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What is Term Insurance Plan?
A Term insurance plan is a life insurance of the simplest form. Term insurance provide policyholders with monetary coverage in lieu of premiums paid for a specific time period. Term plans offer compensation to the nominee of the insured in case of his/her unfortunate demise during the term of the policy. Since term plans aid dependants of nominee with financial security, it is important to choose them wisely. Term insurance plans offer death benefit in the form of sum assured to the family of the insured person in the event of his/her unexpected demise. Term plan premiums mostly depends on different factors like gender and age of the policyholder, sum assured, policy duration and so on. Term plans are inexpensive and are easily affordable. They allow greater coverage at affordable premium.
Types of Term Insurance Plans
Below are the various types of term insurance plans:
Level Term Plans
This is the most basic term plan available with a fixed sum assured through the tenure of the policy and the nominee receive benefits if the insured dies.
Term Plan with Return of Premium (TROP)
The TROPs are available with maturity benefits where the insured receives the premium paid at the time of maturity if she/he survives through the policy period.
Increasing Term Plans
In these plans, the insured get the benefit of increasing the sum assured, which means the insured can enhance the sum assured annually at the time policy tenure.
Decreasing Term Plans
In these plans the sum assured keeps decreasing each year as per the declining requirement of the insured.
Convertible Term Plans
The plans comes with limited term policy, which can be converted later into insurance policy for entire life. The key benefit here is that while converting the policy the insured person doesn't require to give any medical proof.
Term Plans with Riders
The plans comes with rider options like:
- Accidental Death Benefits
- Accidental Total and Permanent Disability
- Critical Illness Rider
- Waiver of Premium Rider etc.
Why should you buy a Term Insurance Plan?
Term plans are cost effective and most basic kind of life insurance plans. These plans help the family of the insured by securing them financially. Below are some reasons to opt for the best term insurance plan:
Affordable Premiums
Most term plan insurances offer cost-effective and affordable premium rates. Thus, term insurance policyholders can easily avail greater coverage at reasonable premium prices. It is better to buy a term plan when you are young so that you are levied with lower premium rates. That is because with age people become prone to several diseases, which increases the price of premiums of term plans.
Helps in Tax Savings
Another reason to buy a term plan is that it aids in saving taxes since term plan premiums are eligible for tax benefits. The Income Tax Act Section 80C and 10D allow up to 1.5 Lakh rupees death benefit under term plans.
Option to Add Riders
Another good reason to buy the best term insurance plan India is that they allow additional coverage as riders. These riders aid in enhancing the scope of a term plan coverage. An insured person can add riders to their term policy by paying an extra premium amount. Some such riders include
- Accidental Death Benefit
- Accidental Total and Permanent Disability
- Critical Illness Rider
- Waiver of Premium Rider etc.
Provides Financial Security
A term plan insurance offers financial security to the family members of the insured in the event of an unforeseen death of the insured during the policy period. This monetary security help the nominee of the insured in leading a good life and to fulfill the monetary requirements of the insured. For instance, if you buy the best term insurance plan for 1 crore at young age by paying a nominal premium amount, you get complete coverage for your family members after you are gone.
Affordable Premiums
Most term plan insurances offer cost-effective and affordable premium rates. Thus, term insurance policyholders can easily avail greater coverage at reasonable premium prices. It is better to buy a term plan when you are young so that you are levied with lower premium rates. That is because with age people become prone to several diseases, which increases the price of premiums of term plans.
Helps in Tax Savings
Another reason to buy a term plan is that it aids in saving taxes since term plan premiums are eligible for tax benefits. The Income Tax Act Section 80C and 10D allow up to 1.5 Lakh rupees death benefit under term plans.
Option to Add Riders
Another good reason to buy the best term insurance plan India is that they allow additional coverage as riders. These riders aid in enhancing the scope of a term plan coverage. An insured person can add riders to their term policy by paying an extra premium amount. Some such riders include
- Accidental Death Benefit
- Accidental Total and Permanent Disability
- Critical Illness Rider
- Waiver of Premium Rider etc.
Provides Financial Security
A term plan insurance offers financial security to the family members of the insured in the event of an unforeseen death of the insured during the policy period. This monetary security help the nominee of the insured in leading a good life and to fulfill the monetary requirements of the insured. For instance, if you buy the best term insurance plan for 1 crore at young age by paying a nominal premium amount, you get complete coverage for your family members after you are gone.
Benefits of Term insurance Plan
- Death Benefit -the nominee receives an amount in the form of death benefit in case of unfortunate demise of the insured during the term of the policy to support the members financially.
- Mental Peace - by securing your family's future financially, the term plans allow mental peace to the insured.
- Financial Security - term plans offer financial protection to the family of the insured. Further, plans like TROP allow the insured to gain a sum assured on plan maturity if the person survive the term of the policy.
- Tax Benefits - life insurance premiums are eligible for tax benefits under Section 80C of Income Tax.
- Pocket Friendly - term plans offer high insurance coverage at affordable premiums.
- Whole Life Cover Some term insurance companies offer whole life coverage along with standard term plans.
Features of term insurance plan
Term life plans offer monetary security to the nominee of the insured person. Below are some features of best term insurance plans in India:
- Death Benefits -Term plans offer death benefit to the nominee of the insured in the form of sum assured. Thus, if the life assured dies an unfortunate death during the policy term, the nominee gets a lump sum amount to lead a financially secured life.
- Maturity Benefits - Some term insurance plans offer maturity benefit to the life assured if the person survives the tenure of the policy.
- Tax Benefits - Term plans are also eligible for tax benefits under Income Tax Act.
- Riders/Add-on coverage - Riders like Accidental Death Benefit, Accidental Total and Permanent Disability, Critical Illness Rider etc. are also available with term insurance plans.
- Premium Payment - Term plans offer three ways of premium payment including Regular premium, Limited premium and Single Pay premium.
- Frequency of Premium Payment Under term plans, individuals can opt to pay premium in different ways:
- Monthly payment
- Quarterly payment
- Half yearly payment and
- Yearly payment
- Death Benefit Payout Under term plans, you have the flexibility to select the death benefit option as:
- Lump sum amount,
- Lump sum with regular payouts,
- Regular payouts, and
- Lump sum plus increasing monthly payout
- Sum Assured - The minimum sum insured under term plans starts from 50,000 rupees, while there is no upper limit on sum assured.
Frequently Asked Question
With 99.07 % claim settlement ratio in FY 2019-20, HDFC Life Click 2 Protect Life is regarded as the best term plan in India. Others like ICICI Pru iProtect Smart, Max Life Smart Secure Plus Plan and TATA AIA Life insurance Sampoorna Raksha Supreme Plan are also rated among the top term plans in India.
Below are some of the best bank term insurance plans:
- HDFC Life Click 2 Protect Life
- ICICI Pru iProtect Smart
- SBI Life Term Insurance
- Canara HSBC OBC Life Term Insurance
They are namely:
- Level Term Plans
- Term Plans with Return of Premium (TROP)
- Increasing Term Plans
- Decreasing Term Plans
- Exide Life Elite Term
- Adity Birla Sun Life Shield Term plan
- Bajaj Allianz Smart Goal Project
- SBI Life eShield Term Plan
Yes, in the present times, there are many insurance providers who offer cover natural death under term insurance plans.
With 98.01% Claim settlement Ratio, Aegon Life iTerm Planis regarded as the best term plan in India in 2022. Others like Aditya Birla Sun Life Protector Plus Plan (97.54% CSR), Aviva Life Shield Advantage Plan (97.53% CSR) and Ageas Federal iSurance Flexi Term Plan with 96.47% are other best term plans.
