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.
Points To Consider When Buying Term Insurance
Here are a few things that you need to keep in mind when buying term insurance plans in India –
- The insurer you choose to purchase the term plan with should be reliable and trustworthy. You can use the claim settlement ratio to determine the reliability of the insurer. Other factors to consider when shortlisting the insurer can be the solvency ratio, corporate governance record, asset under management, and instance of violations.
- As we know, insurers allow you to enhance the scope of the policy with rider benefits. It is not mandatory to opt for all the rider benefits provided by the insurer. It is recommended to select only those that you think may come in handy in the future.
- Since term insurance primarily protects your family financially in your absence, it is important to choose sufficient coverage. Ideally, the sum assured should be 10-15 times than your current annual income.
- The term insurance plan you buy should have a longer duration. As the policy is meant to protect your loved ones after your death financially, it is best to choose an extended term period.
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.
Manage all Queries Related to Types Of Term Insurance here
Q: Can I buy term insurance at Finserv MARKETS online?
A: Yes. You can buy term insurance plans at Finserv MARKETS. All you have to do is visit the website, choose the type of coverage, select rider benefits (if needed), make the premium payment, and you are done. Also, you can buy/renew your term insurance plans using the Finserv MARKETS App.
Q: What are the term insurance plans available on Finserv MARKETS?
A: There are two types of term insurance plans at Finserv MARKETS –
- Smart Protect Goal Term Insurance
- Group Term Life Insurance
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