Features of a Term Insurance Policy in India
Life is unpredictable; however, one can always prepare for any contingency that may occur at some point in life. Be it an accident, a death, or a life-threatening disease, you can always make sure that you are financially secure during such scenarios. Term plans are cost-effective and are essentially pure protection plans, which means your family will be financially protected in case something happens to you in the future. Unlike traditional life insurance policies like ULIPs, term plans do not offer any return on investments. They offer you the element of protection only and no maturity benefit is given out at the end of the policy term.
Enumerated below are the features of a typical term insurance policy available in India:
They are highly cost-effective:
The reason why most people in India choose to purchase a term plan is that of its high affordability feature. A pure term insurance policy essentially provides life cover to the insured for a certain amount known as the sum assured. In the case of death of the insured during the term of the policy, the death benefit sum assured is given out to his/her family by the insurance company. Purchasing a term plan is the first step that an individual takes towards safeguarding his/her family against all kinds of debts, loans, and it also helps the family maintain a certain standard of living.
Some term plans offer a return of premiums:
A certain variant of term plans incorporates the feature of return of premiums. This particular feature is known as term plan with return of premium or TROP and it basically provides a certain maturity value to the insured which is equivalent to the return of all the premiums that have been paid. However, this feature will only be applicable if the insured survives the term of the policy. In comparison with pure vanilla term insurance policies, such plans are slightly more expensive. The maturity value will vary from one insurer to another and from one plan to another.
They are super easy to purchase:
Since term plans do not incorporate the element of investment, they are super convenient to purchase (both online and offline). The individual will not have to check where the company is investing his/her money. He/she will only be required to determine the sum assured amount based on his/her financial requirements, the standard of living, financial debts, and so on.
They offer flexibility in terms of premium payment:
You can choose the mode of your premium payment in a term insurance policy. You may choose to pay your premiums either annually, quarterly, semi-annually, or monthly. Additionally, there are certain term plans available in the market that offer a limited pay or single pay premium option.
Can a Term Insurance Policy be Extended Beyond the Policy Term?
A typical term insurance policy cannot be extended after the term of the policy has been set and the policy has been purchased. Term plans fundamentally provide the protection element only which remains valid throughout the policy term. There are however certain term insurance policies that offer an enhanced coverage in case of achievement of certain life milestones such as marriage or pregnancy.