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Types of Term Insurance Plans

By Finserv MARKETS - Jul 4,2020
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What are the different types of term insurance?

Term insurance is one of the most affordable insurance plans available in India. Generally, term insurance is a financial protection plan that is designed specifically to safeguard your loved ones financially in your absence or in case of unforeseen situations.

As the name suggests, term insurance plans are bought for a specific period. During the tenure of the plan, if you (the policyholder) happen to die unfortunately, then the sum assured amount is paid to your nominee. The sum assured amount is the coverage you choose at the time of buying the policy.

In case the term insurance matures while you are still alive, then no maturity benefits are paid. It is solely a financial protection plan that helps your loved ones in your absence.

There are multiple types of term insurance plans available in the market as per your requirements. Some of the most common types are as follows –

  • Level Term Plans
  • Return of Premium Plans
  • Increasing Term Plans
  • Decreasing Term Plans
  • Convertible Term Plans
  • Term Plans with Riders

Let us understand these in detail.

Level Term Plans

The level term plans are one of the most basic term insurance types in India. In this plan, the sum assured amount does not change during the policy term. The term insurance benefits are paid to the beneficiaries in case of unfortunate dismissal of the policyholder.

Some common level term plans include –

  • Annual renewable term
  • Five-year renewable term
  • Ten-year term
  • 15-year term
  • 20-year term
  • 25-year term
  • 30-year term
  • Term to a specific age (generally, 65 years of age)

If the level term insurance plan is renewable, it means that the policy can be continued for an additional term(s), up to a specific age.

Return of Premium Plans

Although most term insurance plans do not provide maturity benefits, there are plans created with the ‘return of premium’ feature. The return of premium plans provides maturity benefits. In simple terms, the premium amount paid by the policyholder will be returned to them in case they survive the plan term.

However, the premiums of these plans are relatively high and you are required to maintain the policy until the term ends to enjoy the benefits. In case you forfeit the term plan before the tenure ends, then you end up losing the maturity benefits.

Increasing Term Plans

In the increasing term plan, you can choose to increase the sum assured amount on an annual basis during the plan tenure. Note that the premium amount here remains the same. However, the premiums charged for increasing term plans will be different from basic term insurance plans.

Decreasing Term Plans

Decreasing term insurance plans are opposite to that of increasing term plans. In this plan, the sum assured amount keeps on decreasing over the years.

Generally, decreasing term plans are ideal for people who have to pay off loans such as a home loan or personal loan in EMIs (Equated Monthly Installments). This way, the decreasing sum assured amount matches the decreasing insurance needs of the policyholder.

As a matter of fact, the sum assured amount reduces as the EMIs are paid and total loan amount decreases.

Convertible Term Plans

A convertible term plan allows you to buy the policy with an option to convert it into some other plan of your choice in the future.

For instance, consider that you bought a term plan for twenty-five years. After five years of the plan, you can switch the policy to whole life insurance, endowment plan, or any other insurance plan of your choice.

Term Plans with Riders

Certain term plans like the Smart Protect Goal Term plan available on Finserv MARKETS, offer rider options such as critical illness cover, accidental death cover, and disability cover. You can avail the rider for an additional premium amount over your existing term insurance plan.

To Sum It Up!

Even though term insurance plans are one of the basic insurance plans, they are affordable and tend to financially protect your family members in your absence. Hence, buying term insurance plans is crucial.

In case you are looking for one, browse through the term insurance plan available on Finserv MARKETS online. The premiums charged are easy on-the-pocket, you can customize the plans as per your needs, and your family is financially secure with a coverage of up to INR 1 crore.

So, don’t wait! Ensure yourself and your family with an affordable term plan at Finserv MARKETS, today.

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522