Nobody can predict the future, but there is a way you can secure it financially. Term life insurance policy is one of the best ways to protect your family from future uncertainties, especially if you are the sole breadwinner of the family. In this guide, we tell you everything you need to know about term life insurance so that you can make a well-informed decision.
What Is A Term Life Insurance Plan?
Term life insurance plans are a popular life insurance plan which can be taken by anyone above the age of 18 years. A certain tenure, as well as sum assured, is selected under the insurance plan. If the insured individual dies while the tenure of the plan is active, the insured amount is paid to the beneficiary by the insurance company. The benefit provided in a lump sum amount can help your family live comfortably.
What Are The Key Features of Term Insurance?
Following are the prominent features of the term plan:
- There is no limit on the coverage that you can acquire. Therefore, you can choose a higher coverage level depending on the need of your financial requirements in order to gain stronger financial security.
- Term insurance plan comes with low premiums as the policy covers merely the risk of death.
- The period of coverage can range between 30 years and 35 years old, enabling you to enjoy coverage for a really long time.
- Bonus is not offered under term insurance plans. In case of the assured dies, only the sum assured is paid.
- ● There is no paid-up value or surrender value in term insurance plans. If you do not pay your premiums on the time, the term policy will lapse, and you will not receive any benefits.
- Within term insurance plans, you get a ton of rider options. They assist in improving the coverage scope of the policy.
What Are The Types of Term Insurance Policy?
There are different plans with different premiums. Companies offer term plan calculators where you can know how much premium you will be paying for the policy you will choose. Below are the types of term insurance plan you will come across –
- Level Term Plans
In this plan, the insured sum remains the same across the tenure of the term insurance policy. In case of the untimely death of the policyholder, the beneficiary is paid the sum assured. If you are looking for a straightforward insurance plan, then this is a reliable option.
- Term Insurance With Return of Premium
It is also known as TROP or return of premium plans, and they are quite different from other types of term insurance plans. In this form of policy, if the policyholder dies when tenure of the policy is not expired, the sum assured is given to the beneficiary as usual. However, if the insured person survives the tenure period, then the premium you have paid through the period will be paid by the insurance company. Considering the premiums are provided upon maturity, the insurance plan is known as the return of premium term plan. It is ideal for people who want financial security, along with benefits upon maturity.
- Increasing Term Plans
Within increasing term insurance plans, the sum assured continues to increase every year at a definite rate. In case the insured dies during the active policy, the insured sum at the time of the death is paid out.
- Decreasing Term Plans
This plan is entirely opposite to increasing term plans in the sum assured trend with every passing year. This plan is generally offered as a loan redemption policy in which the reduction in the sum assured is proportionate to the decreasing the balance of your pending loan.
Moreover, in case of death during the tenure period, the sum assured is paid to your beneficiary. The main aim of this form of term insurance is to assist in paying off your loan in case the borrower dies prior to the repayment.
- Group Term Insurance Plans
Group term insurance plans are dedicated to recognized groups for the members. They can be employer-employee groups, clubs and members, banks and the account holders, trader unions and members, and similar group members. These terms policy is provided for one year.
There you have everything you need to know about term life insurance plans. When taking these insurance policies, make sure you choose a credible provider to get personalized and reliable services.