Best Term Insurance Plans for Your Family in India

Term insurance is a pure protection plan that takes care of your loved one’s finances in your absence. As the name suggests, every term plan offers coverage only for a specific duration or ‘term.’ In the event of your demise during this period, the insurance company pays the beneficiary the death benefit, i.e., the policy’s sum assured in a lump sum.

Over the years, as the life insurance segment has evolved, so has term insurance. Today, insurance companies have a variety of term plans to suit the varying insurance needs of the people. And, before you choose the best term plan, you must know about the different types of term insurance policies and their features and benefits.

Level Term Plan

This is the most common type of term plan, and most insurance companies issue a level term plan by default. In this type of term insurance, you select the coverage sum assured at the time of buying the policy, and it remains the same constant throughout the policy period.

The best thing about buying a level term plan is that you can buy a policy with a high sum assured at a lower premium if you buy the policy at a young age. And the premium will remain unchanged.

Increasing Term Plan

As the name suggests, in this type of term plan, the insurer gives you the flexibility to increase the sum assured amount after specific intervals during the policy term. The sum assured is increased by a particular percentage, which is predetermined when buying the policy.

It is an excellent choice of term plan if you want to keep up with the rising inflation and ensure that your family has sufficient funds to sustain after you are gone. Also, it is the best-suited term plan if you foresee a rise in your financial liabilities in the future. The increased sum assured will help your family get higher protection and financial support.

Decreasing Term Plan

In contrast to the increasing term plan, the sum assured decreases by a specific predetermined percentage as your age increases in this type of plan. It is the best term plan for those who don’t have any liabilities. In such cases, you may not need a higher sum assured, and you can do with a basic plan with a lower premium. Instead of paying a high premium for term insurance, you can use the amount in other pension plans and generate returns.

Return of Premium Term Plan

Amongst other term plans mentioned above, this is the newest variant and a very popular type. Unlike the traditional term plan, the return of premium term insurance comes with a savings component.

In this plan, if you outlive the policy period, the insurance company repays the premium you have paid after maturity. However, you must know that the return of premium clause is applicable only if your family has not filed any claim during the policy period. Also, you must have paid the premiums diligently throughout the term.

Final Word

There is no one-size-fits-all kind of term plan. The idea of a ‘best term plan’ is highly subjective; you must choose your plan wisely based on your specific needs, family liabilities, dependents, and financial goals.