The importance of term insurance, especially for people looking to support their dependents through all walks of life, cannot be overstated. The right term life insurance plan can help you create a secure financial future for your loved ones without letting the premiums burn a hole in your pocket today.
Now, there is no single term plan that suits everyone, which is why there are a number of term life insurance variants. With numerous options available in the Indian market, understanding the different types of term insurance policies and their benefits can help you make an informed choice. So, which term life insurance is the best option for you? Let’s look at the types of term plans and who they are best suited for.
What is Term Insurance?
It is a type of life insurance policy providing coverage for a specific period or term. In case of untimely demise of policyholder during this specified term the insurance company pays a death benefit (usually equals to sum assured stated under the plan) to the nominees or beneficiaries.
Term insurance plans are known for their cost-effective structure, which is afforded by a relatively hassle-free design. The simplest term plans offer only death benefit. However, there are variants of term plans that may offer some additional features at a slightly higher cost.
Why You Should Get Term Life Insurance?
Term insurance offers several compelling benefits:
Affordability: Term insurance is typically the most affordable type of life insurance, providing high coverage at low premiums.
Financial Security: It ensures your family’s financial needs are met in your absence, covering living expenses, debts, and education costs.
Flexibility: With various types of term plans available, you can choose a policy best fitting your changing life stages and financial responsibilities.
Tax Benefits: Premiums paid towards term insurance are eligible for tax deductions under Section 80C of the Income Tax Act, and the death benefit is tax-free under Section 10(10D).**
Types of Term Insurance in India
Several types of term insurance plans in India cater to different needs and preferences. Here’s an overview of some of the common ones, so you may understand which term life insurance plan is the best option for you.
The most fundamental type of life insurance, level term plans are where the sum assured remains constant throughout the policy term. It offers financial security at a low premium, with the plan offering only a death benefit. Riders may be available to enhance the scope of the plan.
In this type, the sum assured increases at a predetermined rate annually to keep up with inflation and changing financial needs.
Suitable for covering liabilities such as loans and mortgages, the sum assured decreases over time, reflecting the decreasing balance of the liability.
These plans refund the premiums paid if the policyholder survives the policy term. While the premiums may be on the higher side, they offer the dual benefit of protection and savings.
These policies allow policyholders to convert their term plan into a permanent life insurance policy during the term.
Usually offered by employers to their employees, these plans provide life cover to a group of people under a single policy.
Which Term Life Insurance Plan Is Right For You?
Choosing the right term life insurance depends on your individual needs, financial goals, and life stage. Life insurance policies are ideally a long-term commitment. Ensure that you have taken your needs and means into consideration before choosing the plan. Here is what may suit you best, based on what your needs are.
If you are starting your career or are a young professional, you may still want to protect your family’s future. It is ideal to do so at a younger age as premium costs may increase later. A level term plan might be sufficient, offering high coverage at low premiums.
An increasing term plan can ensure that the sum assured grows with your family’s needs and inflation. This ensures the cost of additional responsibilities is met.
A decreasing term plan can align with your decreasing liabilities, ensuring your debts are covered. If you expect to have fewer responsibilities in the latter half of your life, a lower sum assured may suit you best.
For Savings-Conscious Individuals
A return of premium plan might be attractive as it provides a maturity benefit. This ensures your premium amount is available to you after plan maturity.
If your employer offers a group term plan, it could be a cost-effective way to get coverage, though it may not be sufficient as a standalone policy.
Selecting the right term life insurance policy requires careful consideration of your financial goals, liabilities, and the future needs of your dependents. Choose a plan that suits you so your family can be safe even after you are gone. Using a term insurance calculator can help you determine the premium amounts and coverage needed based on your specific requirements.
Disclaimers:
** Tax exemptions are as per applicable tax laws from time to time.
IndiaFirst Life Insurance Company Limited, IRDAI Regn No.:143, CIN: U66010MH2008PLC183679, Address: 12th & 13th floor, North [C] Wing, Tower 4, Nesco IT Park, Nesco Center, Western Express Highway, Goregaon (East), Mumbai – 400 063. Toll-free No – 18002098700. Email Id:customer.first@indiafirstlife.com, Website: www.indiafirstlife.com, Fax No. +91226570600. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale. Trade logo displayed above belongs to our promoter M/s Bank of Baroda and is used by IndiaFirst Life Insurance Co. Ltd. under license.
Customers 
Distributor 
Employee 
