Insurance

Term Insurance Checklist: 15 Questions Before Buying a Policy

Q: What happens if I die by suicide within the first year of the policy?

Under IRDAI's standard suicide clause, if the life assured dies by suicide within 12 months of the policy's commencement, the full death benefit is not paid — the insurer instead returns 80% of the premiums paid till the date of death (excluding rider premiums and certain extra charges). After 12 months, the full sum assured is payable regardless of cause, subject to the policy's other terms.

Q: How long is the free-look period to cancel a new policy?

At least 15 days from receipt of the policy document, extended to 30 days for policies bought electronically or through distance-marketing channels (which covers most online term-insurance purchases today).

Q: Is a "return of premium" term plan worth the extra cost?

Usually not, on a pure math basis — a return-of-premium (TROP) plan charges substantially more than a plain term plan to refund your premiums if you outlive the term, and investing that cost difference separately typically outperforms the refund. It can still suit someone who values a guaranteed, contractual return of outlay over the higher expected return of investing separately.

Q: What is Saral Jeevan Bima?

A standardised individual term insurance product that IRDAI requires every life insurer to offer, with the same core features and wording across companies. It's a useful baseline for comparing pricing for identical coverage across insurers, even if you ultimately buy a insurer's own branded term plan instead.

Q: Where do I escalate a wrongly delayed or rejected claim?

First, the insurer's own grievance cell; if unresolved, IRDAI's Bima Bharosa integrated grievance portal, and separately the Insurance Ombudsman for eligible disputes (a free, faster alternative to court for claims up to the Ombudsman's monetary limit).

Term Insurance Checklist: 15 Questions Before Buying a Policy

Finin2min Money Desk·June 2026·10 min readTERM INSURANCEValidated: 30 August 2026

Term insurance is not bought for returns. It is bought so the family does not need to sell assets in grief.

Answer first: the premium is the least important number to compare. A policy that's ₹500/year cheaper but has the wrong cover amount, wrong term, an undisclosed health fact, or no findable nominee is worse than a slightly costlier one that gets all four right — because those four things determine whether the claim actually gets paid, in full, to the right person. Current-law status: the IRDAI protections below (15/30-day free-look, 12-month suicide clause, Bima Bharosa grievance portal, Saral Jeevan Bima standard product) reflect regulations current as of August 2026.

For broader context, see the Investing, Loans and Personal Finance Hub.

The 15 Questions

1. What is my actual cover requirement? Add outstanding liabilities (home/car/personal loans), replace 10-15 years of take-home income, and add future goals (children's education, a dependent's care) — then subtract existing liquid assets. A round "10x salary" rule ignores your specific debts and goals.
2. Does the policy term actually match my need? The term should run at least until your youngest dependent is financially independent or your largest loan is closed, not just until a round retirement age.
3. Have I disclosed every material fact honestly? Smoking/tobacco use (including occasional), pre-existing conditions, family medical history, and hazardous hobbies or occupation — misrepresentation is the single most common reason a claim is repudiated, and it is checked at claim time, not at purchase.
4. Am I comparing insurers on claim behaviour, not just price? Look at each insurer's claim settlement ratio AND claim amount settlement ratio (the value paid, not just the count of claims) over several years, both published in IRDAI's annual handbook.
5. Is this a pure term plan or a "return of premium" (TROP) variant? TROP refunds your premiums if you outlive the term but costs substantially more — usually more than you'd gain by simply investing the price difference separately.
6. Have I checked the Saral Jeevan Bima benchmark? IRDAI requires every insurer to offer this standardised term product with identical core wording, making it a useful apples-to-apples price comparison even if you buy a different branded plan.
7. Which riders genuinely fit my situation? Critical illness, accidental death/disability, and waiver-of-premium riders can be worth the extra cost for some buyers and dead weight for others — evaluate each against your actual risk, not as a bundled default.
8. Is my nominee current and unambiguous? Update it after every marriage, divorce, or birth — an outdated nominee is a leading cause of claim delay and family dispute.
9. If the nominee is a minor, is an appointee named? Without one, the payout can be held up pending a guardian being legally established.
10. Do I understand the free-look period? At least 15 days from receiving the policy document to review and cancel for a full refund (minus certain deductions), extended to 30 days for policies bought online or through distance marketing — which covers most term purchases today.
11. Do I understand the suicide-clause exclusion? If death is by suicide within 12 months of the policy starting, the insurer pays 80% of premiums paid, not the full sum assured — full cover for suicide applies only after 12 months.
12. Am I buying as early as my situation allows? Premium is locked in at issue age for level-term cover, and a health change later can mean higher premium, exclusions, or being declined outright — there's a real cost to delaying.
13. Do I understand the grace period and revival process if I miss a payment? A lapsed policy typically can be revived within a defined window (commonly up to 5 years, insurer-specific) but usually requires fresh health disclosure and may cost more.
14. Will my family actually be able to find this policy? Store the policy number, insurer, and nominee details somewhere the family can access without needing your devices or passwords — a valid policy that nobody can locate pays nothing.
15. Do I know the claim process and where to escalate? The documents needed, the typical timeline, and — if a claim is wrongly delayed or rejected — the insurer's grievance cell, then IRDAI's Bima Bharosa portal, then the Insurance Ombudsman for eligible disputes.

