What are the features of term life insurance?

Term insurance plans secure your family’s financial future even when you are not around. These plans are considered by many as one of the basic financial necessities of life, especially in today’s times. Term insurance plans also have multiple features and benefits, right from affordable premiums to riders for additional covers.

Table of Contents Show

What are the benefits of term insurance?
Why choose term insurance plans?
People like you also read ...
What is term life insurance?
What was whole (of) life insurance?
Main features
Term life insurance
Whole life insurance
Key comparisons of each

What are the benefits of term insurance?

Term insurance offers multiple benefits to customers. Here are a few you should be aware of:

Affordable Premiums - You can get a high-value life cover from a term insurance plan by paying an affordable premium amount of ₹ 540/- p.m2a. Premium payments can be made either monthly/half-yearly/yearly. The earlier you buy a term insurance plan, the lower premium amount you have to pay.
Whole Life Cover - Term insurance plans offer substantially longer coverage. Whole life insurance plans offer coverage till the age of 99 years
Payout of Sum Insured - In case of the unfortunate demise of the person insured, the family members will receive the sum assured as a payout. The policyholder can choose for this payout to be in the form of a lump sum, an income that is either monthly or annual, a combination of lump sum and income or an increasing income at the inception. This will help take care of financial needs and household expenses among other costs
Critical Illness Coverage - In case optional Critical Illness Coverage1 is included in your term insurance plan, you will get a lump sum payout upon diagnosis of any critical illness1 that is covered in the plan
Accidental Death Benefit - You can add the Accidental Death Benefit benefit3 to your term insurance plan. This will offer protection against any mishaps in the future
Coverage for Terminal Illnesses - Term insurance plans can give you lump sum payouts in case of diagnosis of terminal illnesses2 such as AIDS
Tax** Benefits - You can get tax** benefits on premiums paid under Section 80C along with premiums paid towards critical illness benefit under Section 80D. The lump sum amount received by nominees as the sum assured/death benefit is also exempted from taxes subject to Section 10 (10D) of the Income Tax Act, 1961

Why choose term insurance plans?

Term insurance plans offer financial security for the entire family in case of the unfortunate death of the policyholder. Also, you can get optional coverage for critical illnesses or accidental death. You are covered for a long duration, while the premiums are affordable.

The ICICI Pru iProtect Smart term insurance plan offers the regular benefits of a term insurance plan with extensive Critical Illness Coverage. Here are a few key features of the same:

Longer coverage with the option to be covered until 99 years of age
Extensive coverage for 34 critical illnesses1 (optional)
Receive payouts upon the first diagnosis of any critical illness1 covered under the plan
Receive full payout of life coverage upon the diagnosis of any terminal illness2.
Pay lower premiums starting from ₹ 540/- per month2a
Choose from four payout options, namely Lump Sum, Lump Sum + Income, Increasing Income and Income

You can also buy term insurance online under the MWP (Married Women’s Property) Act4, ensuring that your insurance amount is protected and handed over to your spouse and/or children without being claimed wrongfully by creditors4.

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* The given premium is applicable for a 18 year old healthy male life with monthly mode of payment and premiums paid regularly for the policy term of 18 years with income payout option with Life Cover of ₹ 1 crore. Goods and Services tax and/or applicable cesses (if any) as per applicable rates will be charged extra

** Tax benefits are subject to conditions under Sections 80C, 80D, 10(10D),115BAC and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above

1 Critical Illness Benefit (CI Benefit) is optional and available under Life & Health and All in One options. This benefit is payable, on first occurrence of any of the 34 illnesses covered. Medical documents confirming diagnosis of critical illness needs to be submitted. The benefit is payable only on the fulfillment of the definition of the diagnosed critical illness. The CI Benefit, is accelerated and not an additional benefit which means the policy will continue with the Death Benefit reduced by the extent of the CI Benefit paid. The future premiums payable under the policy will reduce proportionately. If CI Benefit paid is equal to the Death Benefit, the policy will terminate on payment of the CI Benefit. To know more in detail about CI Benefit, terms & conditions governing it, kindly refer to the sales brochure. CI Benefit term would be equal to policy term or 30 years or (75-Age at entry), whichever is lower

2 A Life Assured shall be regarded as Terminally Ill only if that Life Assured is diagnosed as suffering from a condition which, in the opinion of two independent medical practitioners’ specializing in treatment of such illness, is highly likely to lead to death within 6 months. The terminal illness must be diagnosed and confirmed by medical practitioner registered with the Indian Medical Association and approved by the Company. The Company reserves the right for independent assessment

3 Accidental Death Benefit (ADB) is up to ₹2 Crore. ADB is available in Life Plus and All in One option. In case of death due to an accident Accidental Death Benefit will be paid out in addition to Death Benefit. Accidental Death Benefit will be equal to the policy term or (80-Age at entry), whichever is lower

