Term Insurance Plans

A term plan provides coverage for a specific length of time. It means that if the policyholder dies within the set time period, the policyholder's nominee is entitled to the death benefit or the specified quantity insured in a lump sum or monthly instalments (as stated by the policy holder). However, if the policyholder lives longer than the policy term, that is, if he lives longer than the term period for which he purchased the policy and coverage, he or his nominee will not be entitled to any benefits.

There are various types of term insurance plans:

• Return-of-premium term plan- In most term insurance policies, there is no provision for a premium refund, although some companies are now offering plans with a premium refund option at the policy's maturity. Choosing this type of term plan, however, may result in a larger premium than typical.

• Level term insurance- Along with the premium to be paid, the amount of coverage remains constant during the policy's term.

• Term plans with survival benefits- Another type of term plan is one in which the policyholder has the right to receive survival benefits, but only if he or she is disabled partially or permanently.

• Annual renewable term insurance- The policyholder has the option of renewing his coverage on an annual basis. This type of coverage has a cheaper initial price, but it gradually increases when the coverage is renewed year after year. The policyholder's ability to analyse and pay for his needs annually is ensured by the plan.

• Decreasing term insurance- Under this type, the amount of coverage a policyholder receives decreases as they get older. This type of insurance is appropriate for those who believe their liabilities will diminish as they age.

• Increasing term insurance- As the policyholder's age rises, the coverage increases while the premium remains same. This type of plan is critical in combating inflation problems and gives policyholders piece of mind that they will not be underinsured in the future. Because of this, the premium charged is more than for other types of term insurance.

When the insurance term ends, the policyholder may or may not be able to obtain the same coverage for the same premium amount. Alternatively, if the premium payment remains constant, the degree of coverage is reduced. The premium rate is determined by a number of factors, including the policyholder's lifestyle and health status, as well as possible death scenarios.

A simple rule of thumb is that you should have at least 10 times your annual income in life insurance. However, your coverage must be sufficient to cover your existing and future liabilities, as well as your financial objectives. If you have a home loan of Rs. 50 lakhs, you should make sure that your life insurance policy is large enough to cover the liability. Remember to factor in inflation when determining future goals.

This, of course, is dependent on how early you get your term insurance coverage. The sooner you get one, the longer you will be protected. The general rule is to buy an insurance for as long as feasible and then cancel it when it is no longer needed. This is especially handy if your policy is designed to pay off a loan while you are away. You can customise your coverage based on how many years you have left to pay your premiums. It's also a good idea to make sure you're protected for the rest of your working life.

Term insurance is a life insurance policy, and insurance companies rely on risk assessments. We charge you a greater premium if you are at a higher risk of developing a critical disease. If you smoke, your premium will be more than if you did not smoke.

Only if the insured dies in an accident does accidental insurance give a death reward. Any type of death is covered by a term insurance policy.

If you get term insurance online, the nominees will be paid an amount assured if something unfortunate happens. When a life insurance policy matures, it pays out benefits.

Yes, the policyholder can claim a tax benefit of up to INR 1.5 lakh under Section 80C of the Income Tax Act, 1961.

Term insurance covers all sorts of death, including natural death, death from an accident, and death from serious illnesses, unless the policy contract provisions specify otherwise.

The insurance plan will expire at the conclusion of the policy term. If there are any survival benefits, they are disclosed.