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Detailed analysis

Why this matters
The core checks are human-life-value need, liabilities, dependents, policy term, income replacement, disclosures, nominee details and claim process. Cheap premium is useless if disclosures are wrong.

Practical example

Example
A 35-year-old with ₹60 lakh home loan and two dependents buys only ₹25 lakh cover because premium looked low. Proper need analysis shows cover should consider loan, children’s education and income replacement.

Evidence and control checklist

Area	What to check	Evidence to save
Risk trigger	What event makes term insurance risky for a household.	Statement, app screenshot, policy copy or transaction proof.
Money impact	EMI, interest, penalty, tax, lock-in, liquidity or claim impact.	Calculator working, schedule and assumptions.
Evidence file	Documents needed before complaint, claim, investment or decision.	PDF folder with statements, emails and screenshots.
Decision rule	What action to take, avoid or verify before proceeding.	Checklist and reviewer/partner sign-off.
Complaint/escalation	Where to complain or escalate if money is stuck or fraud happens.	Complaint acknowledgement and timeline tracker.

For the connected rule, example or next step, see Life Insurance Surrender Trap: Before You Exit a Policy.

⚠ Disclaimer: Educational content only, not insurance or financial advice. Free-look periods, the suicide-clause window, grievance-portal names and specific product features are set by IRDAI regulation and each insurer's own policy wording, and can change; confirm current terms in your actual policy document and IRDAI's current circulars before buying, and consult a licensed insurance advisor for personalised cover recommendations.

Common mistakes

Avoid these mistakes

Buying cover based only on premium.
Hiding health/smoking history.
No nominee update after marriage/childbirth.
Confusing term plan with investment plan.
Not storing policy document for family.

Official reference framework

Checked on 30 August 2026
Based only on official RBI/Sachet, SEBI, IRDAI, PFRDA and Income Tax Department source pages listed below. Check latest circulars, product documents and regulator portals before acting.

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Official sources used

This article is source-limited to official RBI/Sachet, SEBI, IRDAI, PFRDA and Income Tax Department material. Source validation date: 30 August 2026. Verify final positions with latest circulars, product documents, policy terms and regulator portals before acting.

For the connected rule, example or next step, see Insurance Premium Payment Failed or Policy Lapsed: Revival and Risk Checklist.

FAQs

What happens if I die by suicide within the first year of the policy? ▾

Under IRDAI's standard suicide clause, death by suicide within 12 months of commencement means the insurer returns 80% of premiums paid rather than the full death benefit. After 12 months, the full sum assured is payable regardless of cause, subject to other policy terms.

How long is the free-look period to cancel a new policy? ▾

At least 15 days from receiving the policy document, extended to 30 days for policies bought online or through distance marketing — which covers most term-insurance purchases today.

Is a "return of premium" term plan worth the extra cost? ▾

Usually not on pure math — a TROP plan charges substantially more to refund premiums if you outlive the term, and investing that cost difference separately typically does better. It can still suit someone who values a guaranteed contractual return over expected investment return.

What is Saral Jeevan Bima? ▾

A standardised term insurance product IRDAI requires every insurer to offer with identical core wording — a useful baseline for comparing pricing for identical coverage across insurers.

Where do I escalate a wrongly delayed or rejected claim? ▾

First the insurer's own grievance cell; if unresolved, IRDAI's Bima Bharosa integrated grievance portal; and separately the Insurance Ombudsman for eligible disputes, a free, faster alternative to court.

Source and review trail

Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.

Primary category: Insurance
Official starting point: irdai.gov.in

Page source links

For the connected rule, example or next step, see IRDAI Free-Look Period: How to Cancel a Life Insurance Policy After Buying It.

For the connected rule, example or next step, see Insurance Ombudsman: When to Use It Instead of Going to Court.