5 Best Term Insurance Policies in India (2025): A Comprehensive Guide

Term insurance is one of the most cost-effective ways to secure your family’s financial future in case of an unfortunate event. With the increasing awareness of financial planning, term insurance has become a crucial part of every individual’s portfolio. In this blog, we’ll dive deep into the 5 best term insurance policies in India for 2025, their features, benefits, and why they stand out in the market. Whether you’re a first-time buyer or looking to switch policies, this guide will help you make an informed decision.

Why Term Insurance is Essential

Term insurance provides a pure life cover at an affordable premium. It ensures that your loved ones are financially protected in case of your untimely demise. Unlike other insurance plans, term insurance does not offer maturity benefits but focuses solely on providing a high sum assured at a low cost. It’s a must-have for anyone with financial dependents.

Top 5 Term Insurance Policies in India (2025)

1. LIC e-Term Insurance Plan

LIC (Life Insurance Corporation of India) is a trusted name in the insurance industry. Its e-Term Insurance Plan is a pure term plan that offers comprehensive coverage at an affordable price.

Key Features:

Online Purchase: The plan can be bought online without any intermediaries.
Affordable Premiums: Lower premiums compared to offline plans.
Death Benefit: The sum assured is paid to the nominee in case of the policyholder’s death.
No Maturity Benefit: Pure term plan with no payout if the policyholder survives the term.
Tax Benefits: Premiums qualify for tax deductions under Section 80C, and the death benefit is tax-free under Section 10(10D).

Why Choose LIC e-Term?

Trusted brand with a strong claim settlement ratio.
Simple and transparent terms.
Ideal for those looking for a basic, no-frills term plan.

2. ICICI Pru iProtect Smart

ICICI Prudential’s iProtect Smart is a feature-rich term insurance plan that offers coverage for critical illnesses along with life protection.

Key Features:

Critical Illness Cover: Covers 34 critical illnesses.
Flexible Payout Options: Choose from 4 payout options (Life, Life Plus, Life & Health, All-in-One).
Accidental Death Benefit: Optional rider for additional coverage.
Waiver of Premium: In case of permanent disability due to an accident, future premiums are waived.
Tax Benefits: Premiums and death benefits are tax-free under applicable sections.

Why Choose ICICI Pru iProtect Smart?

Comprehensive coverage with critical illness and accidental death benefits.
Flexible options to customize the plan as per your needs.
High claim settlement ratio.

3. SBI Smart Shield

SBI Life’s Smart Shield is a simple yet effective term insurance plan designed to provide financial security to your family.

Key Features:

Death Benefit: Sum assured is paid to the nominee in case of the policyholder’s death.
Surrender Option: Available after the second year for single premium policies.
No Survival Benefit: Pure term plan with no maturity payout.
Affordable Premiums: Competitive pricing for high coverage.

Why Choose SBI Smart Shield?

Backed by India’s largest bank, SBI.
Simple and straightforward plan with no complex features.
Ideal for those looking for basic life coverage.

4. HDFC Click 2 Protect Plus

HDFC Life’s Click 2 Protect Plus is a versatile term insurance plan that offers life stage protection and flexible payout options.

Key Features:

Life Stage Protection: Increase coverage during milestones like marriage or childbirth.
Accidental Death Benefit: Optional rider for additional protection.
Flexible Payouts: Choose between lump sum or monthly payouts.
Tax Benefits: Premiums and death benefits are tax-free under applicable sections.

Why Choose HDFC Click 2 Protect Plus?

Customizable coverage to suit changing life needs.
Option to increase sum assured during key life events.
Trusted brand with a strong customer base.

5. Max Online Term Plan Plus

Max Life’s Online Term Plan Plus is a comprehensive term insurance plan that offers financial protection against death, disability, and critical illnesses.

Key Features:

Critical Illness Cover: Optional rider for additional protection.
Monthly Income Option: Choose to receive a monthly income along with the lump sum payout.
Flexible Premium Payment: Pay premiums monthly, quarterly, half-yearly, or annually.
High Coverage Age: Coverage available up to 85 years.

Factors to Consider Before Choosing a Term Insurance Plan

Choosing the right term insurance plan is a critical decision that requires careful consideration of various factors. Here are the key aspects you should evaluate before selecting a term insurance policy:

1. Risk Coverage

The primary purpose of term insurance is to provide financial security to your family in case of your untimely demise. Ensure that the sum assured is sufficient to cover your family’s future expenses, including daily living costs, education, loans, and other liabilities. A good rule of thumb is to opt for a sum assured that is 10-15 times your annual income.

2. Varied Plans

Insurance companies offer a range of term insurance plans tailored to different needs. Some plans focus solely on life coverage, while others include additional benefits like critical illness cover, accidental death benefit, or income payout options. Choose a plan that aligns with your financial goals and family’s requirements.

3. Health Benefits

Many term insurance plans now offer riders for critical illnesses, hospitalization, and surgical expenses. These riders provide an additional layer of protection, ensuring that you and your family are covered not just for life risks but also for health-related emergencies.

4. Inculcates Savings Culture

While term insurance is primarily a protection plan, some policies come with savings or investment components. These plans help you accumulate wealth over time while ensuring life coverage. However, pure term plans are generally more affordable and provide higher coverage.

5. Additional Income

Some term insurance plans offer guaranteed income options where the nominee receives regular payouts (monthly or quarterly) in addition to the lump sum amount. This can be particularly useful for families who rely on a steady income to meet their daily expenses.

6. Availing Loan

Certain term insurance policies allow you to avail loans against the policy. This feature can be beneficial during financial emergencies. However, this facility is available only on selected policies, so check the terms and conditions before purchasing.

7. Tax Benefits

One of the most attractive features of term insurance is the tax benefits it offers. Premiums paid towards term insurance qualify for deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakh per year. Additionally, the death benefit received by the nominee is tax-free under Section 10(10D).

How to Choose the Best Term Insurance Plan?

Assess Your Needs: Determine the sum assured based on your income, liabilities, and future expenses.
Compare Plans: Use online comparison tools to evaluate premiums, features, and benefits.
Check Claim Settlement Ratio: A higher ratio indicates better reliability.
Look for Riders: Add-ons like critical illness or accidental death riders can enhance coverage.
Read the Fine Print: Understand exclusions, waiting periods, and other terms.