Types of term insurance plans

Term insurance is an essential tool for safeguarding the financial future of your loved ones in case of unforeseen events. To make the most of it, it is important to understand the different types of term insurance policies available in the market. Each offers unique features tailored to various financial needs and personal situations. By knowing these types, you can make a more informed decision that aligns with your goals.

Term insurance is a type of life insurance that provides coverage for a specific period or 'term.' If the policyholder passes away during this term, the insurer pays a death benefit to the nominated beneficiaries. The absence of a maturity benefit keeps term insurance affordable while offering high coverage amounts. Its simplicity and cost-effectiveness make it a popular choice for securing the financial future of one’s dependents.

The different types of term insurance policies

There are various types of term life insurance policies, each designed to cater to different needs. Choosing the right one can depend on factors such as financial goals, family requirements, and coverage needs.

1. Level term insurance: This is the most common type where the coverage amount remains fixed throughout the policy term.

2. Increasing term insurance: The coverage amount increases at specified intervals to counter the effects of inflation.

3. Decreasing term insurance: Here, the coverage amount decreases over time, typically aligned with reducing financial liabilities like loans.

4. Convertible term insurance: This plan allows the policyholder to convert their term policy into a permanent life insurance policy later, without a medical exam.

Key features of term insurance plans

Term insurance policies come with various features that make them a reliable financial tool. These features ensure that you get comprehensive coverage at affordable rates.

• Fixed premiums: Premiums remain constant throughout the policy term, making it easier to budget.
• Customisable cover: Many plans allow the option to add riders for additional benefits, like critical illness coverage.
• No maturity benefit: Term insurance is a pure protection plan without a savings or investment component.
• Tax benefits: Premiums paid for term insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act.

Key benefits of term insurance plans

Opting for a term insurance policy offers a range of benefits that make it an attractive option for ensuring financial security.

• Affordable coverage: Term insurance provides high coverage amounts at relatively low premiums compared to other life insurance plans.
• Financial security for dependents: It guarantees that your family is financially protected in your absence.
• Flexible policy terms: You can select the term based on your specific financial obligations, such as your children’s education or mortgage repayment.
• Customisable with riders: Additional benefits like accidental death or critical illness cover can be added for enhanced protection.

Read more: Term life insurance benefits

Important factors to consider while buying term insurance

Before purchasing term insurance, there are certain factors to evaluate to ensure that the policy meets your requirements.

Coverage amount: Assess your financial obligations, such as loans and family needs, before deciding on the coverage.

Policy tenure: Choose a policy term that aligns with your major life goals, like your children's education or retirement.

Claim settlement ratio: Check the insurer's claim settlement ratio to ensure reliability in the event of a claim.

Riders: Consider adding relevant riders like critical illness or disability cover for more comprehensive protection.

Buying term insurance online is simple and convenient. You can easily compare and select a policy that suits your needs without any hassle.

• Research and compare plans: Use online comparison tools to evaluate different policies and their features.
• Calculate your premium: Use a premium calculator to check how much you will need to pay for the desired coverage.
• Choose the right policy: Select a policy that offers adequate coverage and fits within your budget.
• Submit the required documents: Provide necessary details such as your identity proof, medical records, and income information.

Bajaj Finance along with leading insurance companies in India offers a wide range of affordable insurance plans. You can avail these insurance plans online through Bajaj Finance Insurance Mall. The platform offers 100% digital journey with minimal- required paperwork.

Conclusion

Term insurance is a vital financial instrument to ensure the security of your loved ones in your absence. By understanding the various types of term insurance policies and considering key features and benefits, you can make an informed decision. Evaluating important factors such as coverage, tenure, and the insurer's reputation can help you choose the most suitable policy. With the ease of purchasing term insurance online, securing your family’s future is now simpler than ever.

Related Article