Life Insurance is an essential part of our lives - providing a shield during times of unfortunate events & consoling us with its financial benefit. There are various types of insurance plans suiting individual needs. A Term Plan is one of them, which provides a pure risk cover for death. The benefit offered to the individual is a higher sum assured at a very low premium. Since this is a pure risk cover product, there is no maturity benefit payable on survival and therefore is called a Plain Vanilla Plan.

Features & Benefits:

1. Life Cover benefit: In case of any unfortunate event resulting in loss of life, your beneficiary will receive the Sum assured.

2. No survival benefit: Typically Term plans don’t provide Maturity or survival benefits, they only provide death benefit i.e. your premium is not returned back, but to overcome this drawback, few insurance companies have come up with term plans that return the premiums paid during the policy term but in such plans premiums paid are much higher than that paid for a pure term policy.

3. Rider benefits: IThere are various Rider benefits you can add to the Term plan like Accidental Death rider, Partial & Total Disability benefit rider and Premium waiver rider etc.

4. Payment options:: It is a low cost insurance plan where you have the option of going for a regular premium payment option or a single premium payment option. In the latter, there is one time premium payment for the selected term at commencement, In case you opt for the regular premium payment option, premium is paid throughout the selected term where you may pay your premiums either annually, or in half yearly or quarterly installments.

How to choose the Term plan?

Lowest price: The underlying idea behind choosing the best Term plan is to choose that plan which is most effective in terms of cost i.e. premium. Following is the table which shows the premium comparison chart in case of Term Plans for various companies for a male paying an annual premium for a sum assured of Rs. 15, 00,000.

Companies	Tenure	Age 25	Age 35	Age 40	Age 45
HDFC/Term Assurance	15	3930	4665	6495	9615
	20	4005	5295	7590	11355
	25	4080	6105	8880	Max Expiry Age is 65
	30	4155	7050	Max Expiry Age is 65	Max Expiry Age is 65
LIC/Anmol Jeevan I	Tenure	Age 25	Age 35	Age 40	Age 45
	15	3534	5762	13291	8628
	20	3816	6,920	10,410	15,934
	25	4292	8,301	12,459	Maximum Term 20years
	30	Maximum Term 25 years
Birla Sun Life	Tenure	Age 25	Age 35	Age 40	Age 45
	15	4,702	5,747	7,736	11,157
	20	4,702	6,101	8,511	12,758
	25	4,702	6,624	9,708	14,882
	30	Maximum Term 25 years
Max New York Life/Level Term	Tenure	Age 25	Age 35	Age 40	Age 45
	15	3180	4905	7275	11190
	20	3330	5670	8475	Maturity age 60 yrs
	25	3615	6495	Maturity age 60 yrs	Maturity age 60 yrs
	30	Maximum Term 25 years
TATA-AIG Life	Tenure	Age 25	Age 35	Age 40	Age 45
	15	5010	8280	12600	20070
	20	5460	9870	15300	NA
	25	6120	11730	NA	NA
	30	Maximum Term 25 years

Tenure: The Term plan bought should always be of maximum term because premium remains the same throughout the tenure & also the risk of your life is directly proportional to your age that means more the age more the risk & more is your premium. Therefore you should always buy the Term plan of maximum tenure.

Let’s take an example of Shyam who wants to take a Term plan for a sum assured Of Rs. 15, 00,000.

    First case: If at the age of 25 Shyam takes a Term plan from HDFC Standard Life for the tenure of 15 years his annual premium is 3930 & total premium comes out to be Rs 58950. At the end of the tenure Shyam’s age is 40 & he thinks of taking another Term plan again from HDFC for another 15 years at an annual premium of Rs. 6495 where his total premium comes out to be Rs. 97425. Thus taking two Term policies one at the age of 25 another at the age of 40 Shyam’s total premium is Rs. 1,56,375 (Rs. 58950 + Rs. 97425).
    Second case: If Shyam at the age of 25 takes a Term plan of 30 years from HDFC Standard at an annual premium of Rs. 4155 then his total premium comes out to be Rs. 124650.

Thus if Shyam would have taken the Term plan for 25 years (tenure) he would have gained Rs. 31725(Rs. 156375 _ Rs. 124650). Thus it is always recommended to get a Term plan of maximum tenure.

Hence we summarize that the Term plan offers death benefit at the lowest premium with the maximum sum assured, Only the mortality charges and the sales and administration expenses are covered. So those who intend to buy only life cover with the minimum premium & maximum life coverage (Sum assured) must go for Term plans but with maximum tenure or term.

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