A Quick Overview of Term Insurance Plans

ByUday P Thakur

Term insurance is an individual and non-participating life insurance product. The best term plan ensures effective financial protection for the policyholder. Being a pure insurance product, with no investment component, a term policy tends to be much cheaper than whole life and other insurance policies. In fact, you get to pay the same premium rate for the entire tenure of the plan. This makes the best term insurance plan in India affordable and convenient. However, remember that the payable premium might increase at renewal.

Now that you know what is a term insurance plan, it is crucial to understand the advantages of this product and how it works. This will help beginners make a sound financial decision. Take a look at this quick overview.

Benefits of Term Insurance Plans

There are plenty of benefits offered in exchange for an affordable premium. Besides security, reliability, affordability and simplicity, here are some more reasons why a term life insurance policy is a great choice:

  • A term insurance policy can be bought both online and offline. Getting insured is just a click away, which is helpful amid an ongoing pandemic.
  • You get a grace period of at least 30 days from the due date for premium payment. This helps you to make arrangements for the premium without losing out on the term insurance benefits.
  • Discounts are offered on premiums for non-smokers.
  • You can pick from two benefit structures: Level Cover Benefit and Increasing Cover Benefit. An additional Accelerated Terminal Illness Benefit is available as an in-built product for both structures.
  • Tax benefits are available on term insurance as per the Income Tax laws. However, this is subject to change from time to time.

Further, the minimum age of entry is as low as 18 years, which helps in better financial planning. Your family starts being covered early, which reduces vulnerability.

Term Insurance Premium

The premium is usually quite affordable even for the best term insurance policy. You do not have to pay extra at any point. Further, you can seek a tax rebate of up to ₹1.5 lakhs per year under Section 80C of the Income Tax Act. This is one of the top term plan benefits. Use a calculator to understand how much you are required to pay yearly, half-yearly, quarterly or monthly. Simple enter the basic details like policy duration, payment frequency, gender, smoker/non-smoker and date of birth to get started.

Types of Term Insurance Plans

The best company offers multiple plans, so that you can pick the one that suits your needs. Take a look at the most popular term insurance plans in India:

  • Renewable: This can be renewed once the term is over.
  • Increasing Insurance: The end coverage tends to increase over a particular time period.
  • Level: The cover and premium remain fixed throughout the term.
  • Convertible: The policyholder can shift to a cash-value product like a while life insurance plan. The premium here might increase slightly.

Term insurance plans help to shift the load of financially securing your family from your shoulder. Understand the range of benefits and read through the terms and conditions before purchasing the policy.