0
0
Term life insurance plans are a basic and an effective way of finically securing our family. It is a plan that spans over a fixed period of time. If the policyholder dies during this period, the family will get a pre-determined amount of money as financial support. Now that you know “What is term insurance?”, why you should buy one?
The sum assured of the policy is a death benefit. Hence, the only way your family receives the amount designated as the sum assured is your death. On the other hand, there may occur a situation where the total term of the policy is completed and there is no need of making a claim that arises. In such a situation, the plan simply expires and you have to buy a new one. Moreover, if the plan expires, there is maturity benefit that you will receive in some cases.
One of the major concerns while buying a term insurance policy is deciding the type of plan you should buy. Here are all the different types of term insurance policies to help you take a better decision.
Level term plans
A level term plan can be considered as a regular term insurance or a standard policy that every other policy is based on. It offers a fixed sum of money as a death benefit to the family in case of the policyholder’s death. It has a fixed tenure that can be between 5 years to 40 years. During the term of the policy, the sum assured remains unchanged. In case of a claim, the amount is given to the nominee mentioned in the policy.
Return of premium plans
Abbreviated as ROP term insurance, a return of premium policy ensures that your life insurance policy ultimately ends up rewarding you. It gives your dependents the sum assured mentioned in the policy in case of your death. However, the difference here is that it makes sure you don’t end up in a loss if you survive the policy. In other words, if you pay your premiums on time and survive the policy, the insurance provider will reward you with the maturity benefits of the policy, which in this type of term insurance is the sum total of the entire premium you paid.
Increasing term plans
An increasing term plan is a type of life coverage that gives you the option to raise your coverage at regular intervals of time. It allows you to increase your sum assured by a certain percentage of your current cover amount at the end of every policy year. This way, as your family’s financial requirements grow, the cover of your term insurance grows to meet those requirements in the future. The premium for an increasing term plan will be higher as compared to a regular term policy by a minimal margin. However, once you buy the policy, it will stay the same throughout the term.
Decreasing term plans
A decreasing term plan is the complete opposite of an increasing term plan. The sum assured of such a plan decreases with each policy year. Moreover, while other types of term plans are taken to ensure that your family gets money after they die, a decreasing term plan is often taken to protect them against a liability. For example, if you have taken a home loan, your death would put all the pressure of repayment on your spouse. At this point, a decreasing term plan will offer you enough money to pay off the rest of the loan.
Convertible term plans
Some insurance companies offer a term plan that can be converted into another type of insurance plan if the policyholder wishes to. This allows you a free hand while choosing a type of term plan to buy. For example, if you take a convertible term plan with a term of 30 years, but you realise that it does not work for you, you can convert this plan into an endowment plan, whole life insurance plan, and much more.
In all, keep in mind that you are aware of the different types of term insurance plans in India and the various features of each. It will help you plan your finances and buy a plan that is best suited for you and your family.
Average Rating