Understanding the Different Types of Term Insurance Plans

What are the Types of Term Insurance Plans?

Now that you've understood what term insurance is, the next question is: Are all term insurance the same? Well, technically, no. There are different types of term insurance plans based on their benefits and coverage. Here are some of them:

Level-Term Insurance Plans

These are some of the most simple and basic term insurance plans that are known for their affordability. The sum assured is fixed here for the entire policy duration, and the death benefit is offered in case of the untimely demise of the insured individual. The fixed tenure and sum assured make it easy to calculate the cost and the premium structure for detailed financial planning.

Increasing Term Plans

Increasing term insurance plans, as the name suggests, are plans where the sum assured increases by a set limit or percentage every year. This happens generally till the amount gets doubled of the original sum assured. The increasing sum assured ensures it works as an ideal hedge against inflation and rising living costs. The premiums of these plans are comparatively higher than other policies.

Decreasing Term Plans

Decreasing term plans are the policies where the sum assured or the death benefit being offered decreases at a set limit or percentage every year. For instance, a decreasing term plan with a plan tenure of 15 years and a sum assured of ₹5 lakhs may offer ₹5 lakhs in the first year; in the second year, the amount may come down to ₹4.5 lakhs, 4 lakhs in the third year, and so on. Generally, the premiums on such policies are to be paid for a limited tenure, and that's what makes these terms insurance plans quite unique.

Term Return of Premium or TROP Plans

Want a term plan with a maturity benefit? TROP is the answer. What makes TROP plans different from other term plans is that this helps you avail the maturity benefit of survival. This means that whatever premiums you pay during the policy terms are returned to you after the termination of the policy. However, the premiums of these policies are comparatively a bit higher than other regular term insurances.

Convertible Plans

Convertible term plans, as the name suggests, are plans where you can convert your term insurance plans into some other plan at a particular time. For example, say you avail of a term insurance plan for 10 years, but after completing 8 years, you want to convert it into a life insurance plan; convertible plans help you do the same easily and conveniently without much hassle.

What are the Benefits of Term Insurance Plans?

Still wondering if term insurance is worth the hype? Well, here are some compelling benefits of availing a term insurance plan.

Financial Security

Term insurance helps you with a lump sum amount that works as a financial net in case of an untimely and unexpected demise of the policyholder. This can help clear off debts, loans, and more, helping you maintain your independence and financial security.

Flexibility to Choose Policy Term and Amount

With term insurance plans, you can choose the sum assured and policy tenure based on your financial goals and objectives. Further, at Jio Insurance Broking, you get the option to choose from a variety of optional riders to make your policy more comprehensive and suitable as per your needs.

Easy, Affordable Premiums

One of the most prominent benefits of term insurance is its affordable premiums. You can easily choose a plan and customise it to enjoy the benefits of life coverage without straining your budget.

Tax Advantages

With term insurance, you also enjoy tax benefits. The Income Tax Act allows you to claim tax relief on death benefits for extra financial support under the Old Tax Regim. Take a look:

• The premiums up to ₹1.5 lakh are eligible for tax relaxation under section 80C

• Section 10(10D) allows deductions on the payouts (if conditions are met)

• Section 80D allows deductions for premiums on health riders like critical illness coverage.

Final Word

Looking to choose a term insurance for yourself? First, understanding its different types, their features, and how they work can help significantly. Once you understand these policies, you can make a better and more informed choice on what policy base suits your needs, budget, and financial goals. Furthermore, at Jio Insurance Broking, you can compare different options and choose a policy that comes with better flexibility and cost-effective premiums. So, wait no more and get the best out of term insurance plans.