Types of Term Insurance Plans
Have you ever thought about what will happen to your family in your absence? How they will manage their regular expenses and fulfill their dreams? The answer must be yes.
As the family is the most precious gift, we all have. And we always strive to secure them anyhow whether it’s physically or financially. Hence it becomes equally important to safeguard their future in our absence.
In such a scenario, Term insurance comes as an effective solution. It secures your loved ones’ future financially during uncertain times. Now the question arises how? For this, you need to know what is term insurance?
Term insurance is an affordable and simplest form of life insurance that offers a comprehensive life cover to the policyholders in the form of insurance coverage amount against considerably low premiums. Term plans are pure protection plans without any maturity benefit. It offers death benefit in the form of sum assured to the policy nominee/ beneficiary upon the untimely demise of the policyholder within the policy tenure.
Along with knowing the importance of term insurance, it is also essential to be aware of different types of term insurance plans to make the right buying decision. So, let’s dive into the details of different types of term insurance policies.
6 Different Types of Term Insurance Plans in India
- Level Term Insurance: Almost all insurance companies offer level term plans. Under this kind of term insurance, the premiums and the sum assured remains the same for the whole policy tenure. Thus, the premium amount decided at the beginning of the policy between you and the insurer will remain constant for the entire term of the policy say for 20 to 30 years. Moreover, if you buy level term plans at a young age, lower premiums can be availed.
- Increasing Term Insurance Plan: As the name suggests, in increasing term plans the sum assured amount increases at a fixed frequency every year during the policy tenure while the premiums remain constant. Increasing term plans help in tackling inflation and growing expenses at different life stages. However, the increasing term plans are usually costlier than the level term plans.
- Decreasing Term Insurance Plan: Here, the sum assured decreases each year until the policy tenure or the coverage amount comes to an end while the premiums payable remain fixed. Decreasing term policies are usually availed as coverage against a particular debt. Typically, the coverage amount becomes zero when the tenure of the policy comes to an end. The premiums in the case of decreasing term plans are lower than other forms of term insurance policies.
- Term Insurance with Return of Premium (TROP): The basic term insurance plan does not offer any maturity benefit due to which many people do not prefer to buy it. However, term insurance with return of premium do offer maturity benefit wherein if the insured survives the policy term, then all the premiums paid are returned at the end of the term. In case the policyholder passes away during the policy term then the nominee/ beneficiary will receive the guaranteed sum assured amount.
- Convertible Term Plans: Convertible term insurance plans give you the option to convert the plan into some other plan at a future date of your choice. For instance, if you have term insurance for 20 years and after 5 years you want to convert it into whole life insurance or an endowment plan then you can easily do the same without any hassle.
- Term Plans with Riders: Term plans offer flexibility to add riders by paying some additional amount. Riders are the extra benefit that you can opt for along with your base policy to increase the scope of your insurance coverage. The popular riders include critical illness benefit, accidental death benefit rider or disability rider, waiver of premium benefit amongst others.
If you are still confused about the importance of term insurance, then think about the uncertainties associated with life and how much your loved ones can suffer in your absence. A term insurance plan is the only financial tool that can help you in securing your financial future when you are not with them.
While buying term insurance is a necessity but opting for the right one is more essential, and for which having knowledge about every type of term insurance is important. You should choose a policy that fits all your requirements as well as your budget. In case you want to check which of the term plans is most suitable for you then visit iiflinsurance.com.
