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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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