As the name suggests, these policies are bought for a fixed period of time and usually carry cheaper premiums as compared to other life insurance policies because of the absence of maturity benefits. It is a kind of life insurance which provides a death benefit to the nominee only if the life assured dies within the term of the policy. If the insured one outlives his policy, no amount is payable to the nominee by the insurance company.
The various types of Term Insurance Plans are:
Level Term Insurance Plan: Here, the death benefit remains constant throughout the policy’s term and renewal premium also remains fixed.
Decreasing Term Insurance Plan: In this type, the death benefit decreases with time, but the renewal premium remains constant.
Increasing Term Insurance Plan: In this case, both the coverage and the premium increase with time, during the term of the policy.
The benefits of opting for a term plan are as follows:
Comes at a very affordable rate of premium
Online purchase and renewal facility
Provides more coverage at minimum premium rates
Provides flexible pay-out options
Premium paid for term insurance is eligible for tax exemption under Section 80C
The policyholder may opt for different riders to enhance the coverage of the policy