Know All About Different Types of Term Insurance Plans

Term insurance plans, which are the most basic and traditional life insurance, are basically protection plans that care about a person's loved ones when they pass away. The plan term is purchased for a set amount of time chosen at the start of the policy. The insurance company pays the predetermined sum assured to the policyholder's nominees if the life assured dies during the policy period. The life assured also receives additional benefits like tax benefits, loan and debt payback services, and retirement planning services. These plans are available for purchase both online and offline. Let's have a look at the various sorts of term insurance policies offered by different insurers.

Types of Term Insurance Plans

There are various sorts of term plans available on the market which can be divided into the following categories.

1. Level Term Insurance Plan

With a defined coverage, this is one of the most fundamental types of term life insurance. If the life assured dies during the plan's term, the beneficiary would get the predetermined sum assured. The payment can be provided as a lump sum or as a monthly income.

2. Decreasing Term Insurance Planan

The amount of sum assured provided each year under this plan decreases to reflect the changing demands of the life assured. Policyholders who have taken out a large loan, such as a home or a personal loan, will benefit from these plans. Once a person has paid off their loan, their liabilities are decreased, and they won't need a large sum insured for the rest of their policy. As a result, the sum assured continues to decrease under this policy.

3. Increasing Term Insurance Plan

Increased term plans, as the name implies, allow the life assured to increase their sum assured each year during the policy's term. If you choose this type of coverage, you may have to pay a higher price.

4. Convertible Term Insurance Plans

These plans allow the policyholder to convert a term insurance policy into any other type of life insurance policy at a later date. For example, if a policyholder purchases an 18-year term insurance policy and then requires a savings component after 10 years, they can convert their current term insurance policy to an endowment policy.

5. Term Return of Premium Plans (TROP)

TROP plans allow the life assured to benefit from maturity benefits. One of their most tempting characteristics is that the policyholder receives his/her invested money back at the end of the policy tenure. If the life assured lives to the end of the policy's term without making any claims, the total premiums paid are reimbursed to him/her.

6. Term Insurance Plans With Riders

Critical illness coverage, accidental death coverage, accelerated death coverage, accidental total permanent disability coverage, and other insurance are included in this policy.  Such coverage is frequently available in conjunction with a standard term insurance plan for a small additional fee.

7. Group Term Insurance Plan

Group term insurance refers to term insurance coverage for corporations, firms, societies, and other similar organisations. All members of the organisation are covered under this policy. They typically provide the same benefits as individual policies, with a distinction that total coverage may not include additional customised features not available in individual plans. 

Endnotes

Each term insurance policy available in the market has its own set of benefits and drawbacks. You can easily compare the numerous plans available and choose the one that best meets your loved ones' current financial requirements and long-term ambitions.

Also read - Term Life Insurance: Myths Vs Reality

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.