What is Term Insurance?
Term insurance is a pure form of life insurance plan which provides financial protection to the life assured’s nominee(s) in case of demise of life assured during the policy tenure. It involves an agreement between the policyholder and the insurance company, wherein the insurer provides a life cover to the life assured for which he/she pays premium to the insurer. The term plan is for a specific tenure. If the life insured dies during the selected tenure, the insurance company pays the sum assured to the family to help them deal with the expenses or debts, if any, due to the loss of the earning member of the family.
Type of term plan are
Level term insurance Under this type of plan, the sum assured remains constant throughout the policy term. If the life insured dies during the policy term, the insurer pays the sum assured and the plan terminates.
Increasing term insurance
Under this type of plan, the sum assured increases every year. If the insured dies during the policy term, the increased sum assured at the time of his death is paid, and the plan is terminated.
Decreasing term insurance
Under this term plan, the sum assured reduces every year on a pre-defined basis. If the life insured dies during the policy term, the reduced sum assured at the time of his death is paid, and the plan is terminated.
Term Plan with a return of premium
This term plan has a maturity benefit and is, different from other plans. Under this plan, if the life insured dies during the policy term, the sum assured is paid. However, if the insured survives the policy tenure, the premium paid after deducting applicable taxes is refunded back as a maturity benefit, provided all the premiums of the plan are duly paid.