A life insurance plan is a crucial inclusion in the financial portfolio of every individual, especially for those who are responsible for the financial well-being of the family. Term Insurance is the most elementary and purest form of life insurance. A term insurance plan is one of the several life insurance plans and you purchase it for a particular period. If the policyholder passes away during the policy tenure, his/her family gets the death benefits.
Indian Insurance companies provide customers with a wide array of life insurance plans, including different types of term insurance plans. A detailed term plan comparison will help you determine the best term insurance plan for yourself. You can compare term policy online, offered by various insurance companies, and decide which one gives you the desired financial benefits and required coverage.
Types Of Term Insurance Plans
We can broadly classify the various kinds of term insurance plans available in the market into the following categories:
- Level Term Plans
Level term plans are the most elementary and easy-to-understand type of term insurance plan. The sum assured in this plan remains fixed during the entire policy tenure, and the insurer will pay the benefits to the nominee in case of the demise of the policyholder.
The premium the policyholder needs to pay for this type of term insurance plan is directly proportional to the age of the policyholder, thus, the lower your age, the lower is the premium he needs to pay.
- Return of Premium Plans
This plan is a step ahead of the Level Term Plan and offers you the savings component benefit. It is a new and pretty popular plan that gives the maturity benefit. Under this, the insurer will pay back the entire premium to the insured person in the condition wherein he survives the policy term. However, the catch is that the premiums are returned to you only if you have not made any claims during the policy term.
- Increasing Term Plans
Under this plan, you get the facility of increasing the sum assured annually during the policy term. The rate at which this sum increases is fixed and predetermined. Notably, the premium amount for the policy does not change for the entire tenure of the policy. This contributes to the higher premium at which this plan is available when compared to Level Term Plans. The tenure for an Increasing Term Plan is more than other term insurance plans.
When you make a term plan comparison, this plan comes up as a smart choice as it keeps up with the ever-increasing prices and allows your family to remain financially secure in wake of the inflation. If your financial liabilities are bound to increase considerably in the future, this plan is your go-to option.
- Decreasing Term Plans
If you compare term policy online, you will see the functioning of a Decreasing Term Plan is the reverse of an Increasing Term Plan. Under this plan, the sum assured to the policyholder keeps decreasing annually, keeping in line with the reducing insurance requirements of the insured. If you have other financial liabilities like a huge personal loan, home loan, or an EMI, this insurance plan can help you balance your financial commitments.
Along with the sum assured, the total loan amount also decreases here. The logic behind this plan is that with an increase in the age of a person, his financial liabilities are expected to decrease, and thus, his requirement for a higher sum assured would also decrease.
- Convertible Term Plans
A term plan comparison tells that a Convertible Term Plan gives the policyholder the freedom to convert this plan into any other type of insurance plan in the coming future. For example, you take a term insurance plan for 20 years initially, but convert it into an endowment plan after five years. If you feel there will be a shift in your financial commitments and priorities in the future, you can opt for a convertible term plan.
- Term Plan with Riders
Under this term insurance plan, you can add riders such as disability cover, critical illness cover, or an accidental death cover. You can purchase these riders in addition to your term insurance plan for a small premium amount.
You can compare term policy online and get a fair idea of which term insurance plan suits your and your family’s financial requirement.