, the policy usually ends once the policy term is completed. No maturity benefit is paid if the life insured survives the term. The premium paid in a term life insurance policy is the cost of financial protection provided during those years.

However, some term insurance plans come with a Return of Premium (ROP) feature.

If the policyholder survives the policy term, the insurer may return the premiums paid. This is usually subject to all premiums being paid on time. Taxes, rider premiums, and other charges may not be included in the payout, depending on the policy terms.

These plans generally have higher premiums compared to pure term insurance plans.

Apart from this, certain insurers may also offer plan-specific features such as a Special Exit Value option. For example, Axis Max Life Insurance offers a Special Exit Value option under select plans. Under this feature, the policyholder may receive a payout if certain policy conditions are met. Eligibility criteria, premium payment conditions, and payout terms depend on the chosen policy.

These features may suit buyers who want life cover along with some payout benefit. They also help address the concern of getting nothing back if no claim is made during the policy term.

Before choosing such features, compare:

• Overall premium costs
• Eligibility conditions for receiving the payout
• Policy tenure and survival requirements
• Long-term financial goals
• Alternative investment opportunities

Term insurance should primarily be viewed as a financial protection tool for your dependents. These return benefits can be an added advantage. However, they should not be the main reason for buying a term insurance policy.

While term insurance is one of the most affordable forms of life insurance, the premium you pay depends on factors such as your age, health, lifestyle and the policy options you choose. Thankfully, there are some options to reduce your premium while still providing financial security for your family.

One of the most critical aspects that individuals consider before purchasing a term plan is a claims settlement process. Many policyholders are concerned about experiencing delays and frequent requests for paperwork in already challenging times. A 3-hour claims promise can help in this case. Term insurance plans offered by Axis Max Life Insurance provide a 3-hour claim intimation promise.
This feature aims to help nominees receive quicker claim support during emergencies. It can make the claims process faster and more convenient.

To be eligible for 3-hour Insta Claim:

• Your policy must have completed 3 continuous years
• Mandatory documents have been submitted before 3:00 pm on a working day.
• Claim amount on all eligible policies is less than ₹50L

The final stage of a term life insurance is the claim settlement. However, sometimes, the insurance claim gets rejected even after doing everything right as per you and paying premiums on time. Hence, it is important to take note of these important tips to know how to avoid of an insurance claim rejection later:

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