Term plan insurance, also known as term life insurance, is slowly picking up in India. Term plan insurance as a concept is working hard to strike big with the Indian consumer, as people still prefer to get back something at the end of their insurance scheme, which is not the case with term plan insurance. In this type of insurance, you pay an ‘x’ amount of money, known as premium, for a stipulated term. The insured person is entitled to a return on his investments only if the insured dies in the period specified in the policy. In this case, a death benefit will be paid to the deceased nominee.
So how does it work? You pay a certain amount of money every month, towards your insurance scheme for a stipulated term. Since there is no saving element in this and no returns on maturity, the premiums you’re paying is really quite low. There are some plans that may give you the premium back, but these are comparatively expensive. Thus, what happens with a term insurance plan is that if you die during the term of your policy, your dependents will get the insurance amount.