A term plan is basically a life insurance plan that covers your death risks. These are the best forms of life insurance as they offer high coverage at a low price. In a term insurance plan, what you need to choose is the sum assured and the plan term, the premium is then decided as per your sum assured, age, health risks, and plan term. Moreover, there are several term plan calculators available in the market that are especially designed to calculate the required monthly cover in order to get the sum assured desired by you. 

Term insurance plans help in case of the pre-matured death of the insured when his family could face both financial and emotional trauma. In simple terms, a term plan fulfils the income replacement needs of the insured and also, ensures financial security of his family. With so many features and benefits, these new-age insurance plans can be a little confusing. Thus, this article will act as a guide for beginners to understand the basics of a term plan:

Types of Term Insurance Plans:

1. Level Term Plans: Also known as the basic term insurance plan, these plans pay the sum assured on death during the term.

2. Increasing Term Plans: In this type of a term plan, the sum assured increases every year by a specified percentage.

3. Decreasing Term Plan: In this type of a term plan, the sum assured decreases every year by a specified percentage.

4. Monthly Income Plans: These types of plans pay the death benefit partly in lump sum and partly in monthly income.

5. Return of Premium Plans: Except this one, term plans do not have any maturity benefit. In these plans, the aggregate premium that you have paid would be retuned on maturity if you survive the tenure.

Features of Term Insurance Plans:

Here are the following features of a term insurance plan:

1. Tenure: The tenure of a term plan typically ranges from 10 to 40 years, subject to the age of an insured person. The maximum maturity rate allowed under a term plan goes up to 80 years. Whereas, the entry age may range from 18 to 65 years. Thus, you can always opt for the highest possible term in order to enjoy the coverage for the maximum possible age.

2. Claim Settlement Ratio: Claim settlement ratio is the ratio of claims that an insurance company honours. For instance, if an insurer receives 50 claims and settles 20 of them, its CSR is 20%. Therefore, you must look at insurers with the best possible CSR, while buying an insurance plan.

3. Sum assured & Premium: As compared to the traditional and investment-linked insurance plans, term plans provide high coverage at low premium rates. Term plans ensure accessible financial security by providing a substantial coverage at an affordable rate.

So, for those looking to buy an effective term insurance plan, opt for Aegon Life Insurance; it offers one of the best term plans in India.