Term Plan

A pure term plan, which pays out a predetermined sum promised to the nominee in the event of the insured's passing during the policy's term, is the easiest to comprehend. Such plans make no payments if the insured person lives over the policy's expiration date. Pure term insurance premiums are primarily influenced by the insured's age, gender, smoking status, policy term, premium payment schedule, and sum assured. These are products' basic offerings, and they often have the lowest premiums out of all the other product selections.

Many clients find it difficult to accept that pure term insurance policies do not offer any money back if the insured lives to the end of the policy term. For these consumers, the Return of Premium plan is particularly alluring, under which all premium payments (taxes excluded) would be refunded if the insurer survived the insurance period. In the event of death during the period, the nominee will get the sum assured. These types of policies are significantly more expensive than Pure Term policies because they guarantee rewards both on survival and on death.

This plan's increase in sum promised is the exact opposite of a decreasing plan; it is often capped at a multiple of the initial amount assured. As the benefit amount rises with each passing year, the premiums are more than they would be under a flat plan. These programmes aim to improve coverage as the customer's income levels rise. Many policies offer the ability to enhance the sum insured yearly without additional underwriting at the time of purchase. The customer can take advantage of the updated greater sum assured by paying higher premiums each year.

Term insurance is generally purchased to replace lost income. The income benefit is a feature that helps product benefits better match customer demands by ensuring that the nominee receives the specified sum assured over time. In some of these plans, a portion of the benefit is still provided as a lump sum. The fact that the plan is more tax-efficient in the nominee's hands than a lump sum-based plan is one of its main advantages. Any lump sum that is guaranteed is often invested in an interest-bearing financial instrument, and the periodic interest that is earned may be subject to taxation. Additionally, the nominee has the option to forego any future income payments in favour of a lump sum equal to the current value of any outstanding debt at any time.