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If you're the primary breadwinner in your family, it is advisable to have life insurance form an essential part of your investment portfolio. It ensures that your beneficiaries and dependents have a financial safety net to depend on in case of your unfortunate demise later in life. If you're interested in investing in insurance, a term plan may be a good option to consider.

So, what is a term insurance plan? How does it work? And what are its primary features and main advantages? If these are some questions on your mind, here's everything you need to know about term insurance.

What is term insurance?

Term insurance is a kind of life insurance provides a protective life cover to the policyholder. It is essentially a legally binding contract between the insured and the insurer. The person investing in the term plan agrees to pay premium charges to the insurance service provider. In return, the insurer promises a protective financial cover over the life of the insured person. The insurance cover offered by a term insurance plan is valid only for a particular term. This term can range from 10 years to 30 years or more, depending on the age at which you invest in the plan.

How does term insurance work?

Term insurance is a simple investment option that offers many benefits. Understanding how it works can help you see why it's an essential investment option. Here are the key points about how a term plan functions.

  • When you invest in a term insurance policy, you agree to pay premium charges to the insurer.
  • This premium can be paid as a lump sum amount or as periodic payments.
  • If you choose to pay your premium periodically, you can do so on a monthly, quarterly, semi-annual, or annual basis, depending on the plan you opt for.
  • In return, the insurer offers you a protective life cover.
  • In case the policyholder passes away during the term of the plan, the insurer shall pay a sum assured, also known as death benefits, to the beneficiaries of the insured person.
  • If the policyholder survives the term of the plan, no benefits are paid out by the insurance provider.

What are the primary features of a term insurance plan?

Having understood what is a term insurance plan, the next important thing is to take a look at the primary features of this type of insurance. Here are some of the defining features of a term plan.

Affordable premiums: A term plan is the most affordable kind of life insurance, since the premium charges are much lower for a term insurance scheme than for other kinds of insurance plans. This is because a term plan offers a pure protective life cover that includes death benefits alone.

Easy to purchase: Purchasing term insurance plans is extremely easy, since it's possible to invest in a policy online, by using the web portal of the insurance service provider. Alternatively, you can also approach an insurance agent to purchase a term plan or visit any branch office of the insurance company to make your investment.

Flexibility: Term plans offer flexible premium payment options, so investors can choose the schedule that they find most convenient. If you prefer to pay your premium upfront, you can opt for a single premium plan. You can also choose to pay your premium periodically each month, every six months, or every year, depending on the terms and conditions of the plan.

Add-on riders: In addition to death benefits, some term insurance plans also offer added benefits in the form of add-on riders. You can purchase this extended coverage by paying additional charges. Riders include critical illness benefits, waiver of premium, accidental death benefits, and permanent and total disability benefits.

How can a term plan benefit you?

A term insurance plan has the potential to offer several benefits to investors. Explained here are some of the benefits you get to experience when you invest in a term plan.

High life cover at low premium costs

Term insurance plans offer you a high life cover at extremely affordable premium charges. The premium rates for a term plan are much lower than the charges payable for other kinds of life insurance. This makes term plans perfect for investors who intend to invest in a purely protective life cover.

Tax benefits

The premium paid for purchasing or renewing a term insurance policy can be claimed as a deduction by investors. Section 80C of the Income Tax Act allows you to deduct the premium amount from the total income, thereby bringing down the taxable amount. This, in turn, reduces your tax liability. In addition to this, the death benefits paid out to your beneficiaries are also exempt from tax, as per the provisions of section 10 (10D).


Term insurance plans are straightforward insurance schemes that help protect your future and the future of your family. Canara HSBC Oriental Bank of Commerce has developed the iSelect+ Term Plan specifically for investors who're keen on obtaining a protective life cover with customizable benefits. This plan offers policyholders enhanced coverage in the form of Accidental Death Benefit, Accidental Total and Permanent Disability, and even Child Support Riders. Moreover, policyholders can even tailor their payout options (lumpsum, monthly income or lump sum + monthly income) and pick from three different coverage options -increasing, decreasing and level.