Term insurance plan

Term insurance plan

This is the most basic plan and simplest form of insurance offered by the life insurance industry. In this plan the life insurance company promises to pay a specified amount (sum insured) if the insured dies during the term of the plan. If the life insured survives the entire duration of the plan then they will not be entitled to anything, meaning that there is no maturity benefit with such policies.

So in short, this plan offers only death cover in the event of the death of the life insured during the period of the plan.

Key points: 

• Term insurance plans offer only death cover. 
• They are the simplest form of insurance plans offered by insurance companies. 
• Term insurance plans are the cheapest insurance plans available in the market. For a small premium an individual can take out a big protection cover against their liabilities. 
• Tenure: as the name suggests these plans offer protection only for a specified term. Normally the term starts from 5 years and runs to 10, 15, 20, 25, 30 years or any other term chosen by the insured and agreed by the insurer. 
• Protection against liabilities: to cover larger liabilities like home loans or car loans, term insurance cover is the best solution. 
• Insurance companies, under some term plans, allow the life insured to increase or decrease the death cover during the term of the plan. 
• Minimum and maximum sum insured: for most term plans the insurance company specifies the minimum and maximum sums insured. For some insurance companies the maximum sum insured is subject to underwriting. 
• Minimum and maximum age: most insurance companies specify the minimum and maximum age at entry and exit for term plans. 

Anand Khemka
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