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How To Choose The Right Term Insurance Plan?

3 minutes, 44 seconds Read

Emergencies, by nature, are unpredictable and cannot be anticipated. One may not be able to prepare for them mentally. However, that does not mean you cannot be prepare for them financially either. People tend to overlook the financial cost of emergencies, which can be disadvantageous, especially if you are the sole earning member of your family. If some unfortunate accidents were to happen involving you, your family could end up financially instable. It is imperative that you ensure your family’s financial safety, in addition to the savings you might leave behind for them. This can be done by buying a term insurance. However, how do you choose the correct plan? Continue reading to know more.

Understanding term plan

Before you purchase the policy, you might one question in your mind: what is term insurance? Term insurance is a type of life insurance policy which, as the name suggests, provides life coverage for a specified term. For example, if you put your money in a term plan with a duration of 15 years, the coverage of the policy will last for that period. Once the period ends, the policy expires. If something unfortunate were to happen to you during the term of the plan, your family would receive the sum assured under the policy.

What are the different term plans?

Listed below are the different types of term insurance plans that you can select from:

  1. Basic/Level term plan

In this plan, your family would be compensated by the insurer with the sum assured offered under the plan. You can pay the premium either on monthly, quarterly, half-yearly or yearly basis. In the event of an unfortunate incident covered by the policy, your insurer may compensate your family with the sum assured.

  1. Term return of premium plan

In the basic plan, there are no maturity benefits if the policyholder survives the term. In return of premium term plan, they are offered maturity benefits. The premium you have paid will be returned.

  1. Increasing term plan

In an increasing term plan, have the option of increasing the amount of sum assured is provided to you, which keeps increasing on an annual basis. There is no increase in the premium that you pay towards the plan. Do keep in mind that the premium tends to be higher as compared to level term plans.

  1. Decreasing term plan

In a decreasing plan, the sum assured decreases over time. This plan is beneficial for you if you have planned expenses in the pipeline. If you have any financial liabilities that need to be taken care of and want to reduce contribution towards your term plan, you can do so with this plan. Based on how much repayment is, the sum assured will also decrease overtime. The premium that you pay towards the plan also reduces. This assists you in properly balancing your repayments without defaulting on your premium payments as well.

How to select a plan?

If you wish to select either of the plans mentioned above, you ought to consider the factors given below:

  1. If your goal is to leave behind a corpus for your loved ones in your absence, you can opt for the level term plan. The sum assured from this plan can be used by your family to manage daily expenses while setting aside a sum for future expenses.
  2. If you wish to get some kind of maturity benefits from the plan once it expires, you can choose the return of premium plan. This ensures that at the end of the policy duration, the insurer returns the amount that you have paid into the plan.
  3. If you have goals you wish to accomplish even in your absence, and want a better sum assured from your policy, you can opt for the increasing term plan. For example, if your goal is to secure your child’s educational future, you can buy this plan.
  4. If you have a major expense that you wish to take care, you should go for the decreasing term plan. For example, if you have an upcoming medical procedure and want to set aside some money for it, the decreasing plan will reduce the sum assured and the premium along with it.


When looking to buy a term plan, you can consider the types and the factors mentioned to help you make a better decision. To know how much your plan could cost you, you can consider using the term insurance plan calculator to get an estimate.

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