Term Insurance & its' Types
While the world continues to face uncertainties, term insurance supports a policyholder for a certain period and gains maturity benefits per the terms of the contract. People opt for life insurance policies to provide financial protection in the case of unprecedented circumstances. Contrary to popular opinion, a term plan is not only a straightforward, one-layered plan. Term insura- nce policies come in a variety of forms to suit different demands. Let us clarify term insurance by definition, before we dive into the forms of term insurance.
Types of term insurance
1. Level Term Plans
A level-term plan is the standard type of life insurance coverage offered by the majority of Indian insurers. The most popular kind of term insurance policy is this one.
- The sum assured while availing of a policy remains the same throughout the policy term.
- The cost of your level term insurance will be cheaper the younger you are when you get it.
2. Increasing Term Insurance
- At key intervals during the policy term, this is an option to raise your sum insured.
- This increase's tempo is predefined.
- This kind of plan is a terrific option for guaranteeing that your family has enough money to survive after inflation and for keeping up with growing prices.
- If you anticipate a significant increase in your financial obligations in the future, expanding term insurance is the ideal option for you.
- This sort of term plan often has a longer term than other forms of term insurance.
3. Decreasing term insurance
- The sum assured in this situation declines at a set pace as you age, as opposed to term insurance which grows with age.
- It is based on the theory that as you become older, your liabilities may reduce, which might also mean that you require a lower sum insured.
- If you have a mortgage or debt that you anticipate paying off soon, it is a good fit for you.
4. Return the Premium Term Insurance
- Return of premium plans, a new and extremely popular form of term insurance, provide you access to a savings component that term insurance often does not.
- If you outlast the policy's term, you will get a refund for all premium payments made up to the maturity date.
- Only if you haven't filed any claims throughout the policy's term will your premium be refunded.
5. Convertible Term Plans
- A convertible term insurance policy can be changed at a later time into another kind of policy, such as a whole life or endowment plan.
- You might choose a term plan of this kind if you anticipate that your financial priorities will alter in the upcoming years.
- Consider choosing a term plan that can be changed into a full life plan if you are now risk-averse but anticipate becoming more adaptable in that area.