Must Know: The 6 Types of Term Insurance Plans

Before Purchasing Term Insurance It Is Important To Know Which Plan Suits You. Term insurance policies are classified into six kinds.

Why Should You Purchase Term Insurance Right Away?

· When you’re in good health, getting an insurance is simple.

· Because you are in good health, your premium amount will largely stay the same during the term of your coverage.

· If you develop lifestyle conditions such as heart disease, diabetes, high blood pressure, or lung disease, you may be denied coverage.

· If you are approved for the coverage, your premiums may rise by 50-100 percent if you have a lifestyle illness.

What Are the Six Different Types of Term Insurance Plans?

Before purchasing a term insurance policy, it is critical to determine which plan is best for you. Term insurance policies are classified into six kinds.

1. Term Insurance Plan with a Fixed Premium

This is the principal plan in which your family or nominee gets a predetermined, set sum guaranteed amount in the event of your untimely death.

Example:

For example, if your sum promised is Rs. 50 lakhs, your nominee or family would get Rs. 50 lakhs if you die within the policy term.

2. TROP (Return of Premium) Plans

This plan is comparable to basic term insurance. But what if the policy develops while you are still alive? In such scenario, your complete subscription payment will be refunded to you.

Example:

Assume you pay a premium of $10,000 every year for the next 20 years. Your guaranteed sum is 50 lakhs. You, on the other hand, escaped. As a consequence, you will get a refund of your whole premium payment of Rs. 2 lakh.

3. Extending Term Insurance Coverage

You may raise your sum guaranteed amount by a specified percentage each year under this plan. This is possible without raising your premium.

Example:

For example, suppose you pick an insurance worth 50 lakhs with a ten percent annual increase. After five years, your insurance will be worth 75 lakhs.

4. Term Insurance Plan With Decreased Premiums

This is strongly suggested if you have any debts, such as a house loan with EMIs. This strategy is the inverse of the growing term strategy. In this case, the amount promised is reduced by a certain percentage each year.

Example:

Assume you have a house loan in the amount of 20 lakhs. Your plan has an annual decrease rate of 10%. As a result, your amount guaranteed will be 18 lakhs at the conclusion of the first policy year.

Assume you die in the second year of your coverage. As a consequence, your nominee or family would get Rs. 16,20,000/- as an amount guaranteed.

This is beneficial since your pending home loan money might be paid with this cash guaranteed if you are not present. Your family will be free of the financial burden of EMIs for the rest of their life.

5. Term Insurance Plans with Convertible Benefits

These plans offer the possibility of being converted into any other plan.

Example:

For example, suppose you purchased a 30-year term insurance coverage. After 5 years, you decide you want to convert it to a whole life insurance policy or an endowment plan. You may do so with these sorts of plans.

6. Riders on Term Insurance Policies

These plans have a distinct benefit in that they have advantageous riders. Critical sickness coverage, accidental death coverage, and a variety of additional riders are among those available.

Example:

Assume you’ve added a critical illness rider to your policy. As a consequence, you will be covered for a wide range of severe ailments. Cancer, heart disease, and any other maladies mentioned by your insurance carrier are examples of critical illnesses.

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Conclusion

Before selecting a plan, it is advisable to get guidance from term insurance professionals. They can assist you in selecting the best term insurance policy.