Finance: Insurance: Term Insurance.

Term Insurance

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Term Insurance, also known as Term Life Insurance is one sort of life insurance that offers coverage for a certain period of time at a fixed rate of payments. Coverage at the previous rate is no longer valid once the "term" expires. In such cases, client needs to forgo coverage. Else s/he may also obtain further coverage, but that would come with different payments/conditions. In case of death of the insured during the "term", death benefit will be given to the beneficiary. Term insurance is considered as the protection against risk to life.

Term insurance is one of the cheapest ways to procure a substantial death benefit. Comparing to permanent life insurance policies, term insurance costs much less and has no cash value as well. Moreover, unlike permanent life insurance, term insurance guarantees a fixed premium for lifetime.

Usage of Term Insurance

Term insurance is purely a death benefit policy. The main goal of term insurance is to give coverage of financial responsibilities like mortgages, consumer debt, education for dependents, dependent care etc. Term insurance is preferred over permanent life insurance as it is less expensive. People also go for term insurance until they have enough funds for permanent life insurance.

Who Should Go for Term Insurance?

Term insurance is suitable for the young people with dependents. As the premiums of term insurance are low, it helps individuals to invest in high-growth instruments like Equity-linked Saving Schemes etc. It also offers tax breaks.

On one hand, term insurance is suitable for single income where individual needs to support his/her previous and next generation. 


On the other hand, term insurance is also suitable for double income families where the family needs to meet regular expenses as well as the investment goals.

Types of Term Insurance

There can be different types of term insurance. Following are two of the most common types of term insurance:

Annual Renewable Term: 


It is a simple form of term insurance. Here insurance is made for the period of one year. Benefit is valid for that one year only. There is another version of Annual Renewable Term where insurance has one year of coverage, however policy is guaranteed to be continued for a specified period of years (usually ranges from 10 to 30 years).
Level Term Life Insurance: 


This type of term insurance is more common than the previous one. Here premium is assured for a specified period of years, most common of which are 10, 15, 20, and 30 years.

Various Term Insurance Policies

There are a number of term insurance policies available in the market. Following given are some of those:


Tata AIG Life – Raksha
Bajaj Allianz Life – New Risk Care
HDFC Standard Life – Term Assurance Plan
LIC – Anmol Jeevan (Plan – 164)
MetLife – Suraksha Plus
Max New York Life – Level Term Policy
Birla Sun Life – High Networth Plan
Aviva Life Insurance – Life Shield Plus
ING Vysya Life – Term Life
ICICI Prudential Life Insurance – ICICI Pure Protect
Reliance Life – Term Plan
Birla Sun Life – Term Plan
Bharti AXA Life – SecureConfident
AEGON Religare Life – Level Term Plan
LIC – Amulya Jeevan (Plan – 190)
Kotak Life – Term Plan / Preferred Term Plan
Aviva Life – Life Shield
SBI Life – Shield
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