5 Year Term Life Insurance Policy in India

1. Offers coverage to the insured for five years

1. After the annual renewable term insurance policy, this is one of the shortest term life insurance plan

1. Offers higher rates unlike the other short term life insurance plan

1. Converting the policy once it expires is allowed to the insured

Features and Benefits

Some of the salient features and benefits of a 5 year term life insurance policy are mentioned below.

1. Death benefit In the event of unfortunate demise of policyholder during this term period, his/her nominee will receive a death benefit which is generally higher than the death benefit offered by traditional plans.
2. Income Tax benefit Individuals can avail income tax benefits under Section 80C of the Income Tax Act, saving tax and reducing the financial burden on a taxpayer.
3. Surrender benefit Policyholders are entitled to surrender benefits if they choose to surrender their policies before maturity.
4. Additional riders Policyholders can choose to avail extra cover by adding additional riders to their plan, enhancing protection to meet their individual requirements.
5. Low premiums 5 year policies can come with low premiums, depending on the age of policyholder. Flexible payment modes and discounts make these premiums light on the pocket.
6. Loans It is possible to avail loans against these policies.
7. Planning Opting for this scheme helps one plan for the immediate future, knowing where to invest money and offering peace of mind for this period.
8. Level cover benefits: As long as the policy is in force, the sum assured under this policy remains fixed and is payable only after death of the insured person.

Sum assured on death = Highest of 10 time of (either 105% of all the premiums paid as on the date of death, annualised premium, or absolute amount assured at the time of death

1. Increasing cover benefit: At the end of fifth year, the assured sum under the policy increases by 10% automatically

Note These features and benefits might vary depending on the service provider and it is recommended to check with the provider first.

Eligibility Criteria for Five Year Term Life Insurance Policy

The following is the list of eligibility criteria that must be fulfilled by the applicant to avail themselves of the benefits of five-year term life insurance policy:

1. Minimum age to avail this plan is 18 years.
2. Maximum age to avail this plan is 65 years and it will be 55 years if premium is paid till 60 years.
3. The maturity age depends on the insurer policy.
4. The total assured amount and premium payment tenure will also depend on the type of insurer.
5. The policy ternure ranges between five to 67 years or 100 years age for fixed-term coverage.
6. Premium payment mode that the applicant must opt for should be either single, yearly, monthly, or semi-annually.

Documents Required to Apply for Five Year Term Life Insurance Policy

The following are some of the vital documents that are required to apply for five-year term life insurance plan:

1. Income proof of a salaried individual (any one of the following):

o   Current Form 16

o   Income Tax Return for last two years

o   Bank statement for last three months' salary credit details

1.  For address

o   Utility bill for last one or two months that includes telephone bill, water bill, piped gas bill, electricity or post-paid mobile bill

o   Pension order issued to the retired individuals

o   Property Tax Receipt from the Municipality

o   Accommodation allotment letter from the employer by state or central government, scheduled commercial bank, financial institutions, PSUs, regulatory bodies, or listed companies

1. Valid official documents (any one of the following):

o   Aadhar card

o   Passport

o   Voter ID

o   Signed job card issued by NREGA

o   National Population Registration letter with required details, such as name, Aadhar number, and address

1. PAN card or Form 60 in addition to the above mentioned valid official documents

Additional Benefits of Five Year Term Life Insurance Policy

Here is the list of some of the additional benefits of availing five-year term life insurance plan:

1. Medical Second Opinion Service: This report provides a detailed treatment plan made by the attending physician and is an add-on benefit to the five-year term life insurance plan.

1. In-built accelerated terminal illness benefits: Under this policy, there is a provision enabling this add-on benefit, under which lump sum would be paid to insured person if he or she is expected to die within 12 months due to an end-stage illness.

1. Tax benefits: Under section80C and 10(10D) of the Income Tax Act 1961, this insurance policy offers tax benefits on all the premiums paid and benefits earned. The death benefits are also subject to tax benefits as per the benefit opted by the insured.

1. Limited premium payment option: This insurance plan offers flexibility to pay premium till the age of 60 years to the insured person.

1. Low premium amount for specific groups: Non-smoking category individuals can avail themselves of low premium for five year term life insurance plan. Smokers excluded from these benefits who consumer beedi, gutka, cigars, cigarette, flavoured pan masala, chewing gums, or nicotine patch.

1. Maximum life coverage: The five-year term life insurance policies offer maximum life coverage for up to 100 years of age.

Advantages of Five Year Term Life Insurance Policy

The following are the advantages of availing five-year term life insurance plan:

1. Provides the facility of annual renewal with coverage allowances without asking for health report.

1. No worry about increasing premium as the amount of premium or the coverage remains constant every year.
2. Single maturity amount can be set by the insurer and the insured under this scheme.
3. Person in good health purchasing this insurance plan will be benefited by increased sum assure in 15, 20 or 25 years of coverage.
4. Ensures predictability of the amount of coverage the family members or the nominee would receive in case of demise of the insured.

Exclusions of Five Year Term Life Insurance Policy

The following are some of the exclusions under five-year term life insurance plan that includes death due to:

1. War
2. Drugs or alcohol
3. Criminal activity
4. Pre-existing illness
5. Hazardous or racing activity
6. Childbirth, pregnancy, or any complication due to this

Important Details Required for Five-Year Term Life Insurance Plan

The following is the list of some of the vital details which will be verified by the company to finalise whether the policy will be approved for the applicant:

1. Health condition
2. History of medication
3. Age of the applicant
4. State of residence
5. Gender
6. Usage of tobacco
7. Details of nominee
8. Amount of death benefit
9. Family history, and other details

Who is this plan suited for

A is suited for individuals who have immediate financial concerns which could aggravate post their demise. It is apt for those who feel their demise could push their family towards hard time in the near future. Individuals approaching a ripe age can opt for this policy, provided they are healthy and fit to be offered protection. It is also suited for individuals who have to look after their family, with educational or marriage responsibilities on them. Individuals with limited means can choose this policy as the premium is generally lower compared to traditional life insurance policies.

How this plan works

The working of a 5 year term life insurance policy is simple to understand, with a straightforward working methodology. Under the plan, an individual is expected to pay premiums for the duration of this policy and he/she is entitled to protection during this term. In the event of his/her unfortunate demise during this term, his/her nominee will receive a death benefit which depends on the premium. There is no maturity benefit under this scheme and an individual is not entitled to any monetary return on maturity of the policy. Also, no benefit will be paid if an individual passes away after the policy has expired or lapsed.

What is the Process of Purchase of Five Year Term Life Insurance Policy?

The following are the steps to purchase a five year term life insurance policy:

1. Make a thorough research to find out the best five-year term life insurance plan that suits your requirements.

1. Discuss about the advantages and disadvantages of the scheme with insurance company to have a better idea.

1. To decide which plan is best for the policy buyer, the insurance company conducts a health check-up.

1. Depending on the medical test report, policy buyer can add various options to the main policy.

1. Lastly discuss about the plan tenure, premium amount, and mode of premium payment to finalise the plan.

Best 5 year term life insurance plan in India

Some of the best 5 year are mentioned below.

• LIC Amulya Jeevan I – This plan offers great claim settlement numbers and premiums designed to meet individual requirements.
• SBI Life e-Shield is non linked non participating plan offers customization with cover ranging from Rs 20 lakh onwards.
• Aegon Life iTerm Plan This plan comes with flexible options with a cover ranging from Rs 10 lakh onwards.