Types of term insurance

The various types of term insurance policies available in India are:

• Standard Term Insurance: The standard term insurance plan is the type of insurance plan where the insured pays premiums on the policy at fixed annual, half yearly, quarterly, or monthly periods, and the insurance amount is paid as death benefit in case of the death of the policyholder. No payment is disbursed if the policyholder survives the policy term.
• Term Return of Premium (TROP): the return of premium term plan ensures that all the premiums paid are returned at the end of the policy term if the insured does not pass away during this time.
• Increasing Term Insurance Plan: This term plan ensures that the payout amount to be paid by the insurance provider increases at a fixed rate every year while the premiums to be paid remain the same.
• Life Stage Event Term Insurance Plan: This type of term insurance plan allows a fixed increase in your insurance payout as well as premiums with every life milestone you reach, such as marriage, birth of first and second children, etc
• Convertible Term Plan: Convertible term plans give you the flexibility to switch from term plan to whole life plan or endowment plan you wish. Payouts and premiums adjust accordingly.
• Joint Life Term Plan: The joint life term plan provides financial coverage to you and your spouse in a single policy. These policies do not lapse on the death of one partner, but survives till the death of the other partner or end of policy term, whichever is earlier.
• Group Term Insurance: Group term insurance policies are standard term policies but purchased for a group of people. These policies are typically purchased by companies for their employees, and the premiums, coverage, and terms and conditions of the plan are designed accordingly.

Riders in Term Insurance

Basic term life insurance plans are simple and straightforward in their scope and approach: They provide the sum assured as death benefit upon your demise to the beneficiary you specify. They do not provide any additional coverage beyond this basic premise.

Riders are extensions added on to the basic term life insurance policy you purchase for a nominally increased premium. A number of riders are provided by the insurance companies which can be added on to your basic term life plan to extend it's coverage.

Types of riders:

Some common riders include:

• Accidental Death Benefit Rider
• Accidental Total and Permanent Disability Rider
• Critical Illness Rider
• Waiver of Premium
• Accelerated Death Benefit Rider
• Hospital Cash Rider

How to Choose the Best Term Plan?

While the word 'best' is highly subjective, it is worthwhile to compare the various features of the term insurance policy you intend to purchase and the provider you want to purchase it from. Following are the key points you can keep in mind:

• Claim Settlement Ratio: Settlement ratio of an insurance service provider refers to the number of claims settled by them for every hundred claims.
• Company Reliability: The value of reputation does not need an explanation. Buying your insurance policy from a reputed and well established policy provider to make sure your money stays secure all the way through.
• Premium: Premiums are vital for an insurance. Therefore, compare policies from different providers to select a plan that offers the highest coverage for the lowest rates of premium. Look out for discounts you may be eligible for.
• Solvency Ratio: Solvency ratio is a measure of the total capital of your insurance provider against the amount of liabilities they have taken up. This gives you an idea of whether they can cover their claims without going bankrupt.
• Enhanced Cover: Certain policies allow the policyholder to increase the coverage in certain critical situations arising during policy period without you having to pay extra.
• Riders: While comparing policies, check the riders you can avail to increase the coverage scope of your policy to beyond what it would originally have been without riders.

Claim process

The process for claiming term insurance is pretty straightforward, and involves the following three steps:

1. Intimation: Upon the demise of the policyholder, inform the insurance service provider as the beneficiary and submit the necessary documents within 90 days of occurrence of death.
2. Assessment: The claim documents are thoroughly scrutinized and any further requirements are informed to the beneficiary. The company may also appoint a medical team to investigate the claim.
3. Settlement: Once the documents are verified and investigation is complete, the claim is disbursed to the beneficiary directly.