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    Types of term insurance plans

    Published on March 24, 2020

    A term insurance plan has been a part of the insurance market for a long time. Although it has present for a long time, only 5% of the urban population have purchased a term plan for their insurance needs. The primary reason for the minimal sale of term insurance plans can be lack of awareness and visibility. Due to lack of awareness, many of you might fail to understand the different types of term insurance plans available in the market. If you do not know which term policy can suit your needs, you might be unable to make the right selection. Therefore, let’s understand the top four types of term insurance plans to make an informed decision in the future:

    1. Traditional term insurance

    A traditional term insurance plan is the simplest form of insurance. It has been introduced in the Indian market with the primary aim of financial protection. Since it can aim to protect your family members financially, traditional term insurance can provide death benefits in your absence. With the death benefit, your family members can either clear your past liabilities or maintain their current standard of living after your demise. Additionally, you can avail riders on top of your traditional term insurance to strengthen it. However, you might not be eligible to receive anything in return in case you survive your term policy.

    1. Term plan with return of premium (TROP)

    As the name suggests, TROP can provide you with the whole premium amount after the maturity period. Typically, your insurer can be liable to return the premium value that you have paid so far from the time of purchase of term insurance policy if you survive the term policy. Since you can obtain the premium amount during the maturity period, you might have to pay a relatively high premium than a traditional term plan.

    1. Smart term plan

    A smart term plan can be a combination of death benefits as well as survival benefits under a single plan. While the death benefits can safeguard your loved ones in your absence, the survival benefits can allow you to lead a secure retirement period. One other term insurance benefits are that smart term insurance can act as whole life term insurance that can provide you with various variants to match your evolving needs. Under smart term insurance, the variants can depend from one insurance company to another.

    1. Convertible term plan

    As the name suggests, a convertible term plan can let you transform your existing term policy into any other type of insurance product. For instance, it can be possible to convert your term plan of 20 years into an endowment plan or a whole-life policy after the completion of five years. However, you should inform your insurer before converting your term policy into another insurance product.

    To conclude, term insurance plans can protect you from the eventualities of life such as death, critical illness, loss of income, and so forth. Therefore, you should choose a term plan carefully based on its types, your financial requirements, and suitability. While buying an offline term plan can be time-consuming, online term plan can ensure your convenience and affordability. If you face any difficulty in purchasing a term plan online or if you are unable to understand what is term insurance in detail, consult a financial expert to guide you through the process.

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