Types of Term Insurance Plans
Published On May 26, 2021
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Term insurance plans are one of the most frequently purchased forms of life insurance. They are efficient savings avenues that provide life cover and several benefits. Term insurance plans provide protection for yourself as well as your family, over a certain period of time or “term”.
There are multiple term insurance plans available. It is important to choose the best insurance plan for your savings which is why it is advisable to know about the various types of term insurance plans available.
Types of Term Insurance Plans
The following are the various types of term insurance plans that are available.
Level Term Insurance Plans
Level term plans are the traditional and the most common type of term insurance plans. In this type, the Sum Assured remains fixed throughout the policy term. The benefits under this plan are paid on the death of the policyholder.
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Increasing Term Insurance Plans
Increasing term plans give the opportunity for policyholders to increase the Sum Assured under the plan. This can be done on an annual basis but the premium must be kept fixed. Increasing term plans generally have higher premiums than other types of term insurance plans.
Decreasing Term Insurance Plans
Like its counterpart that has been mentioned above, these term plans have a decreasing Sum Assured under them. These term insurance plans are very helpful for policyholders who have other financial investments or loans. The Sum Assured decreases on a predetermined frequency.
Return of Premium Term Insurance Plans
In a Return of Premium Term Insurance Plan, a maturity benefit is paid out. This is a unique benefit of this type of term plan. On the death of the policyholder before the end of the policy term, the benefit is received by the nominees of the policyholder.
Convertible Term Insurance Plans
As in the name, a Convertible Term Insurance Plan can be converted to any other type of insurance plan. This can be carried out at any point in time after the purchase of the convertible term insurance plan.
Term Insurance Plans with Riders
Riders are important add-ons that enhance the protection and benefit provided by your term insurance plan. There are many different types of riders available. The policyholder is free to choose the one they want to purchase, according to their needs and circumstances. Some commonly available riders include critical illness riders, premium waiver riders and many more.
Term insurance plans are affordable and convenient insurance options. There many types provide flexibility for policyholders to choose. Since everyone does not have the same needs, circumstances and financial conditions, such flexibility is very convenient.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.