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How to Evaluate Term Insurance Quote

  6/27/23 6:27 AM

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When you are young and healthy, buying term insurance is probably the last thing on your list of priorities. It is often believed that you do not need a term plan at least until you are married. However, you might have dependents even in the early stages of your career whose financial standing might be compromised in your absence. Moreover, top term insurance plans can be purchased at a reasonable premium when you are young. Therefore, it is recommended that you invest in term insurance sooner rather than later.

Aside from offering a life cover, several term insurance benefits can be reaped by an insurance seeker. However, before you buy term insurance, it is recommended to check the term plan claim ratio, which is a metric to gauge the reliability of the insurance provider. 

The term insurance quote incorporates various components to provide a life cover; these include:

The Premium Amount Payable

The insurance provider offers term insurance by undertaking a risk analysis. If the risk profile of the insurance seeker is high, then the premium amount automatically increases. Age and health are the primary concerns for creating a risk profile and subsequently determining the term insurance premium.

This is why financial advisors recommend buying term insurance in the early stages of life. Your health is better when you are younger and deteriorates subsequently with age. The term insurance premium is steady throughout the policy term, which means that you can get the top term insurance plans at a reasonable price when you are young. You can compare the term plan online to find an affordable and sizable cover based on your financial needs.

The Basic Term Insurance Quote

In the early phase of your life, when you have limited responsibilities, you can opt for a basic term plan that is exclusive of the riders and taxes. The term insurance premium for a basic cover will factor in age, gender, and whether or not you are a smoker. This is because smoking reduces the life expectancy of an individual. A term insurance comparison observably reveals that the premium for a smoker is much higher as compared to a non-smoker for the same term plan.

When you compare the term plan online, you can get better rates for your policy. This is because the cost of distribution is eliminated in an online purchase. Ideally, it is recommended that you buy term insurance that is at least 10 to 15 times your annual income to supplement your family in your absence. However, the best term insurance policy also incorporates inflation and existing liabilities such as a house or business loan for comprehensive protection.

The Cost of Riders

A rider can be defined as an amendment to the basic cover. Aside from offering the base amount of the death benefit, riders provided an additional specified sum if the death occurs under the circumstances specified in the rider. One of the greatest term insurance benefits is that it can be molded to suit your financial preferences at different stages in life.

Riders can transform a basic cover to the best term plan. These add-ons are provided at an additional premium amount and have to be purchased separately. Common insurance riders include accidental death and disability rider, critical illness rider, and waiver of premium rider. With a rise in lifestyle diseases, a critical illness rider is highly recommended.

The Tax Factor

As life insurance is a service, it attracts the Service Tax that is payable by the policyholder. This standard cost is applied across different term insurance policies and insurance providers. Therefore, when you receive a term insurance quote, check whether or not it is inclusive of the Service Tax. Presently, 18% service tax is levied on insurance premiums. However, amongst numerous other benefits, term insurance is eligible for tax exemptions.

The three tax benefits you enjoy on the purchase of a term plan under the Indian Income Tax Act are:

  • Section 80C: Under this section, a deduction of up to ₹1.5 lakhs is permitted for term insurance premiums.
  • Section 80D: For coverage on premium paid towards health-based riders under a term plan, a deduction of up to ₹25,000 can be claimed by the policyholder. This would include the amount paid towards a critical illness rider.
  • Section 10(10D): This section states that the death benefit payable to the nominee in the event of the policyholder’s demise is exempted from taxes.

For an accurate term insurance quote, it is important to factor in taxes. The term plan claim ratio, which is the percentage of life insurance claims an insurer has settled during a financial year, must be checked before the purchase.

The Lapse Charges for Policy Revival

Timely premium payment can eliminate this cost, but to err is human. Usually, insurance companies provide a grace period for premium payment. However, if the premium is still not paid during the extended term, then additional charges are levied for the revival of the policy. These charges include due premiums payable, taxes, penalty fees, and the incurred interest.

The Medical Test Analysis

Insurance seekers more than 50 years of age are asked for a medical report for risk analysis. If their health is in good shape, the policy is seamlessly provided. However, if there are health concerns that are highlighted in the medical report, the insurance provider either reduces the tenure or asks for a higher premium payment.

Edelweiss Tokio term insurance is packed with innovative offerings that provide wholesome financial protection. It provides discounts on high sum assured and even covers you against unprecedented scenarios such as COVID-19. It has no medical option for a sum assured of up to ₹99,99,000, so you can purchase your insurance while staying indoors.  

For more details on our term plans, visit the website today!


Term insurance is an important inclusion in your financial portfolio, and therefore it needs to be purchased after careful analysis and not on a whim. Term insurance comparison is essential to find the top term insurance plans that perfectly accommodate your financial needs. Additionally, one must not neglect the term plan claim ratio to determine whether the insurance company delivers what it promises.


Aastha Mestry - Portfolio Manager 

An Author and a Full-Time Portfolio Manager, Aastha has 6 years of experience working in the Insurance Industry with businesses globally. With a profound interest in traveling, Aastha also loves to blog in her free time.

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