Types of Term Plan & Right Time to buy it


One of the most common types of life insurances is a term plan. It offers financial assistance to the policyholder for a set time. Term insurance offers death benefit, which means that the policyholder’s family will receive cover if the policyholder dies during the tenure. The policyholder must pick a nominee in order to help their family get the death benefit. The insurer pays the sum assured to the nominee. Buying a term insurance is important as it offers life cover and helps the policyholder’s family financially. A family doesn’t have to be troubled because of the financial needs created by the demise of a policyholder. Term insurance is a good way to protect families from any unforeseen event.

If you are the only earner in the family, then it will be very hard for them to secure themselves financially in the event of your untimely demise. It is recommended that you should get a cover which is 10 to 20 times your yearly salary. One of the most important factors of an insurance plan is tenure. If you buy an insurance plan with short tenure, then you may leave your family without financial protection in the future. Also, the premiums of the insurance policy play a big role in the amount of cover.

However, term insurance plan must be purchased at an early age. A policyholder in their 20s can purchase longer-term insurance. Also, the premiums for a person in 30s will be expensive compared to a person in 20s.

With that in mind, here are different types of term plans-

  • Pure Level Term Plan

Pure level plan is one of the most popular types of term insurance policies. It is a policy in which your family will get a sum assured if you pass away during the term. You will have to pick a nominee who will receive the death benefit. Normally, pure level term plans aren’t costly. However, you won’t receive your premiums if you survive the policy term. Different factors such as age, gender, term, etc. impact the premium.

  • Return of Premium Policies

A lot of people want to get their money back if they survive the term. Return of Premium plans offers that. If the policyholder survives the term, then the insurer returns the premiums they had paid after the maturity. The policyholder needs to pick a nominee. If the policyholder dies during the term, then the nominee receives the sum assured. However, the premiums are expensive as they offer survival benefits as well as death benefit.

  • Increasing Sum Assured Plans

Many policyholders have a rise in their incomes as they become professionals in their jobs. It offers the policyholder to increase their sum assured. However, the premiums become expensive too.

  • Income Benefits Term Insurance Plans

Term Insurance Plans with income benefits offer financial help to the policyholders who want to replace their normal income. The policyholder receives sum assured in instalments over a period. However, policyholders can receive lump sum amount too.

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