Term insurance plans are highly beneficial for individuals looking to safeguard the financial interests of their loved ones in case something happens to them. Available at premiums that are comparatively lower, these term plans come with attractive features to suit the different requirements of investors. These plans are issued for a fixed term and in the case the policyholder outlives the term no benefits are payable unless specified in advance. Now that you know what a term insurance plan is, let us have a look at the various types of term insurance plans in India.

Level Term Plans

This is the simplest type of a term insurance policy wherein the amount of death benefit or the sum assured remains at the same level during the full term. The death benefit is paid to the policyholder’s family or nominees in case of a miss happening, but no maturity benefit is payable in case of such plans. Some insurance providers, however, provide a better half benefit option wherein the spouse gets coverage after the death of the policyholder.

Level Term Plans with Future Proofing Benefit

These term plans come with an option that allows the policyholders to increase their cover as they achieve important milestones in their life. This could be at the time of marriage, having a child or buying a house, or undergoing medical check-ups.

Term Plans with Maturity Benefits

For investors who are looking for life cover plus some maturity benefits, insurance companies in India offer a term plan with maturity benefits. In this case, a proportion of the premiums paid by the policyholder is returned as maturity benefit in case the policyholder outlives the policy term.

Increasing Term Plans

As the name suggests these term plans allow the policyholder to increase the sum assured after a pre-specified duration. The annual premium payable for this plan, however, remains the same during the policy term. The premiums for such plans are a bit higher than the basic term plans.

Decreasing Term Plans

These term plans allow for a reduction in the sum assured at a specific frequency.

Convertible Term Plans

The main feature of the convertible term plans is that a policyholder can at the end of their tenure decide to convert it into any other type of insurance plan. Some companies allow term plans to be converted into endowment plans or whole life insurance plans.

Term Plan with Riders

Enhancing the scope of coverage available under these plans, many insurance providers offer policyholders to buy additional riders. These riders can be bought to seek financial protection in the case of accidents or critical illnesses, or both.

Apart from these types of term insurance plans many insurance companies also offer a limited premium paying term feature. In this case, the policyholder may have to pay the premium for some years but the life cover continues for a longer tenure of say 10 years or 20 years.

Which Plan is Right for You?

The suitability of a term plan will depend on several factors including the motive for which you are taking it. The tax benefits available for investment in term plans also need to be considered. While safeguarding the financial interests of one’s family is the main criteria, the quantum of the sum assured is also important. It should be adequate to take care of the family’s regular expenses while considering the impact of inflation and the expenses that are likely to come up in the future. Choose a plan that offers you great flexibility and can be customised to match your changing requirements.