Various Types Of
 Term Plans
  • Term Insurance
  • Types of Term Plan
  • How to Select the Best Plan
Various Types Of Term Plans
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Types of Term Insurance: Overview

Over the course of time, we have been given ‘n’ number of options to choose from, be it what we want to eat to what insurance we want to opt for. We are sure that you also might have come across a number of term insurance plans giving out various features and perks. It can be overwhelming to choose the right term insurance policy that fits your needs and budget. We can help.

Term Insurance Plans

Term insurance is a straightforward type of insurance coverage that offers a death benefit to the beneficiaries of the policyholder if the policyholder passes away during the policy term. In this article, we will explore the different types of term plans that are available and help you understand which plan may be suitable for you.

Types of Term Life Insurance

There are several types of term insurance plans available in the market, each designed to cater to specific needs and requirements of the individuals. Here are the most common types of term plans:

  • Level Term Insurance
    Level term insurance is the most common type of term insurance plan. It provides coverage for a fixed period, typically ranging from 10 to 30 years, and offers a level death benefit throughout the policy term. The premiums remain the same throughout the policy term, making it easy to budget for the premiums. Level term insurance is an ideal option for those who want predictable coverage and fixed premiums. It is a simple and straightforward policy that is easy to understand and offers affordable coverage to the policyholder's beneficiaries.
  • Decreasing Term Insurance
    Decreasing Term Insurance is a type of term insurance plan that provides a decreasing death benefit over time, while the premium remains constant throughout the policy term. It is an excellent option for individuals who want to ensure that their outstanding loans or mortgages are covered in case of their death. However, it is essential to understand that Decreasing Term Insurance policies do not offer any cash value or investment features, and the death benefit is paid only if the policyholder dies during the policy term.
  • Increasing Term Insurance
    A term life insurance contract with an increasing death benefit is called increasing term insurance. The policyholder can select the policy term according to their particular requirements, and the premium stays set throughout the entire policy term. This plan provides an increasing death benefit over time to keep up with the inflation rate. The policy does not offer any cash value or investment features, but some policies may offer convertibility options and riders that provide additional coverage.
  • Renewable Term Insurance
    Renewable Term Insurance is a type of term life insurance policy that provides the policyholder with the option to renew their policy at the end of the term without having to undergo another medical exam. The policy is a term policy with a fixed premium that remains the same throughout the policy term. The policyholder can renew their policy at the end of the term with a higher premium, and some policies may offer the option to convert the policy to a permanent policy or offer riders that provide additional coverage beyond the standard death benefit. This type of policy provides flexibility and allows the policyholder to continue their coverage as they get older.
  • Convertible Term Insurance
    A term life insurance policy that offers the option to change to permanent life insurance without requiring a new medical examination is known as convertible term insurance. The insurance is a term policy with a set premium that won't change over the course of the policy.The converted permanent policy will have features such as a level death benefit and cash value. This type of policy provides flexibility and allows the policyholder to adjust their coverage as their needs change.
  • Zero Cost Term Insurance
    Zero cost term insurance is rather new to the term insurance domain. In this type of insurance policy, the policyholder can withdraw their term insurance plan after a certain time pre-decided by the insurer and he will receive all of his premiums back after deductions of some percentage of taxes which, too, are pre-decided by the insurer. Just like TRoP plans, zero cost term insurance to pays back the premiums but, the major difference between the two is that TRoP pays back if the policyholder outlives the policy and zero cost gives an option of withdrawal of the policy according to the policyholder’s wish which can be way before the policy tenure.
  • Return of Premium Term Insurance
    Return of Premium Term Insurance is a type of term life insurance policy that returns the premiums paid by the policyholder at the end of the policy term if the policyholder outlives the term. The policy is a term policy with a fixed premium that remains the same throughout the policy term, and the premium is typically higher than traditional term life insurance. The policy is typically limited to 15, 20, or 30-year terms, and the policyholder should choose the term length based on their needs and financial goals. This type of policy provides a savings component and allows the policyholder to recoup their premiums if they do not pass away during the policy term.

