Term Insurance in India (2026): How Much Cover, Plan Types, Riders and How to Buy
Last updated: 31 October 2026
Quick answer: Term insurance pays your family a lump sum if you die during the policy term, and nothing if you outlive it. Start with cover of about 10 to 15 times your annual income, then adjust for loans, goals and savings. Pick a level-cover plan that runs until your dependants no longer need your income, disclose your health and habits fully, and keep the policy alive. Individual term premiums carry no GST since 22 September 2025.
Last updated: 31 October 2026 Quick answer: Term insurance pays your family a lump sum if you die during the policy term, and nothing if you outlive it. Start with cover of about 10 to 15 times your annual income, then adjust for loans, goals and savings. Pick a level-cover plan that runs until your dependants no longer need your income, disclose your health and habits fully, and keep the policy alive. Individual term premiums carry no GST since 22 September 2025. Key takeaways How much: 10 to 15 times income is a starting point; a needs-based gap calculation is better. How long: match the term to when loans end and children become independent, not to a round number. Plan type: level term is the default; return-of-premium plans cost far more for a low return. Disclosure: honest answers on health, smoking and income protect the claim; Section 45 limits challenges after three years. Safety nets: a 30-day free-look period lets you cancel a new policy after reading it. New to this topic? Start with the basics in our free Academy lesson: Term life cover: calculate the dependent-income gap (/learn/protecting-your-family/term-life-insurance) → Term insurance is the simplest and cheapest way to protect the people who depend on your income. It is also the product most often replaced by something that looks more attractive: a savings plan, a ULIP, or just the cover your employer provides. This guide explains how term insurance works, how to size it, which plan type to choose, what riders are worth it, and how to buy and keep a policy so that your family can actually claim it. What term insurance does, and what it does not You pay a premium each year. If you die during the term, the insurer pays the sum assured to your nominee. If you are alive when the term ends, the policy simply stops, and no money comes back unless you chose a return-of-premium variant. Because there is no savings element, term cover costs far less than an endowment or money-back plan for the same amount of protection. Our insurance planning guide (/insights/insurance-planning-guide-india) explains why protection and investing work best when kept separate. How much term cover do you need? A common shortcut is 10 to 15 times your annual income. It is a fair starting point, but it ignores your loans, your goals and what you already own. A better method counts what your family would need and subtracts what they would already have. Step Illustrative figure Income support: ₹5 lakh a year for 20 years, in today's rupees ₹1 crore Add outstanding debt ₹30 lakh Add other dated goals, such as education not already counted ₹20 lakh Total need ₹1.5 crore Less assets genuinely available to the family ₹20 lakh Less existing personal life cover ₹25 lakh Additional cover to buy ₹1.05 crore This is a Money n Wealth illustration, not a recommendation. Your numbers will differ with inflation, survivor income and how long the support is needed; our Academy lesson on calculating the dependent-income gap (/learn/protecting-your-family/term-life-insurance) walks through the method. Two cautions apply. Do not count your own home as spendable money if the family will keep living in it. And do not rely on employer group cover as your main protection: it usually ends when the job does, as our guide for people facing a layoff (/insights/laid-off-money-plan-it-professionals) explains. How long should the policy run? Choose a term that covers the years your family depends on your income. Check when your home loan ends, when your children should be independent and when you plan to retire. Cover that ends too early leaves a gap, while cover that runs far beyond the need costs more. Review the term when your loans or family change. Which type of term plan should you choose? Type How it works Who it suits Level term Sum assured stays the same for the whole term Most people; the default choice Increasing cover Sum assured rises each year, at a higher premium People who worry about inflation and can afford higher premiums Decreasing cover Sum assured falls over time, usually tied to a loan Covering a specific declining debt Return of premium Premiums are returned if you survive the term; costs much more