Term insurance is usually called pure life insurance. However, with different types of term insurance plans offered by insurance companies, policyholders have about six kinds of term plans to choose from.

Term insurance plan is your traditional insurance cover wherein the plan is specifically for your family in the event of your death. Usually, the policyholder doesn’t receive any amount after the maturation of the policy. However, there are different types of term insurance plans that serve your unique financial and insurance needs.

Read on to know about the six types of term insurance policies offered in India.

1.Level Term Plans

This is a typical term plan, and it does not pay off any amount if the policyholder survives the duration of the policy. This plan is popularly known as a pure insurance policy.

2.TROP (Return of Premium)

This is the hybrid version of the term plan wherein the policyholder gets a particular sum assured if he/she survives the policy tenure. However, there’s no interest paid on the premium, and only the total amount spent is returned after the maturation of the policy.

3.Increasing Term Plans

In this term plan, the total sum assured goes on increasing annually. Increasing term plans usually incur the highest premiums among all the other term plans. Most of the policyholders sign up for this type of term plan to get the entire benefit of pure life insurance along with the benefits of an investment instrument.

4.Decreasing Term Plans

These term plans are precisely the opposite of increasing term plans, and the sum assured goes on decreasing every year. These plans are availed mostly when the policyholder must get insured to borrow loans. Hence, as the loan amount to be paid decreases every year, the insurance cover also decreases.

5.Convertible Term Plans

These term plans can be converted into any other type of insurance plan. For example, if you want to convert your term plan into an endowment plan, then you can do so whenever you change your mind.

6.Term Plans with Riders

Term plans usually dispense the sum assured to your nominees only in the event of your death. However, if you want to get insured against other unforeseen circumstances such as critical illnesses, accidental death or partial or permanent disability, then you can get the additional cover by paying an extra premium over and above your base premium.

Term plans are usually mistaken as the rigid insurance policies that do not allow any flexibility for investment or liquidity.  However, insurance companies have enhanced the term insurance plans to six different types giving added benefits along with pure life insurance.

Click here to know more about Term Insurance Plan.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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