Term Insurance Plans

Term insurance, also known as ‘Pure Risk’ insurance, offers financial protection to your family in case of your unfortunate demise. Term insurance plans offer a sum assured to the beneficiary of the life assured in case of the life assured’s unfortunate demise during the policy term. These plans offer life cover for a specific term of the policy and are available at affordable premiums.

Types of Term Insurance Plans

There are various categories of term insurance plan available in India, as discussed below:

1. Increasing Term Plan: Increasing term plans allow the life assured to increase the value of the sum assured on death on a yearly basis while keeping the amount of insurance premium the same. Due to the benefit of increasing sum assured, these plans feature a relatively higher premium than level term plans.

2. Decreasing Term Plan: Decreasing term plans are those term plans where the sum assured keeps decreasing every year to match the life assured’s decreasing insurance needs. This type of term plan is useful for those who have already taken a personal loan or a home loan and need to pay EMI’s. The sum assured under this plan decreases at the decided frequency along with the EMI payment. Thus, these plans help life assured to meet their financial liabilities.

3. Level Term Plan: Level term plans are the most basic type of term plans. In level term plans, the sum assured is fixed throughout the entire policy term and the plan benefits are payable to the nominee in case of an untimely demise of the life assured.

4. Term Plan With Return of Premium (TROP): Term plan with inbuilt return of premium benefit is a type of plan which provides sum assured in case of an unfortunate demise of the life assured, but if the life assured survives the entire policy tenure he/she is provided with a maturity benefit amount i.e. equivalent to all the premiums till the date of plan maturity. This is the only term plan which offers maturity benefit.

5. Convertible Term Plan: Under this plan, the policyholder has the liberty to change their existing term plan into any other type of plan in the future. For instance, if you have purchased a convertible term plan with a policy tenure of 20 years and you wish to convert it into a pension plan after 7 years, you can do the same without any hassle.

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