A term policy or a Term Insurance Plan is a kind of life insurance protection plan that can be purchased for a time period to protect the family during an emergency. This kind of insurance, however, does not offer any kind of maturity benefit but it also has a lower premium rate as compared to many other kinds of insurance policies. The policyholder can also get a death benefit which can be availed by the nominee in case of the policyholder if the latter passes away during the tenure of the policy.
The term policy is considered to be the most comprehensive, as well as the simplest of all the insurance policies and gives the policyholder to secure the family’s fortune in case of the sudden demise of the breadwinner of the family.
Likewise, there are many kinds of term policy that one can choose from:
The Standard Term Insurance Plan is the commonest and the simplest of all the plans and covers the family in the form of a death benefit during the untimely death of the policyholder, with the money payable to the family.
The Group Term Insurance Plan has been designed to meet the needs of the companies and businesses as provides life cover to all the members of the specific group or company and the coverage is also higher compared to an individual term plan.
The Term Return of Premium or TROP is a term insurance plan offers survival benefit as the premium is returned. Hence, if the policyholder survives the tenure, then the entire premium amount is paid back excluding the taxes and is a great investment for those who want to create a corpus for a long term, along with providing life protection for the family.
There are also Increasing and Decreasing Term Plans that one can opt for. Under the former, the coverage of the plan increased during a particular period of the tenure which happens as the policy calculates the risk in accordance with the rising cost of the term of the policy and the policy coverage keeps on increasing till the value is 1.5 times higher than the actual policy coverage. In case of the Decreasing Term Plan, the rate of premium payment, along with the life coverage it offers decreased at a specific rate during the policy tenure. Such plans are often used by banks and other financial institutions to cover the risks of home loans or mortgages that are provided to the customer.
Depending on the requirements, a policyholder can choose any term policy they feel is most suited to their requirements.