What is a Family Term Insurance Plan?

Financial Aid

Getting a term insurance plan is the best choice one can make to ensure financial security for their family members after their unfortunate death during the policy term. Additionally, depending on the riders purchased, a term policy also helps financially in accidental, funeral expenses, medical bills, etc.

Comprehensive Coverage

Apart from financial help after the policyholder’s demise, term life insurance also covers unforeseen events like critical illness, accidental disability, etc., depending on your term plan chosen.

Flexibility for Life Stages

You can increase the life cover of a term policy as you reach the major milestones in your life. This helps you plan accordingly for different stages of your life like marriage, childbirth, car loans, home loans, etc.

Tax Benefits

Additionally, according to your opted tax regime rules, term insurance in India offers you the benefit of tax saving under Sections 80C and 10 (10D) of the Income Tax Act. So, you can keep your family financially secure while saving money.

Please consult your tax advisor if you are eligible for these tax benefits.

Peace of Mind

Peace of mind is the ultimate benefit of investing in the best term life insurance. You and your loved ones won’t have to worry about the finances in the event of your unfortunate demise or think about the expenses incurred in case you are hospitalized or diagnosed with a critical/terminal illness.

1. Level Term Insurance Plan

Level term insurance is the most basic type of term insurance. Here, the coverage amount (sum assured) and your premium will remain the same throughout the policy term.

Example: If you buy a policy for 20 years with a sum assured of ₹50 lakhs, your family will receive ₹50 lakhs if you pass away within those 20 years.

2. Increasing Term Insurance Plan

Increasing term insurance is a plan where the coverage amount increases over time. Here the sum assured increases at a fixed rate each year, but the premium usually stays the same.

Example: If you start with a sum assured of ₹50 lakhs, it might increase by 5% every year. So, after 10 years, the sum assured would be ₹75 lakhs.

3. Decreasing Term Insurance Plan

It is a plan where the coverage amount decreases over time. Here the sum assured decreases each year, often used to cover loans or mortgages that reduce over time.

Example: If you have a home loan, the sum assured might start at ₹50 lakhs and decrease as you pay off your loan.

4. Convertible Term Insurance Plan

Convertible term insurance is a flexible plan that can be converted into a permanent life insurance policy. You can switch your term plan to a whole life or universal life policy without a new medical exam.

Example: If you decide you want lifelong coverage, you can convert your term plan to a permanent one after a few years.

5. Term Insurance with Return of Premium Plan

Term Insurance with Return of Premium is a plan that returns the premiums you paid if you survive the policy term. If you outlive the policy term, you get back all the premiums you paid. These plans have higher premiums.

Example: If you paid ₹1 lakh per year for 20 years and you survive the term, you get back ₹20 lakhs.

6. Joint Term Insurance Plan

Joint term insurance is a plan that covers two people, usually spouses. Here, the sum assured is paid out on the first death, and the policy may continue to cover the surviving spouse.

Example: If either you or your spouse passes away, the surviving partner receives the sum assured.