Types of Term Insurance

In order to cater to the varying demands of consumers, insurance companies offer a variety of term insurance plans that customers can choose from. So before jumping into signing a policy document, it is important you understand the varying forms of term insurance plans you can choose from.

Here are some of the most common term insurance policies available to customers :

• 1
  
  Level Term Plans
  Level term plans are the most basic and common form of term insurance available in the country. Under such a plan, the sum assured of your policy (life cover) and the premium will remain the same during the entire tenure of the policy. The premium of such a plan is usually determined on the basis of your age, gender, health and lifestyle habits. Almost all life insurance companies offer level term plans for their customers.
• 2
  
  Decreasing Term Plans
  In the case of decreasing term plans, the cover provided under the policy keeps decreasing every year at a predetermined rate. However, it is important to note that the premium paid by the policyholder remains the same during the entire policy term. The reason such a policy is in the market is that often people’s needs for high levels of life insurance decreases with age, as liabilities such as home loan, car loan or other personal loans decrease or have been paid off. Another important advantage of such a policy is that you will be paying a lesser premium as compared to other term insurance policies.
• 3
  
  Increasing Term Plans
  As clearly indicated by their name, such plans work in the opposite way of decreasing term plans. In the case of such plans, the cover provided under the policy keeps increasing every year at a predetermined rate. Just as in the case of decreasing term plans, the premium paid by the policyholder, however, continues to be the same during the entire policy term. Due to the increasing value of the sum assured, typically such plans demand a higher premium than other term plans on the market.
  The reason such plans are offered to customers in the market is to take into account the rising costs of inflation. Due to rising prices, often the coverage you started with may not be adequate in keeping up with living expenses. Hence, in order to take into account the rising costs, insurers offer increasing term plans whereby, the insurance coverage rises at a predetermined rate every year.
• 4
  
  TROP (Return of Premium) Plans
  TROP plans are very different from other forms of term policies as they come with a maturity benefit, whereby, the total premium you have paid will be paid back to the policyholder at the end of the term of the policy, even if life assured survives. While most term plans do not offer a maturity benefit, TROP plans have been designed to cater to customers who believe term plans should offer the same. For instance, if you have been paying a premium of Rs. 15,000(excluding taxes) for 25 years for a cover of Rs. 40 lakh, your insurer will pay you Rs. 3.75 lakhs at the end of-of the 25 years (in case the life assured survives the term). Due to the maturity benefit, such term plans usually have a higher premium as compared to other term plans.
• 5
  
  Term plans with riders
  While not exactly a different type of term policy, often insurers will offer you rider options such as accidental death cover, critical illness cover, waiver of premium benefit and disability benefit rider, amongst several others to help you customize your term life insurance policy. Such riders can be purchased with your policy by paying a nominal fee and enable you to customize your term plan as per your needs. There are several types of riders available to you which essentially just help you add new benefits to an existing insurance policy. Riders enable you to increase protection and have a customized insurance plan without having to switch policies or buy another one.

If you know the kind of policy you would like to go for, you can simply opt to buy the same online and eliminate any hassle or time-consuming documentation process. Opt to buy a term insurance plan immediately to secure your family’s financial future and your peace of mind.