A term insurance is a special kind of life insurance policy that provides financial coverage for a fixed period of time, also known as a term. If the insured happens to pass away during the term specified in the policy, then the beneficiaries will receive the agreed-upon payment from the company. Over the past few years, there have been a lot of impressive insurance options in the Indian market. You can even buy term insurance online from your favourite provider. Here are the 6 basic types of term insurance plans.

  1. Level Term Life Insurance: A level term insurance is one that pays the same benefit amount no matter when you die. The benefit from this insurance will stay the same no matter at what age you expire. Your beneficiaries will receive the same payout irrespective of when you pass away. The main benefit of this kind of insurance is certainty. You will have assurance that no matter when something unfortunate occurs, your loved ones are going to receive a good secure sum of money. Another benefit of a level term insurance is the fact that the premiums are also level.
  2. Return of Premium Plans: When you look up a term plan online, you will find that the Return of Premium or TROP plans are very popular. A TROP plan will return the premium amounts that you paid in case you outlive the policy. The amount that you receive will not return any interest, but it is 100% tax exempt. For a normal life insurance policy, you won’t get anything back if you outlive the policy. However, you have to remember that TROP insurance plans tend to cost at least 30% more than normal or level term life insurance plans.
  3. Increasing Term Insurance Plans: This is a type of term insurance that has gained a lot of popularity and attention over the past few years. This is an insurance policy that makes sure that the payout benefits are adjusted for inflation. The policy benefits of this kind of plan goes on increasing over the course of your life. You must keep in mind that your premium payments are also going to increase as you grow older. However, this is a great plan and is ideal if you want to provide proper financial security to your family and loved ones.
  4. Decreasing Term Insurance Plans: This type of plan is the opposite of an increasing plan. The benefits of the policy are going to steadily fall as you grow older. The theory behind this scheme is that the number of liabilities generally tend to decrease with age. As a result, high coverages are not necessary for a lot of families. For example, a decreasing term plan is ideal if you have already taken on a large home loan or are paying loans off in the form of EMIs. This policy is used by individuals who want to protect their assets.
  5. Term Plans with Riders Attached: This is a modified version of a normal term life insurance. This plan comes with various riders attached, which will make sure that your beneficiaries get paid in case your death occurs under certain circumstances. Some of the regular covers include a critical illness cover, accident cover, etc. The riders can be added to the policy by adding a small additional amount along with the premium. The critical illness rider is extremely important and can be helpful if you or a loved one develops a critical illness like all forms of cancer, dementia, etc.
  6. Convertible Term Life Insurance: This is a type of life insurance that will let you convert your existing policy into any other policy of your choice if you outlive the term of the insurance. As it starts out, there is very little difference between a convertible policy and a regular term policy. However, at the end of the term or after a certain amount of time, you will be able to convert this policy into an entirely different policy. The tax benefits for this type of insurance are huge. You can modify the plans according to your current situation.

These have been all of the various types of term insurances that you can get. Do your research and consult your family as well as financial advisor before getting one for yourself!


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