A Comprehensive Guide to the Types of Term Insurance Plans

A Comprehensive Guide to the Types of Term Insurance Plans
2024-12-12T12:40:30.000000Z

Term Insurance is the simplest form of Life Insurance, which provides financial coverage for a specific tenure in exchange for a premium. It ensures the financial protection of the loved ones in the absence of the policyholder. This financial cover can help manage various expenses, securing the financial future of the family and peace of mind.

Who Should Get a Term Insurance Plan?

Let us know the list of individuals who should buy Term Insurance:

  • Parents

Parents play a vital role in a child’s life in terms of bearing their daily expenses, school fees, etc., hence providing great financial support to the children. With the help of term insurance, parents can secure the dreams of their children.

  • Young Professionals

At a young age, the premiums are low, and as young professionals have fewer liabilities, it becomes affordable to buy term insurance. It will help to provide financial security to their loved ones at a later stage.

  • Newly Married

Gifting your spouse term insurance and secure their financial future that lasts quite long.

  • Working Women

Term plan helps working women maintain a healthy lifestyle and fulfil all their desires by ensuring financial security for their families. It also helps in settling debts, if any, and includes critical illness riders. Additionally, they can establish a fearless business, knowing that their family’s future is financially safeguarded.

  • TaxPayers

The premium paid towards the term plan is eligible for deduction u/s 80C of the Income Tax Act.

  • Retirees

In the event of the unfortunate death of retired personnel, the term plan will provide financial security to their spouses, allowing them to maintain a standard of living and cover medical expenses.

  • Housewives

In case of the death of a housewife, the term plan will provide financial security to her family. It will help to cover the cost of household expenses, including children's expenses as well.

  • Self-Employed

Term insurance provides financial security to the family of a self-employed in case of their death.

  • NRIs

It takes care of the family of an NRI left behind in India by providing them with financial security. 

Get 1 Crore Term Insurance

The Best Term Insurance Plan for 1 Crore will help pay the maturity benefit on the sum assured to the family members on the policyholder’s unfortunate demise. The term plan that provides sum assured of INR 1 crore are becoming quite popular amongst buyers as they provide affordable premium rates along with financial support in times of distress.This substantial coverage is especially beneficial for entrepreneurs managing an online business, as it provides a financial safety net in challenging times. Also, this is a huge amount to meet the inflation factor to sustain a premium lifestyle and get financial safety in your absence. One can use a term insurance calculator to find out the sum assured required to meet the coverage.

Types of Term Insurance

Term insurance plans come in various types, each catering to specific needs. Choosing the right plan is akin to selecting the perfect fonts for a professional document—both require careful thought to ensure the outcome meets expectations and serves its purpose effectively.
Provided below are the different Term Insurance types:

  • Term Insurance

It provides financial security to the beneficiaries and dependents at an affordable premium, supporting them in any unfortunate event.

  • Term Insurance with Critical Illness rider

It provides financial security in case of an unexpected death of the policyholder. The amount paid helps to achieve financial security for the policyholder’s family. 

  • Term insurance with Return of Premium

It provides financial security to the dependents of a policyholder if the policyholder dies, and if he/ she remains alive, the amount of the premium is returned back.

  • Term Insurance with Waiver of Premium Waiver

In this type of plan, the premium is waived off in the event of dismemberment or any critical illness is diagnosed. It eases the stress factor of the financial burden in these unexpected situations.

  • Term Insurance with Accidental Disability & Death Cover

It covers incidents of death caused by accident. 

  • Term Insurance with Monthly Income

It provides monthly income, ensuring a regular flow of income besides the lump sum amount that is received as a death benefit.

  • Group Term Life Insurance Plan

This plan is offered by employers to their employees to provide financial assurance to their families. It comes at an affordable premium amount covering death or disability occurring due to accident or illness.

  • Increasing sum assured plan

This plan caps the sum assured subject to a multiple of a certain percentage of the sum assured. This is due to the premium being on the higher side than a level plan and the benefit amount increasing every year.

  • Term Insurance for Housewives

It provides a lump sum amount to the policyholder’s dependents when they die. It offers comparatively low and adjustable premiums and does not ask for medical health check-ups, even covering whole life and accidental death insurance.

Difference Between Term and Life Insurance Plan

Provided below is the Difference Between Term Insurance and Life Insurance:

 

Term Life Insurance

Whole Life Insurance

This plan protects the insured for a certain period, normally between 5 and 30 years. 

It is a type of permanent life insurance that denotes regularity in the payment of premiums. It will cover the insured person till the age of 99/100 years.

It only covers a death benefit in case the insured dies during the policy tenure. 

It provides financial coverage, which is extended till the insured attains the age of 99/100 years.

Here, the premiums are often less expensive because term insurance is for a specific period. 

Here, the premiums are quite higher than those of term life insurance because it provides extended coverage for 99/100 years. 

Only when TROP is taken along with your primary policy, entitles you to become eligible to get back the premium amount except for taxes and levies.

There is no money back here as it has very long policy terms extending to 99/100 years of age. 

It is not permanent and not convertible to whole life insurance by default. However, certain term life insurance plans provide a conversion option.

Since it offers life coverage till the age of 99/100 years, it does not need to be converted to term life insurance.

It expires once the policy lapses due to non-payment of premiums. There is no financial cover once a term life insurance expires. 

It expires in case either the insured lives beyond 99/100 years or hasn’t paid the due premiums. 

 

Conclusion

When it is about buying a term insurance plan, it should be bought at the early stages of life, if possible. This is because the premium increases with the policyholder's age. They help in protecting the financial future of the policyholder’s family in their absence. This plan also allows paying off debts and managing finances after the death of the policyholder. 

 

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