- A term insurance is the simplest form of life insurance that offers a large cover at a low premium
- There are various types of term insurance plans available. Some even with a return of premium option
- Pure Term Plan, Return of Premium Plan, Increasing, and Decreasing Term Plans are all variants of term insurance
- Choosing the right term plan depends on your financial goals and liabilities
Affordable, easy to understand, and providing a large cover at nominal premiums, term life insurance is the simplest form of life insurance policies available in the market. A term life insurance is a protection plan that provides financial security to your family when you are not there.
Beyond the basic pure term life insurance, there are several variants that meet different needs. Read on to know them and select the one that best suits your needs.
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Pure Term Plan
Pure term plan is the simplest among all term insurance products. It provides a fixed sum assured to the beneficiary/ nominee in case of the policyholder’s demise within the policy period. However, if you survive the policy period, there are no financial benefits. In other words, pure term plans offer only death benefit.
The premiums for such plans depend on your age, sum assured, lifestyle habits, and policy term among others. You can avail additional discounts on premiums by purchasing these plans online.
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Return of Premium Plan
Generally, term plans don’t offer any maturity benefits. However, for those who look for pay-outs at the end of the term, life insurance companies offer variants called the return of premium plans.
As the name suggests, these plans return the premiums paid for the policy in case you survive the policy term. The table below illustrates the same for a 30-year old, non-smoking male, buying Exide Life Smart term Plan(Classic variant) for 30 year policy period.
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Plan
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Sum Assured
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Policy Period
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Annual Premium
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Total Premium Paid
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Did the life assured survive the policy term?
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Amount Received
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Exide Life Smart Term Plan:
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₹ 50 lakh
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30 years
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₹ 11,038 (excluding GST)
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₹ 3,31,140 (including tax)
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Yes
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₹ 3,31,140 (maturity benefit – Provided to the policyholder)
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No
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₹ 50 lakh (death benefit – provided to the family)
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These plans are slightly more expensive than pure term plans as they return the premium.
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Increasing Cover Term Plan
It’s no secret that inflation decreases the value of money. Hence, in the future, the life insurance cover you buy today might not be sufficient to take care of the needs of your dependents several years down the line.
Increasing cover term plans help you to hedge against inflation and beat the extra expenses en route. In this type of plan, the sum assured increases every year by a certain percentage. The increment stops after a maximum limit is reached.
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Decreasing Term Plan
Opposite to an increasing term plan, a decreasing term policy reduces the sum assured every year. The idea behind this policy is to address your different needs at various stages of life.
In your 30s and 40s, you need a policy to insure your children’s education, cover loans and other expenses. When you are nearing retirement, most of your liabilities are taken care of and you need a cover to insure your partner. You can contemplate this policy if you are serving a decreasing fixed term loan.
Choosing the Right Plan
Term plans are available in various forms. Choosing the right plan requires meticulous thinking and gauging your financial goals and needs. A term life insurance is your family’s best friend to sail through tough times and address financial constraints in your absence.
Exide Life Insurance offers you affordable term plans to secure the financial future of your family and take care of their needs in hour of distress. Get in touch with us to know more about our offerings.
