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Term Insurance 240 views September 10, 2019
Term insurance is a form of pure life insurance. You buy a term plan with the sole purpose of having your life insured. You pay the term insurance premium and your insurance provider promises to pay a death benefit to your nominees if you die within the policy period. If you outlive the policy period, you do not get anything in return. Since there is no investment component associated with term insurance, such plans are usually inexpensive and easy to buy. There are however some different types of term insurance plans in India that offer the life cover in a slightly varied manner. Take a look at this article to know more about the different types of life insurance term plans and see which kind of a policy would be of greatest use to you.
Table of Contents
As mentioned above, the basic aim of term insurance is to provide a pure life cover. The types of life term plans serve this purpose too, but in some different and helpful ways:-
The first and most common type of term insurance is level term insurance. You can get a level Term Insurance Policy and Plans in India from any of the leading life insurance companies in India. A level term plan is a type of life insurance cover where the sum assured remains the same throughout the entire policy period.
Let us assume you take a term life cover of Rs 2 crores for 30 years. 20 years into the plan you suffer a heart attack and die. Your nominees will then get a flat sum of Rs 2 crores as the sum assured after your death. If you outlive the policy period, you cannot expect anything to be paid to you in return.
This is a very straightforward type of term life insurance that everyone can buy. It is brought to simply cover the financial well being of the family members of the policyholder, should anything unexpected happen to him. A level term insurance plan is very affordable and the premium is usually the lowest among all the different types of life insurance term plans.
As the name suggests, an increasing term insurance plan offers an increasing life cover as the policy progresses. Such a plan is taken to cover future inflation. You may be a single, healthy person now. But you will get married and have a family soon. You will have to buy a bigger house, you will have to pay for your children’s education, have to make provisions for their marriage, etc. As you progress in age, the value of your life increases because of these very factors.
Keeping them in mind, you can buy an increasing term insurance plan. Your insurance premium will stay fixed but the sum assured will increase periodically. This will help your family to deal with the situation if your death takes place at any unexpected time. An increasing term insurance plan can be slightly expensive, but it is a very good option especially if you have many dependent family members who need to be taken care of for a long time.
A decreasing term insurance plan is the exact opposite of the increasing term insurance plan. In such a term life insurance cover, the sum assured keeps reducing as the policy progresses.
A decreasing life term plan is very commonly taken to cover a large mortgage or a home loan. As you pay off the EMIs and the value of the home loan reduces, so does the cover of the term insurance plan. The insurance provider premium of the term plan, however, remains constant throughout the entire duration of the life cover. Such a term life cover is taken for a duration that is similar to the duration of the loan. If you happen to die within the policy period, your nominees can use the sum assured from the term plan and clear the loan with ease. In the absence of this financial support, the family may find it difficult to clear the loan on their own.
Term insurance with return of premium, or a TROP plan as it is more commonly known, is a type of life insurance cover where you get the premium back if you outlive the term insurance policy period. This is a very good type of term insurance for those who dislike locking in the premium amount paid over the years and then losing the entire amount when no insurance claim is made.
A TROP plan is usually more expensive than a level term insurance plan, but if you really are determined to get your invested money back, opt for a TROP plan and you will never be disappointed.
The aim of all these plans is pretty much the same, but you can see the methodology is different. Choose the plan that would suit you well and get a good term insurance plan in your name.
You need to start off by listing down the situations in life you currently have or will encounter in the near future. Situations refer to financially demanding duties and responsibilities. You may be a family person with dependent family members. You may have aged parents to look after. You may have loans to pay back. You may have a serious illness you are fighting. Keep all these parameters in mind. You will then know what type of term insurance coverage you need and for how long. You can appropriately choose the type of cover and stay protected in a wholesome manner.
Term insurance is largely taken to cover the financial well being of your loved ones after your demise. The term plan cover should, therefore, be large enough to the family’s financial health incorrect margins. Look at the overall economic state of the family. Is there any other income? How many EMIs are being paid each month? How much will your child’s college admission cost? Once you keep track of all these factors, you will easily be able to make a proper calculation and arrive at the ideal term insurance sum assured. Once that is done, look at the type of term insurance that you feel would help you the most.
As you saw, the insurance premium amounts of the different types of term plans differ. A level term plan is cheaper while a TROP is more expensive. You, therefore, need to make a budget beforehand to see what kind of a term insurance plan you can afford. You may want a TROP plan, but the term insurance quote may be too high for you. It is good to buy a plan that you need, but it is never a wise idea to spend more than you can spare. So stay within your budget and find the best possible term life cover for yourself.
Term insurance online is much less expensive. You get some very good deals when you shop online for your term insurance cover. You must, therefore, explore the online options before you make your final purchase. You can also use some very handy online tools like the insurance premium calculator. Enter your details and the details regarding your insurance requirements. You will see the premium amounts of the different insurance plans. You can then compare and buy the best term insurance plan at the best rate.
Find a good life insurance company to buy your term plan from. Your insurer needs to be the very best and there can be no argument about this. Look for a life insurance provider who has a high claim settlement ratio. Also, try to take your plan from an insurer who has a very good customer support cell. You should be able to reach your insurer whenever you have a query. And finally, look for a life insurance company that has a variety of plans on offer so that you have the liberty to choose.
If you buy your term insurance cover after analyzing these points, you will surely end up with a very effective and comprehensive cover. So rather than buying your insurance coverage in a hurry, take your time and do some research. Then buy a suitable plan at a suitable rate and stay properly covered.
Everyone needs the different Types of Term Insurance Plans in India and there are no two ways about that! However, you should get the correct type of life insurance term plan for yourself to ensure the insurance coverage is optimal and perfectly suited for your specific requirements. Once that is guaranteed, you will surely have a wholesome term insurance cover and enjoy a lot of mental peace thereafter. Just remember to pay your insurance premiums on time every year and keep the policy functional at all times, because no one knows when misfortune may strike in 2019 and future.
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