Term insurance plan is a life insurance policy which offers you financial coverage in case of loss of life during the term.Gerber term life insurance plan is a life insurance policy that offers you financial coverage in case of loss of life during the term.You pay a yearly premium against the policy to the insurance company. This policy gives death coverage to the policyholder and offers the sum assured to the family or next of kin. The term insurance policy offers high coverage for a low premium. This plan ensures that the future of your family is safe even after your demise.
Here are some types of term insurance plans you may choose from:
1. Level Term Insurance:
This is the term insurance plan which is popularly chosen by people. The key to this plan is that the life cover and premium which you choose at the time of buying remains the same during the entire term of the policy. This type of cover is provided invariably by all life insurance companies. The nominee receives the benefits upon the death of the policyholder during the term. You must compare term policy before finalizing one.
2. Decreasing Term Insurance:
The cover for decreasing term insurance decreases at a predetermined rate during the policy period. The premium remains constant. The idea behind this type of term insurance policy is the falling requirements of people as they age. They do not need a high level of insurance as their liabilities, such as a home loan or car loan, no longer exist. Decreasing term plans are used for mortgage or loan protection. Another advantage of buying such a plan is that its premium is cheaper when compared to regular term insurance.
For instance, if you buy insurance cover for Rs.50 lakhs for 20 years, the cover may decrease by 5% each year. This way, after ten years, you will have a cover of Rs.25 lakhs instead of Rs.50 lakhs that you started with.
3. Increasing Term Insurance:
This plan works the exact opposite as that of increasing term insurance. The cover amount of the insurance policy increases as the person’s age advances. The premium remains constant. The idea behind this type of insurance policy is to factor in the rising inflation while offering insurance cover. To eliminate the threat that the insurance coverage might not be sufficient, the cover rises at a predetermined rate. For instance, at inception, the cover would be Rs.50 lakhs and the cover amount increases by 5% for each year. So, after 10 years the cover would be Rs.75 lakhs.
Tenure of this type of insurance may not be as liberal as the level term insurance and normally is 20 years. Further; there may be restricted riders that would be available. The premium would normally be higher than the other two types of insurance discussed above.
4. Return of Premium Term Insurance:
While this type of term insurance is new to the market, there are many takers for the same. As the name suggests, if you buy this type of term policy, the insurance company will return the premium paid over the life of the policy at the end of the term, in case you survive.
For instance, if you pay Rs.10,000 p.a. for 25 years for a cover of Rs.50 lakhs, the insurance company would repay to you Rs.2.5 lakhs at the end of 25 years, in case you survive the period. This policy addressed concerns of people who think term plans might be a loss.
5. Convertible Term Insurance Plans:
These plans aim to offer the most flexibility to the policyholder. Convertible Term Insurance Plans come with the feature which allows the policyholder to convert this plan to any other during its tenure. For example, if you have a regular term insurance plan but want to convert it into an endowment plan after seven years, this policy allows you to do so.
6. Term Plan with Riders:
A regular term insurance plan only offers you death benefit during the tenure of the plan. But several plans offer the flexibility of opting for riders such as critical illness cover, accident cover, etc. You can purchase these riders, at an addition to the premium, at the time of purchasing your term insurance policy.
Whichever policy type you choose, ensure to make a term plan comparison to get all the benefits.
