Finding the ideal life cover for your family is one of the most crucial decisions that you can make. While searching for the best term insurance in India, you will notice that insurance is no longer just a financial instrument tailored for men; today, women are earning, managing their households, taking care of their ageing parents, and building wealth. Be it a salaried corporate worker, self-employed businesswoman or a homemaker managing a household, all require financial security.
Choosing the right term insurance for women requires an in-depth analysis of how policies work. A good term plan should cater to your unique career, family needs, and ambitions. The points below will assist female buyers in comparing before buying a plan.
Why is term insurance important for women?
Term insurance is a type of life insurance where you pay a premium to an insurance company for a certain period. In return, if something untoward happens, the insurance company pays out a lump sum amount to your nominee to provide them with the financial protection that they may need.
Previously, it was the responsibility of the male breadwinner to take care of his family financially, and this notion is still prevalent in some parts of the country.
- For Working Females: If a working woman is the breadwinner of the family and her sudden demise would impact the family’s financial lifestyle adversely, then the term plan will restore the lost income stream so that the family can continue to pay rent, electricity, and other dues.
- For Homemakers: Homemakers contribute a lot to the smooth running of the house on a day-to-day basis. Now imagine that a homemaker is no longer able to fulfil her duties; then having to hire help for regular household chores, child-care, and elderly care will cost a pretty penny. Some insurers offer an independent term cover to homemakers on the spouse’s income.
Key factors female buyers should compare
All insurance plans do not offer the same benefits; therefore, while comparing it is important to look out for certain features.
1. Getting discounts on premiums
Did you know that women tend to pay lower premiums for the same sum assured as compared to men? According to insurance data, women have a higher life expectancy rate as compared to men. Therefore, insurers give discounts to their premium amount due to lower risk exposure.
While comparing plans, look out for the final premium amount after the discount as some companies give an additional discount on online premium payments through their official websites. Always check if there is a specific premium rate for your age and income group.
2. Critical illness coverage for female health risks
Health issues do not discriminate between the rich and the poor. In addition to a standard risk cover, a term insurance rider helps your nominee in case of serious illnesses.
Critical Illness Rider: This rider can be added upon purchasing a new term plan or by enhancing an existing policy.
In case of a pre-defined critical illness diagnosis, the claim amount will be paid to the policyholder for treatment costs or to compensate for the income loss suffered during recovery. Female buyers should look out for riders that cover female-specific health concerns such as breast cancer, cervical cancer, or ovarian health issues. Policyholders should check the policy document to look out for covered and excluded illnesses.
3. Pregnancy or maternity premium breaks
Your financial needs change as your family grows. Pregnancy and maternity leave can cause a cash flow crunch in your finances. Some insurers offer a new feature to their customers that allow them to take a break from premium payments for a certain period.
For instance, in some plans, you can pause your premium payments for 12 months during pregnancy and settle the pending amount in accordance with the terms and conditions of the policy. Female buyers should look for this feature when considering a term plan.
4. Waiver of Premium rider
Sometimes, a critical ailment or accident can leave you disabled and unable to work. What will happen to your term insurance policy then?
When a rider called the Waiver of Premium is attached to a term insurance plan, all future premiums are waived in the case of total disability or a critical illness as defined in the rider terms.
5. Claim Settlement Ratio (CSR)
The Claim Settlement Ratio reveals the percentage of death claims settled by an insurer against the total number of claims received by it in a given year. For instance, if an insurer settles 98 out of 100 death claims, then its CSR will be 98%. Though a high CSR is important, it is best to also look at an insurer’s Amount Settlement Ratio (ASR), which is the ratio of the total amount of claims settled against the total amount of claims received.
Understanding tax provisions under the new income tax act, 2025
Tax laws play an essential role in your financial planning. When buying term insurance, it is important to understand tax provisions related to term insurance.
Here are the key tax laws that apply to term insurance:
- Section 123 (Deduction for base premiums): Under Section 123, a tax deduction on the base term insurance premium is allowed. Section 123 allows a deduction of up to ₹1,50,000 on the total premium amount paid during the year. However, the total deduction under Section 123 shall not exceed 10 per cent of the sum assured for policies issued under the standard guidelines for term life assurance. It is pertinent to note that the deductions on the investment made under section 123 shall be applicable to the taxpayer under the old tax regime.
- Section 126 (Deduction for health-related riders): In case of eligible health-related riders attached to a term plan, an additional deduction will be allowed under section 126. The deduction limit under section 126 is up to ₹25,000 for individuals below the age of 60. For senior citizens, the deduction limit is up to ₹50,000.
- Schedule II(2) (Exemption on death benefits): Under Schedule II(2), the death benefit received by a nominee on the death of an insured person is totally exempt from income tax, provided the policy meets all the requirements laid out in the tax law.
Note: Tax laws and exemptions differ depending on an individual’s circumstances, tax regimes, and official tax guidelines. It is always best to consult with a qualified tax advisor.
Simple steps to buying term insurance online
- Calculate your required cover: As a rule of thumb, your insurance cover should be at least 10 to 15 times your annual income. In addition, calculate the amount of loans, expenses for your children’s education, and household expenses.
- Compare quotes: Get quotes from different insurance companies and compare the base premium, riders, and claim settlement ratio.
- Fill the proposal form honestly: Avoid providing false information about your health status, preexisting illnesses, lifestyle, and existing insurance policies. Completing the form honestly avoids any complications while settling a claim.
- Complete the medical test: Most insurers require a medical test for a higher sum assured. However, most companies offer a home visit for the medical test free of cost.