Rarely worth it; compare the implied return first For return-of-premium and other guaranteed plans, calculate the real return before you buy. Our guide to the real IRR of guaranteed-return plans (/insights/guaranteed-return-endowment-plan-real-irr) shows how a headline that sounds like tripling your money can work out to a modest yearly return. If you are tempted by a ULIP instead, read ULIP vs term plan plus mutual fund (/insights/ulip-vs-term-plus-mutual-fund) : in our example, ₹1 lakh a year buys about ₹10 lakh of cover in a ULIP versus about ₹1 crore in a term plan. Riders: which add-ons are worth considering Accidental death benefit: pays an extra amount if death is due to an accident. Useful if you travel a lot, but check the exclusions. Critical illness: pays a lump sum on diagnosis of a listed illness. A standalone policy is often more flexible; see our critical illness insurance guide (/insights/critical-illness-insurance-guide) . Waiver of premium: keeps the cover running if you can no longer pay after a disability or illness. Disability cover: a term plan pays only on death, so income loss from disability needs separate protection; see personal accident insurance (/insights/personal-accident-disability-insurance) . Every rider adds cost and its own conditions. Add only the ones that fill a real gap. What decides your premium? Your age, smoking status, health, sum assured, policy term and the way you pay all affect the price. The earlier you buy, and the healthier you are when you buy, the cheaper the cover. A smoker pays noticeably more than a non-smoker, and hiding the habit risks the claim. Premiums vary by insurer and change, so compare current quotes rather than relying on any figure printed in an article. Individual life insurance premiums, including term plans, are exempt from GST from 22 September 2025, down from 18% earlier. The exemption covers individual policies only; group policies such as employer-provided cover can still attract GST. Insurers also lost the ability to claim input tax credit, so how much premiums fall in practice can vary. How to buy a term plan well Fix the cover and term first. Use the gap method above before you look at products. Compare more than the premium. Look at the claim settlement ratio by number and by amount; our guide to reading claim settlement data (/insights/claim-settlement-ratio-explained) explains the traps. Indian life insurers settled 97.82% of individual death claims by number in 2024-25, according to IRDAI. Disclose everything. State your health, medications, smoking, alcohol and income accurately. Under Section 45 of the Insurance Act, a life policy generally cannot be challenged after three years except for proven fraud, but the first three years are the risky ones. Use the free-look period. You get 30 days from receiving the policy document to read it and cancel if it does not match what you were told. Set up the nominee properly. Read nominee vs legal heir (/insights/nominee-vs-legal-heir-india) so you know what a nominee can and cannot claim. Tell your family. Your nominee must know the insurer, the policy number and where the papers are; see what your nominee must know about the claim process (/insights/term-insurance-claim-process-nominee-guide) . Married men can also buy under the Married Women's Property Act, which protects the proceeds for the wife and children; our guide to term insurance for homemakers and self-employed women (/insights/term-insurance-for-homemakers-women) covers MWPA and cover for homemakers. Tax on term insurance Premiums qualify for a deduction under Section 80C, which is section 123 of the Income-tax Act, 2025, but only in the old tax regime; see our guide to the new section numbers (/insights/income-tax-act-2025-changes-individuals) . The sum paid to your nominee on death is generally tax-free in their hands. Confirm the conditions for your policy with a tax professional. Seven term insurance mistakes to avoid Buying too little because the premium looks low on a smaller cover. Treating an endowment plan or ULIP as a substitute for term cover. Relying only on employer group cover that ends with the job. Hiding smoking, health history or true income to get a lower premium. Choosing on the cheapest premium without checking the claim record and rider terms. Letting the policy lapse by missing premium dates; set up auto-pay. Never telling the family the policy exists. See our checklist of mis-selling red flags (/insights/mis-selling-red-flags-insurance-investments) before you sign. Term insurance for IT professionals in Pune Many Pune professionals in IT parks like Hinjewadi and Kharadi depend on a single high salary, carry a home loan and rely on group cover through their