4 Nothing herein contained shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of assurance, which may have been effected with intent to defraud creditors. In case of any third party claim in the Courts of India with regards the insurance proceeds, the amount shall be subject to the judiciary directions. Please seek professional legal advice for the applicability of this provision

2a The premium of ₹540/- p.m. has been approximately calculated for a 18 year old healthy male life with monthly mode of payment and premiums paid regularly for the policy term of 36 years with income payout option with Life Cover of ₹1 crore. Goods and Services tax and/or applicable cesses (if any) as per applicable rates will be charged extra

UIN: 105N151V06. Advt No.: W/II/2009/2020-21

Life insurance can be one of the most important things you may wish to consider as part of your financial decision making. Designed to pay a benefit in the event of your death, life insurance cover may help your family cope financially if life took a turn for the worse. The right product for you will depend on a range of factors, and in addition to your age, gender and smoking status your issuer will need to know about your health and lifestyle before they arrange cover for you.

Two common life insurances are term life insurance and whole life insurance. But the difference between the two can be confusing. This is because whole (of) life insurance was regarded as Australia’s most popular life insurance (and investment plan) products until 1991. Then compulsory Australian superannuation was introduced in 1992. From that point, whole life insurance was no longer sold in Australia. It was effectively replaced by term life insurance. The only whole life insurance cover holders are those who purchased prior to 1992.

NobleOak would like to shed light on term life and whole life insurances, some of their benefits and a comparison of some of their features. This following information will explain:

what term life insurance is
what whole life insurance is
some of the main features of each
a comparison of some features of each.

What is term life insurance?

Term life insurance – often simply known as “life cover” – protects the life insured for a defined level of cover that is payable in the event of their death, or (with some products, including NobleOak’s life cover) their diagnosis of a terminal illness. Some products will also ensure an advance payment is available immediately to cover funeral costs. Most products are automatically renewed each year (as long as the premiums are paid) with many providing cover through to age 99. In the event of a successful claim, the beneficiaries or insured person’s estate will receive a lump sum cash benefit following the insured person’s death.

What was whole (of) life insurance?

Whole (of) life insurance protected the cover holder for their entire life. As its name suggests, it provided cover for the whole of life, as long as the premiums were paid. In addition to the insurance component, it also had an investment component, called cash, or surrender value. The cash value accrued due to part of the premium being invested in a savings account, and interest accumulated. Typically, the policy could be ‘surrendered’ for the cash.

Whole (of) life insurance was known as ‘traditional life’ insurance, as it was the most popular form of life insurance from the late 1940s to late 1980s. It is still popular in some countries where superannuation is not available, nor as developed as in Australia

Main features

Term life insurance

Flexibility– it can be adjusted to suit your financial needs and changes in life. Under certain circumstances, the cover holder can apply to increase the death benefit when they have greater financial obligations, and they can also decrease as these obligations lessen.
Cost-effective – the cover holder only pays for the cost of the insurance component, not any additional cash value as with whole life insurance.
Regular reviews – as circumstances in life change, adjustments to the cover holder’s sum insured can generally speaking be made to help ensure they are not over or under insured. Life changes may include marriage, divorce, death of spouse, starting a family, embarking on education fees, or acquiring a new mortgage.

Whole life insurance

Guaranteed payout value – traditionally these products gave a guaranteed minimum payout, irrespective of the length of the cover holder’s life.
Death benefit guaranteed – except if the policy was surrendered.
Fixed premiums – these remained the same for the length of the cover holder’s life. Premiums did not alter with health changes. On the other hand, the cover holder would often overpay during their younger years, then underpay as they got older, and likelihood of death increased.
Investment component – an amount of the premium paid would be invested in a savings account, generally by the insurer, and grew at a guaranteed rate (cash value).
Include a surrender value – the policy could be terminated, the death benefit ‘surrendered’ and a cash amount collected (although some had surrender charges).

Key comparisons of each

Term life insurance	Whole life insurance
Automatically renews each year (as long as premiums are paid) until the cover expiry age.	Lasted for the whole of cover holder’s life.
Pays a nominated death benefit to beneficiaries or the estate if the policy holder dies or (with some term life cover) is diagnosed with a terminal illness whilst the policy is active and in force, up to the maximum expiry age.	Death benefit guaranteed.
No cash value or savings component.	Includes a cash value that could be invested, borrowed against (in some cases), or surrendered.
Often suited to those who want cover while they have financial dependants or commitments.	Often suited to those who wanted to leave an inheritance or money towards their funeral.
Premiums are based on the cover holder’s level of cover selected, age, gender, smoking status, health and lifestyle.	Premiums did not rise or fall relative to economic or health factors.
Usually attracts lower premium costs.	Higher premiums costs.

Remember, considering life insurance may one of the most important financial decisions you may make. To find out more about NobleOak life insurance products or get a quote, call a NobleOak Life Australian based insurance team member on 1300 014 494.