At a Glance
What Is Life Insurance?
Life insurance pays a lump sum or regular income to beneficiaries upon the death of the insured. In Türkiye, life insurance is placed either as a group policy (kurumsal hayat sigortası) through an employer or as an individual policy (bireysel hayat sigortası). Corporate life insurance is a key component of the employee benefits package alongside group health insurance and private pension (BES). It provides a financial safety net for an employee's dependants in the event of the employee's death while in service, typically expressed as a multiple of annual salary.
Individual life insurance addresses personal financial planning needs that fall outside the corporate benefits framework. This includes protecting a mortgage or loan obligation (lender's life), replacing the income of a breadwinner for their dependants (income protection), and providing a defined sum for estate planning purposes. For self-employed individuals, sole traders, and business owners, life insurance also addresses the absence of employer-sponsored group cover.
Life insurance in Türkiye is regulated as a personal lines product under the Insurance Law and placed exclusively through licensed insurers and brokers. Neolife holds a SEDDK brokerage licence and places both corporate and individual life insurance on behalf of clients.
Policy Types
Life insurance in Türkiye encompasses several distinct product types, each addressing a different financial protection need. Understanding the differences is important to ensuring the right product is selected for the purpose.
Group Term Life
A one-year renewable policy covering all eligible employees under a single employer-sponsored contract. Sum insured is typically expressed as a multiple of gross annual salary (for example, 1× or 2× salary). The death benefit is paid to the employee's named beneficiary. There is no savings or investment element — this is pure risk protection.
Individual Term Life (Risk Hayat)
Fixed-term cover for an individual, typically over 5, 10, 15, or 20 years. Pure protection with no savings or investment component. The most cost-effective form of life cover on a per-unit-of-sum-insured basis, making it the standard recommendation for income replacement and mortgage protection purposes.
Accidental Death & Dismemberment (ADD)
An additional benefit payable on accidental death or specific permanent injuries — loss of limb, sight, or hearing, as defined in the policy. Available as an extension to a life policy or as a standalone product. The premium is lower than standard life insurance because the cover is limited to accidents; it does not apply to death by natural causes or illness.
Total Permanent Disability (TPD)
Pays a lump sum if the insured suffers a permanent disability that prevents them from working. Can be added as a rider to a life policy or purchased as a standalone product. The definition of "total permanent disability" varies significantly between policies — a key area for wording review, as the practical scope of cover depends entirely on the definition applied.
Critical Illness
A lump sum benefit paid on the diagnosis of specified serious medical conditions — typically cancer, heart attack, stroke, renal failure, and major organ transplant. The benefit allows the insured to cover treatment costs, modify their home or lifestyle, or replace income during a recovery period. Written as a rider to a life policy or as a standalone product.
Lender's Life (Mortgage / Loan Protection)
Life cover tied to a specific debt obligation — typically a mortgage, home equity loan, or business loan. The sum insured decreases in line with the outstanding loan balance over time. Required by most Turkish banks and mortgage lenders as a condition of extending credit. The insurer pays the outstanding balance to the lender upon the death of the insured borrower.
Corporate (Employer-Sponsored) vs Individual Life
The distinction between corporate and individual life insurance goes beyond the policy buyer. It affects underwriting, portability, sum insured flexibility, and tax treatment. Both types can be relevant to the same individual at different points in their life or career.
- Employer pays the premium; generally tax-deductible as a business expense
- All employees covered without individual medical underwriting, up to the free cover limit (FCL)
- Sum insured linked to salary (e.g. 1× or 2× gross annual salary)
- Cover ends when employment ends (unless a conversion option is exercised)
- No flexibility in sum insured or term for the individual employee
- Appropriate for workforce-wide financial protection as an employee benefit
- Individual pays the premium; tax treatment depends on product type and applicable rules
- Medical questionnaire required; pre-existing conditions may result in exclusions or loading
- Flexible sum insured — set by the individual to match their income replacement or debt obligation need
- Portable — the policy continues regardless of employment status
- Term set by the individual — aligned to mortgage term, years to retirement, or dependant ages
- Appropriate for self-employed, business owners, and personal financial planning requirements
Sum Insured — Practical Guidelines
There is no single formula for calculating the right life insurance sum insured. The following guidelines represent common approaches — they are starting points for discussion, not definitive rules. The appropriate sum insured depends on the individual's financial obligations, dependant needs, existing assets, and the purpose of the cover.