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Types Of Term Plans And Which One Should You Buy?

Types Of Term Plans And Which One Should You Buy?

Term insurance plans are the purest and most traditional form of life insurance. They are primarily protection plans that take care of the individual's loved ones in their absence. Every term insurance plan has a fixed time period associated with it, which is known as the plan term. In the event that the policyholder/life insured dies during the policy term, his or her nominees receive the predetermined sum assured from the insurance company.

term insurance plans are offered via offline and online medium. Today, individuals have the option to go through the entire process to purchase term insurance online. Research shows that online term plans can be cheaper by as high as 40% as compared to offline term plans. Currently, insurance providers are continually improving their websites and mobile interfaces to make online term plans much more user-friendly and intuitive. It has become extremely safe to select and purchase term plans online. One can even compare plans from different insurance providers easily online. Online term insurance plans have a variety of advantages such as convenience, quick responsiveness and cost-effectiveness. Canara HSBC Oriental Bank of Commerce's iSelect Term Plan is an online term plan that offers life insurance and terminal illness coverage, cover against accidental death/accidental disability and the option for the dependents to have a secure monthly income in the absence of the insured.

There are a variety of different types of term plans available in the market. They can be categorized as such:

  • Level Term Plans
    This is one of the very basic forms of insurance, wherein the coverage amount stays fixed. The predetermined Sum Assured will be allocated to the dependents if the insured dies during the tenure of the plan.
  • Term Return of Premium Plans (TROP)
    Unlike level term insurance, TROP plans have maturity benefits that the insured can avail. Their most popular feature is that the insured gets his/her invested money back at the end of the policy tenure. That is, the total premiums paid are returned to the insured if he/she lives past the policy tenure and hasn't made any claims.
  • Increasing Term Plans
    Increasing Term Plans, as the name indicates, gives the insured the ability to increase their Sum Assured on a yearly basis, during the policy tenure. If you opt for this type of plan, you may have to pay a higher premium.
  • Decreasing Term Plans
    On the other end of the spectrum, we have decreasing term plans, wherein the amount of money allocated decreases each year to meet the changing requirement of the insured. These plans are particularly useful when the policyholder has taken a large loan such as home or personal loan. Once the individual has paid off their loan, their liability decreases and hence, they won't be in need of a large Sum Assured for the rest of their policy tenure. And so, according to this plan, the sum assured consistently decreases.
  • Convertible Term Plans
    As the name suggests, these plans permit the policyholder to convert them into another type of life insurance plan at a set future date. For example, if a policyholder has purchased a term insurance policy for 18 years and in 7 years he/she finds themselves in need of a savings component, they can convert their current term insurance plan into an endowment one.
  • Term Plans with Riders
    This category of plans has a variety of options such as accidental death cover, critical illness cover, accidental total permanent disability cover etc. Such covers can generally be purchased along with a normal term plan for a small additional premium.
  • Group Term Insurance Plans
    Group Term Insurance are term insurance plans that are designed with businesses, companies, societies and other such organizations in mind. They provide coverage for all the members of the organization. They tend to have similar benefits as individual plans except the overall coverage may include other customizable factors that might be excluded in individual plans.


With the plethora of term insurance plans available in the market, each of the plans have their own unique pros and cons. You can easily compare the variety of plans available and pick the one most suitable for the current financial needs and future life goals of your loved ones.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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