Term insurance is a type of life insurance policy that offers life protection for a certain number of years and pays death benefits to the nominee in case of your uncertain death during the policy tenure.
Term life insurance plans are pure protection plans that do not offer any investment opportunities and thus offer no returns.
Let us understand this by an example:
Vaibhav, a 30-year-old salaried individual lives a comfortable life with his family in Gurugram, Haryana.
Vaibhav decides to buy a term insurance plan of 2 crores so that if something happens to him, his family will receive these 2 crores as the death benefit.
Vaibhav buys the plan for a tenure of 40 years and chooses his wife as the nominee. So now, during these 40 years, if Vaibhav passes away, the sum assured will be given to his wife and the policy will terminate.
Suppose you are planning to buy term insurance.You will go through multiple plans available in the market, and many insurance companies claim they are the best, which can confuse anyone.
But What to choose let’s us help you out,
There are a total of six categories of term insurance available in the market. Let’s understand each one of them:
Level-term insurance plans are the basic term plans in which the policyholder pays the same premiums throughout the policy term, and an assured death benefit will be paid in case of the policyholder's death.
TROP Plans come with dual benefits; apart from the sum assured, the premiums paid will also be returned to the policyholder if they survive the whole policy term after the deduction of taxes.
Increasing term insurance plans offer options to increase the basic sum assured of plans at different milestones of life of the policyholder such as marriage, childbirth, and second childbirth while paying the same premium amount during the entire policy term.
In decreasing term insurance plans, the total sum assured amount decreases over time as one part of the premium is used to pay the loan of the policyholder thereby decreasing the loan as the policy continues. After the demise of the policyholder, the death benefit paid is the sum assured minus the loan amount.
The zero-cost term plan offers a special exit option to the policyholder after they have completed a certain number of years with the active policy. The insurer decides the tenure that the life assured has to endure before exiting the plan. Once the policyholder surrenders the plan, all the premiums paid are given back after the deduction of taxes and the policy terminates.
Life is very uncertain, continuously surrounded by multiple risks, diseases, accidents, or death. Term insurance in such scenarios comes in handy because it offers the financial aid that is utmost needed when these things happen. Let’s look at all the features of term insurance to understand it better.
Before buying a term insurance plan make sure you have decided how much coverage you need. Ideally, your term life cover should be 15 to 20 times your annual income.
Here is a list of the factors you should consider before calculating your ideal term insurance coverage amount:
The following premiums are for a 30-year-old non-smoker male with a coverage of 1 crore.
Insurer | Plan Name | Premium for Pure Term (in INR) | Premium for TROP (in INR) |
ICICI PRU | iProtect Smart | 17,647 | 40,455 |
HDFC Life | Click 2 Protect Super | 18,934 | 47,712 |
Max Life | Smart Secure Plus | 16,513 | 30,734 |
Bajaj Allianz Life Insurance | Bajaj Allianz Life eTouch | 14,628 | 25,888 |
Canara HSBC | Young Term Plan - Life Secure | 14,003 | 25,005 |
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Varun is a passionate content writer with over three years of experience in the insurance domain. An avid learner, he stays ahead of the industry's trends ensuring his writing remains fresh and includes the latest insurance shifts. Through his work, Varun strives to engage with targeted insurance readers.