How to Choose the Perfect Plan for Yourself

Choosing the perfect term plan can be a daunting task, but it is essential to guarantee your loved ones' financial stability in the event of your untimely death. When selecting a contract plan, keep the following things in mind:

  • Amount of coverage
    In the event of your untimely death, the coverage amount should be adequate to meet the financial requirements of your family. Choosing coverage that is at least ten times your yearly income is advised.
  • Policy term
    The policy term ought to be determined by your requirements and financial objectives. If you have young children, you might want a longer insurance term; if you don't have any dependents, or if you have older children, you might want a shorter policy term.
  • Amount of Premium
    The premium payment should be reasonable and within your financial range. To get the best deal, it is advised to compare the premium rates offered by various insurance providers.
  • Riders
    The term plan has extra benefits that can be added as riders. Examples of riders include accidental death benefit, critical illness cover, and waiver of premium. Consider which riders are important to you and your family and choose a policy that offers those riders.
  • Claim settlement ratio
    The claim settlement ratio is the percentage of claims settled by the insurance company. It is important to choose an insurance company with a high claim settlement ratio to ensure that your family will receive the death benefit in case of your demise.
  • Reputation of the insurance company
    The reputation of the insurance company should also be considered. Research the insurance company's history and customer reviews to ensure that they have a good reputation and are reliable.

Conclusion

Each type of term plan has its own set of benefits and drawbacks, and it is essential to understand them before selecting a plan. It is recommended to consult with a financial advisor or insurance agent to determine which type of term insurance plan may be suitable for you. You can easily contact the PolicyX advisors if you have any doubt or need assistance in choosing the right plan for you.

Types of Term Insurance: FAQs

1. What is the difference between level term insurance and decreasing term insurance?

The key difference between is that Level-term insurance provides a fixed death benefit throughout the policy term, whereas decreasing-term insurance provides a death benefit that decreases gradually over time.

2. Is it true that a person can convert his term insurance to a life insurance policy?

It is true that we can change a term insurance policy to a life insurance policy, that too without any medical examination.

3. What is the concept of renewable term insurance?

It is a term insurance that allows the policyholders to renew the policy at the end of the policy term, without undergoing any medical checkup. These plans provide flexibility to the customer when they get older

4. What does the term Return Of Premium mean?

Return of premium term insurance is a policy, in which the premium paid by the customer is returned if he/she outlives the policy term. This policy acts as a saving benefit.

5. What are the factors a person must consider before buying a term insurance plan?

When selecting a term insurance policy, consider factors such as the coverage amount, policy term, premium affordability, available riders, the claim settlement ratio of the insurance company, and the company's reputation.

6. What is zero-cost term insurance?

Zero-cost term insurance offers the benefit of withdrawing your policy before the policy tenure ends and pays back all of your premiums after deducting the taxes. The insurer gives a pre-decided tenure after which you can end the policy if you do not have any further major responsibilities to cater to. Unlike TRoP, zero cost term insurance does not come with costly premiums.

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What Our Customers Have to Say

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Tanya

Chennai

September 29, 2023

I needed help with rider options after the purchase of my term insurance policy and was guided immediately by the customer care team

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Piyush

Raipur

May 1, 2023

I seek help from PolicyX when it comes to purchasing any kind of insurance because they provide me with the best quotes and options for insurance

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Priya Sharma

Jaipur

December 14, 2022

PolicyX has a smooth service from booking policy to verification. Employees are very patient and have good knowledge and help you throughout the process. Had great experience dealing with them

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Somesh

Agra

December 9, 2022

I had many confusions regarding the term policies . But Policyx has handled it well, m happy that they are my wayfarer in this journey.

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Prerna Kumari

Mumbai

July 11, 2022

Good company. Presents nice term insurance plans and flexible plans also. My husband has brought one for the family.

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Priya Sangwan

Mumbai

July 11, 2022

IndiaFirst Term Insurance company ensures that your family s needs are looked after. One of the best companies offers a term plan per your needs.

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Priyanshi Deewan

Hyderabad

July 6, 2022

I recently received the claim amount of the policy that my husband had brought for us. I am glad that the company understands the needs of its customers and their families. Well done Canara HSB...

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Rishabh Kumar

Delhi

July 6, 2022

I bought a term plan with Canara HSBC for the protection of my family and have been satisfied with the benefits received. It is simple and easy to buy their plans.

Naval Goel

Naval Goel : Reviewed By

Naval Goel is the CEO & founder of PolicyX.com. Naval has an expertise in the insurance sector and has professional experience of more than a decade in the Industry and has worked in companies like AIG, New York doing valuation of insurance subsidiaries. He is also an Associate Member of the Indian Institute of Insurance, Pune. He has been authorized by IRDAI to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.

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