Term insurance is a kind of life insurance plan that provides protection to the policy holder for a specified time period say for, 10, 15, 20, 30 or maximum renewal age (varies company to company). It is a pure protection plan i.e. it does not offer anything else but only coverage against risk of death.
Term insurance plan is the most widely preferred plan because:
• It is the cheapest plan available in the market to provide insurance coverage.
• It is the simplest plan to understand i.e. it does not mix insurance with investment.
How Term Insurance Plan is works?
Term insurance plan provides coverage for a stipulated term or time period. It refers that if the policy holder dies within this defined time period, the nominee of the policy holder is entitled to receive the death benefit or the specified sum insured in lump sum or in monthly installments (as stated by the policy holder). However, it also means that if the policy holder outlives the policy term that is, if he does not die in the term period for which he has acquired policy and coverage, he or his nominee would not be entitled to receive any benefit.
Types of Best Term Insurance Plans in India
Generally, there is no provision to return the premium under term insurance plans, but some of the companies are offering the plans with the option of return of premium on the maturity of the policy. Nonetheless, choosing this kind of term plan can cost you premium higher than the usual amount.
Term Insurance Plans with Survival Benefits
This is another kind of term plan available in which the policy holder has the rights to receive the survival benefits, but it is on the condition of partial or permanent disability.
Decreasing Term Insurance
Under this kind, the coverage policy holder gets keeps decreasing with age. This kind of coverage is apt for those who deem their liabilities to decrease as they grow older.
Increasing Term Insurance
The coverage keeps on increasing as the age of the policy holder increases while the premium remains same. This kind of plan plays a vital role to counter inflation woes and provides the peace of mind to the policy holder that he would not be under-insured in the years to come. Due to the same reason, the premium charged is higher as compared to other kind of term plans.
Level Term Insurance
The level of coverage remains same for the entire term of the policy along with the premium to be paid.
Annual Renewable Term Insurance
The policy holder has the rights to renew his coverage annually. The premium for this kind is lower initially but keeps increasing as the coverage gets renewed year by year. The plan ensures the ability of the policy holder to assess his needs annually and pay accordingly.
After the Policy Term Expires
Once the policy term expires, the policy holder may or may not get the same coverage at the amount of premium fixed previously. Or if the rate of premium remains same, the level of coverage gets decreased. The rate of premium determined depends on various factors like lifestyle and health status of the policy holder and by considering various possibilities of his death.
Online Cheapest Term Life Insurance Plans
Term plans are already the cheapest of all nonetheless, their availability through online mode, lowers their rate of premium by 60-70% more. Moreover, acquiring online term insurance plans is much easier than the traditional mode as it eliminates paper work and cuts processing time considerably. These benefits, along with the other advantages of term plan, make online plans the best term insurance plans in India.
In order to avail cheapest term life insurance plan, it is advisable to buy the plan at a younger age. This brings down the premium rate considerably as there is less possibility of death in the young age.
Types of riders available with term insurance plans can be as following (but are not limited to):
• Accidental death and dismemberment
• Accelerated death benefit
• Critical illness rider
• Hospital care rider
• Partial and permanent disability
• Waiver of premium
Benefits of best term life insurance policies
• Term plans are the cheapest term life insurance plans in the market
• They are the most uncomplicated plans to understand
• Policy holder is able to choose the number of years for risk coverage
• Liberty to convert the plan into whole-life or money-back plan
• Higher coverage can be availed as compared to other kinds of life insurance plans at same premium amount
• All other charges are eliminated as there is no investment element attached to the plan
• Premiums paid for term plans are eligible for tax deductions
• Payouts made as death benefits are tax free.
• Loan is available against the premium amount paid
• Survival benefits are available in case of permanent or partial disability
• Some of the term plans also provide supplementary income in case of loss of income due to accident
• Some term plans provide protection in case of critical illness as well