How term plan works?

Online Term plan

We all work hard to ensure that our loved ones always have a better today and tomorrow. One of the most important instruments which can ensure the financial safety of your family is a term insurance plan.

Term Insurance Plan

A term insurance plan is a kind of a life insurance plan which compensates the beneficiary of the insured person in case of an unfortunate death of the insured during the policy term. The sum insured opted under the policy is payable as death benefit to the beneficiary or nominee on filling of a death claim with the insurance company assuming the policy is premium paying.

Affordable Proposition

Term insurance plan is a pure insurance cover. It is the simplest form of life insurance for securing the financial future of your loved ones in your absence by financially indemnifying them to take on their lives in the similar way as earlier. Under term insurance plan, the person can get high coverage amount at the most affordable premium price.

The premiums under the term plans are affordable. Term insurance plan is a pure protection plan which offers death benefit if the insured dies during the policy term and there is no maturity benefit given on survival till the completion of policy term. Affordability is an important aspect of a term insurance plan.

On the top of it, with the availability of online term plans, one can further avail a reduced premium as there is no cost of intermediary like agents commission under online term plans. This makes term insurance plan the cheapest and most affordable form of life insurance. Also, insurance companies offer differential premium pricing for female lives and non smokers which further dip the premium cost. For opting large sum insured amount also, one may get an additional discount on premium from your insurer.

Need for Term Insurance Plan

Considering the fact that life is unpredictable, one should always have a back up financial arrangement to support his/her family. Also, seeing the mounting inflation, lifestyle expenses, education expenses of children, various easy monthly installments (EMI), etc. survival of the family members in the absence of an earning member becomes tough (even if you have few savings in hand).To combat the financial crisis in such scenario, a substantial fund or corpus is necessary for the family members to continue their lives with financial ease. It is difficult to build such a corpus with few handfuls of saving or investment schemes. Term plan takes care of your family’s financial needs and provide them financial stability with the lump sum payout in the times distress due to the loss of the earning member of the family.

Flexibility of Choice

Payout Option:

Term plans offer a lump sum payout as death benefit but there are multiple term insurance plans which offer staggered payout along with lumpsum as per the need of the insured. The insurance companies have payout options where the nominee is paid a monthly regular income till a time frame to manage their monthly expenses along with partial lumpsum payment.


Term plans offer you to enhance your coverage with the help of riders by paying additional nominal premium. You may opt among various riders available with a term plan such as an accidental death benefit rider, critical illness rider, and waiver of premium rider for a comprehensive protection against death, disability, accident or disease.

Premium Payment Mode:

One can opt for premium payment mode as monthly, quarterly, semi annually or annually as per one’s financial comfort of premium payment.

Term insurance plans do not offer a maturity benefit in return makes them the cheapest form of insurance. Term insurance plan is inevitable considering the unpredictable nature of life. Term plan bought at early ages offer lower premium rates. It also helps you to get a tax benefit under section 80 C of the income tax act of the land.

AN Oct 36/17

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