What is Term Insurance? and riders. Term life insurance: It gives life cover for a specific period. Ideally suitable when you have dependents and have financial liabilities. So, for example if you are 35 years old you are likely to have family commitments like children’s education, home loan, car loan etc. and you need to cover those liabilities in case of your untimely death. This risks you offload to insurance companies by paying a small annual premium. At the age of 60 years, you are expected to have settled all the liabilities and therefore term insurance premium need not be required to pay. You stop paying premiums, the life cover stops its pure protection without savings or investment components. In term insurance your family will get large sum of 1cr or 10cr based on your annual income. Unless you have misstated the information or committed suicide in which case most polices will not pay the sum assured. Term life insurance provides coverage for a specified term or duration, such as 10, 20, or 30 years. However, arriving at the sum insured is tricky. There are various methods on how much the term cover should be. One method is to take 20 x the annual salary as the term cover. Another way is to assess your liabilities and monthly household cost and arrive at the lump sum amount. For example, if the current cost is 1 lakh per month, then assuming 7% FD rate, the nominee should get sum insured of at least 1cr lumpsum. Another decision you should make is the duration for which you want the term to cover. Often the life commitments would be over by 60 years of age so keeping some margin of another 5 to 10 years, highest age till you want term cover would be 70 years, but one must assess the commitment and then decide. Since it is pure protection and there is no investment component, the premium for pure term is very low and affordable. Riders: Term insurance offers riders which you need to read and apply to your situation and accordingly opt for it.