{"id":12258,"date":"2026-05-22T13:39:31","date_gmt":"2026-05-22T13:39:31","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/term-insurance\/"},"modified":"2026-05-22T13:39:31","modified_gmt":"2026-05-22T13:39:31","slug":"term-insurance","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/term-insurance\/","title":{"rendered":"Term Insurance"},"content":{"rendered":"<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/term-insurance\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Term insurance<\/a> is the purest form of <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/life-insurance\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">life insurance<\/a>. You pay a fixed <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/premium\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">premium<\/a> for a defined term &#x2014; typically 20 to 40 years &#x2014; and if you pass away during that term, the insurer pays a pre-agreed sum to your nominee. There is no maturity benefit if you survive. Because it is risk cover only (no investment component), term insurance offers the largest <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/sum-assured\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">sum assured<\/a> for the lowest premium &#x2014; making it the foundation of any family&#x2019;s financial plan.<\/p>\n<div><strong>Key takeaways:<\/strong>\n<ul>\n<li>Term insurance is pure life cover &#x2014; no maturity benefit.<\/li>\n<li>Offers the highest sum assured for the lowest premium.<\/li>\n<li>Should be at least 10&#x2013;15&#xD7; your annual income.<\/li>\n<li>Premium is typically locked at policy start; younger buyers get lower rates.<\/li>\n<li><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/section-80c\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Section 80C<\/a> deduction on premium; payout to nominee is <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>tax<\/a>-free under <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/section-1010d\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Section 10(10D)<\/a>.<\/li>\n<\/ul>\n<\/div>\n<h2 id=\"how-term-insurance-works\">How term insurance works<\/h2>\n<ol>\n<li>You choose a sum assured (e.g., &#x20B9;1 crore) and policy term (e.g., 30 years).<\/li>\n<li>Insurer calculates premium based on your age, health, occupation, smoking status.<\/li>\n<li>You pay the premium annually (or monthly), typically for the full term or a shorter pay-period.<\/li>\n<li>If you die during the term, the insurer pays the nominee the sum assured tax-free.<\/li>\n<li>If you survive, the policy ends with no payout (this is the trade-off for lower premiums).<\/li>\n<\/ol>\n<h2 id=\"why-term-insurance-is-essential\">Why term insurance is essential<\/h2>\n<ul>\n<li>Protects dependants from financial ruin if the breadwinner dies prematurely.<\/li>\n<li>Costs a fraction of other life products with similar coverage.<\/li>\n<li>Lets you replace future income for 20&#x2013;30 years with a single financial product.<\/li>\n<li>Premiums are stable; locking in young saves money over a lifetime.<\/li>\n<\/ul>\n<h2 id=\"how-much-cover-do-you-need\">How much cover do you need?<\/h2>\n<p>Rule of thumb: 10&#x2013;15&#xD7; your annual income. For dual-income households, use combined income or assess each earner separately. Account for <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/liabilities\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">liabilities<\/a> (home loan, business loans) and dependants (children, parents). A 30-year-old earning &#x20B9;12 lakh per year typically needs cover of &#x20B9;1.5&#x2013;&#x20B9;2 crore.<\/p>\n<h2 id=\"term-insurance-variants\">Term insurance variants<\/h2>\n<table>\n<tr>\n<th>Variant<\/th>\n<th>Use case<\/th>\n<\/tr>\n<tr>\n<td>Pure Term<\/td>\n<td>Standard cover; most economical<\/td>\n<\/tr>\n<tr>\n<td>Term with Return of Premium<\/td>\n<td>Returns premiums on survival; higher cost<\/td>\n<\/tr>\n<tr>\n<td>Increasing Cover<\/td>\n<td>Sum assured rises annually to match <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/inflation\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">inflation<\/a><\/td>\n<\/tr>\n<tr>\n<td>Decreasing Cover<\/td>\n<td>Cover reduces as liabilities (loans) decrease<\/td>\n<\/tr>\n<\/table>\n<h2 id=\"riders-that-add-value\">Riders that add value<\/h2>\n<ul>\n<li><strong>Accidental death:<\/strong> Doubles payout in case of accidental death.<\/li>\n<li><strong>Critical illness:<\/strong> Lump-sum payout on diagnosis of specific illnesses.<\/li>\n<li><strong>Waiver of premium:<\/strong> Insurer waives future premiums on disability.<\/li>\n<li><strong>Terminal illness:<\/strong> Pays sum assured on diagnosis of terminal illness, before death.<\/li>\n<\/ul>\n<h2 id=\"tax-benefits\">Tax benefits<\/h2>\n<p>Premiums up to &#x20B9;1.5 lakh are deductible under Section 80C (in the old tax regime). Payouts under Section 10(10D) are entirely tax-free for the nominee, with no upper limit. Riders may have separate tax treatment &#x2014; check with the insurer.<\/p>\n<h2 id=\"frequently-asked-questions\">Frequently asked questions<\/h2>\n<div>\n<h3 id=\"why-is-term-insurance-so-cheap\">Why is term insurance so cheap?<\/h3>\n<p>It is pure risk cover with no investment or maturity component. Insurer pays only if the insured dies during the term.<\/p>\n<h3 id=\"should-i-buy-term-insurance-online\">Should I buy term insurance online?<\/h3>\n<p>Yes. Online policies are cheaper because they cut out intermediary commissions.<\/p>\n<h3 id=\"at-what-age-should-i-buy\">At what age should I buy?<\/h3>\n<p>As early as possible &#x2014; premiums are locked at your purchase age, and younger entries cost less.<\/p>\n<h3 id=\"what-if-i-survive-the-term\">What if I survive the term?<\/h3>\n<p>You don&#x2019;t receive anything (in pure term). It is similar to car insurance &#x2014; you paid for protection, not investment.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Term insurance is the purest form of life insurance. You pay a fixed premium for a defined term &#x2014; typically 20 to 40 years &#x2014; and if you pass away during that term, the insurer pays a pre-agreed sum to your nominee. There is no maturity benefit if you survive. Because it is risk cover [&#x2026;]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-12258","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"Term insurance is the purest form of life insurance. You pay a fixed premium for a defined term &#x2014; typically 20 to 40 years &#x2014; and if you pass away during that term, the insurer pays a pre-agreed sum to your nominee. There is no maturity benefit if you survive. Because it is risk cover&hellip;","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/12258","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/12258\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=12258"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}