Types of Term Plans and Right Time to Buy Them

by Vinaya HS on August 13, 2015

in Finance

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There are mainly two types of term insurance plans – annual renewable term and level premium term. Annual renewable term life insurance offers an all year round coverage and has to be renewed annually whereas a level premium term insurance plan offers cover for a longer period of time of 5 to 20 years and is valid for this multi-year period.

One of the main advantages of annual renewable term life insurance is that it has low premium amounts as compared to level premium term insurance policies. However, the premium amount rises as your age increases and so, it is a suitable option for those who are sure that their income is going to rise considerably in the coming years.

With level premium term insurance, you have a fixed amount of premium amount right from the first year of the multi-year period you opt for to the very last. Hence, you do not have to worry even in worst case scenarios where your income may remain more or less the same over a year.

When it comes to returns, a term life insurance policy is again divided into two categories –

  1. Policies with return of premiums
  2. Policies without return of premiums

Policies without return of premiums have lower premium amounts compared to the policies with return of premiums. Investing in a policy with return of premiums is the best term insurance plan for many as they get the premium amount they paid for by the end of their term (only if the policy was not claimed earlier).

Right to Time to Buy a Policy

The ideal time to buy an insurance policy irrespective of the type is in one’s prime. The reason being that the term life insurance will cost you half of what it will be if bought, say, after ten years. You can secure yours and your family’s future and be at peace as you grow older.

However, this does not necessarily mean that term life insurance is only for those belonging to the younger age category. It is never too late to insure yourself with the best term plan in India for you and your family. But it is always best to buy it while you can as with time the premium amount also increases and so do your other financial responsibilities.

A term life insurance policy is a great option if you choose the right plan after careful consideration. Keep in mind your current financial position and goals before signing any deal as the benefits may vary from person to person.

About HDFC Life

HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.

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