employer. That combination argues for a personal term plan sized to the loan and to dependants' needs, bought early while premiums are low. Our page on term insurance advice in Pune (/insights/term-insurance-advisor-pune) covers local questions, and health cover for corporate employees (/insights/health-insurance-for-corporate-employees-pune) covers the health side. Frequently Asked Questions How much term insurance should I buy? Start with 10 to 15 times your annual income, then add loans and unfunded goals and subtract assets and existing personal cover. A needs-based calculation is more reliable than a flat multiple. Is the maturity amount returned in a term plan? No. A pure term plan pays only if you die during the term. Return-of-premium variants refund premiums at the end, but they cost much more. Is GST charged on term insurance? Not on individual policies since 22 September 2025. Group policies, such as employer-provided cover, can still attract GST. Can I cancel a term policy after buying it? Yes, during the 30-day free-look period from receiving the policy document. After that, you can stop paying, but the cover then lapses. Can an insurer reject my claim after three years? Under Section 45 of the Insurance Act, an insurer generally cannot question the policy after three years, except for proven fraud. Accurate disclosure at the start still matters. Related Reading Insurance Planning in India: A Complete Guide to Term, Health and Life (/insights/insurance-planning-guide-india) Term Insurance for Homemakers and Self-Employed Women: 2026 Guide (/insights/term-insurance-for-homemakers-women) ULIP vs Term Plan Plus Mutual Fund (2026): An Honest Comparison (/insights/ulip-vs-term-plus-mutual-fund) Claim Settlement Ratio Explained: How to Read IRDAI Data in 2026 (/insights/claim-settlement-ratio-explained) Term Insurance Claim Process: 9 Things Your Nominee Must Know (2026) (/insights/term-insurance-claim-process-nominee-guide) Academy: Term life cover: calculate the dependent-income gap (/learn/protecting-your-family/term-life-insurance) Sources: Business Today, GST exemption on individual life and health insurance (https://www.businesstoday.in/personal-finance/insurance/story/gst-exemption-cuts-insurance-premiums-by-up-to-rs-3050-actual-savings-may-average-to-rs-900-check-details-495275-2025-09-23) ; Angel One, GST exemption and input tax credit (https://www.angelone.in/news/taxation/insurance-premiums-gst-free-from-sept-22-2025-costs-may-still-rise) ; PolicyX, Section 45 three-year rule (https://www.policyx.com/life-insurance/articles/3-year-rule-in-term-insurance/) ; IRDAI Master Circular on life insurance products, free-look period (https://taxguru.in/wp-content/uploads/2024/06/Master-Circular-is-issued-under-the-provisions-Of-Section-34.pdf) ; IRDAI Annual Report 2024-25 (claim settlement data, as cited in our claim settlement guide). Worked examples are Money n Wealth illustrations. Not sure how much term cover your family needs? Bring your income, loans and goals, and we will work through the gap with you. Talk to Money n Wealth (/contact) for a free review, or see our term insurance advice in Pune (/insights/term-insurance-advisor-pune) . This article is for general educational purposes only and does not constitute financial advice. Figures and examples are illustrative. Please consult a qualified financial adviser for guidance specific to your situation. Money n Wealth (Predics Fintech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor (ARN-121995) and APMI-registered PMS Distributor (APRN07444); it is not a SEBI-registered investment adviser and may earn distribution commission on investments made through it. Insurance is the subject matter of solicitation.
Frequently Asked Questions
How much term insurance should I buy?
Start with 10 to 15 times your annual income, then add loans and unfunded goals and subtract assets and existing personal cover. A needs-based calculation is more reliable than a flat multiple.
Is the maturity amount returned in a term plan?
No. A pure term plan pays only if you die during the term. Return-of-premium variants refund premiums at the end, but they cost much more.
Is GST charged on term insurance?
Not on individual policies since 22 September 2025. Group policies, such as employer-provided cover, can still attract GST.
Can I cancel a term policy after buying it?
Yes, during the 30-day free-look period from receiving the policy document. After that you can stop paying, but the cover then lapses.
Can an insurer reject my claim after three years?
Under Section 45 of the Insurance Act, an insurer generally cannot question the policy after three years, except for proven fraud. Accurate disclosure at the start still matters.