Before buying a term insurance plan, it's important to know which plan suits you. There are 6 types of term insurance plans.
Why Should You Buy Term Insurance Immediately?
- You get a policy easily when you're healthy.
- Being healthy, your premium amount mostly remains the same throughout your policy period.
- If you get lifestyle diseases like heart disease, diabetes, blood pressure or lung ailment, you may not get the policy.
- In case you get the policy, your premium can increase by 50-100% if you have a lifestyle disease.
What Are The 6 Types of Term Insurance Plans?
Before buying a term insurance plan, it's important to know which plan suits you. There are 6 types of term insurance plans.
You can even 'request a call back' and our term insurance experts can help you choose the best plan for you.
1. Level Term Insurance Plan
This is the primary plan in which your family or nominee receives a fixed, pre-decided sum assured amount in case of your unfortunate death.
Example
For example, if your sum assured amount is 50 lakhs, in case of your death during the policy period, your nominee or family will receive the amount of Rs. 50 lakhs.
2. Return of Premium or TROP Plans
This plan is similar to the level term insurance. However, what if the policy matures & you are still alive? In that case, your entire premium amount that you've paid will be returned to you.
Example
For example, let's say you paid a premium of 10,000 per year for 20 years. Your sum assured is 50 lakhs. However, you fortunately survived. As a result, your entire premium amount of Rs. 2 lakh will be returned to you.
3. Increasing Term Insurance Plan
In this plan, you can increase your sum assured amount annually by a fixed percentage. You can do this without increasing your premium.
Example
For example, you choose a 50 lakhs policy, with an increasing term of 10%. After five years, your policy amount will be 75 Lakhs.
Also Read: Term Insurance Premiums are Likely to Increase
4. Decreasing Term Insurance Plan
This is highly recommended if you have any debts like a home loan for which you pay EMIs. This plan is opposite of the increasing term plan. Here, the sum assured keeps decreasing by a fixed percentage annually.
Example
For example, let's say you have a home loan of 20 lakhs. Your plan has a reduction rate of 10% annually. Hence, by the end of the first policy year, your sum assured will be 18 lakhs.
Now let's say that unfortunately you pass away during the policy period in the second year. As a result, your nominee or family will be paid a sum assured of Rs. 16,20,000/-.
This is helpful, because your pending home loan amount can be paid through this sum assured in case you are not there. Your family will be saved from the burden of EMIs for the remainder of their lives.
5. Convertible Term Insurance Plans
These plans have an option where you can convert them into any other plans.
Example
For example, if you've bought a term insurance policy with a tenure of 30 years. Suddenly after 5 years, you want to convert it into a whole life insurance policy or an endowment plan. These types of plans allow you to do so.
Also Read: 8 Things To Know About Term Insurance Tax Benefit
6. Term Insurance Policies with Riders
These plans have a specific advantage as they come with beneficial riders. These riders include critical illness coverage, accidental death coverage & many other riders.
Example
For example, let's say you've taken a rider of critical illness cover. As a result, you will receive coverage for many critical illnesses. These critical illnesses include cancer, heart diseases and any other ailments listed by your insurance company.
Conclusion
It's best to take advice from term insurance experts before choosing a plan. You can 'request a call back' or fill in the details of your requirement. Our experts will get in touch with you & address your queries. It will help you choose the right term insurance plan.
