The active working years can be the most crucial phase of your life. The money that you accumulate throughout your career can help you to build a secure future. However, your hard-earned money might fall short in offering long-term protection. When your earnings fail to protect your family financially, term insurance plans come into the picture.

Before purchasing term insurance for your loved ones, let’s understand what is term insurance in detail:

Term insurance is the simplest form of insurance, which secures your family in your absence over the longest period. It provides a substantial life coverage at an affordable rate, which your family can receive after your demise either monthly or annually. In simple terms, it is a basic insurance plan that covers your family against any unforeseen circumstances.

On the other hand, term insurance offers coverage only for a specific time frame. There a few plans in the market today that offer you return of premium benefit along with many other benefits like cover maximum critical illnesses, child education cover, spouse cover etc. However, a basic variant would only have a life cover.

Under a term insurance policy, you can select between the two main types of term plan, which are mentioned below:

1. Increasing cover term plan

An increasing cover term plan can allow you to increase your coverage every year. However, when you increase the coverage of your term policy, your insurer would charge an additional amount. If you have long-term goals like your child’s education or wedding, you should purchase an increasing cover term plan. Moreover, you can look after your child’s increasing routine expenses as he grows older.

Under an increasing cover term plan, the death benefit can remain the same for the initial 5 years, while it can increase by 5%-10% in another 15 years. When you purchase an increasing cover term plan, your coverage, and the premium amount, both increase. That way, you can protect the future expenses of your family with ease.

2. Decreasing cover term plan

As the name suggests, you can decrease the cover of your term policy when you reach the retirement period. A decreasing cover term plan allows you to pay off your past debts to reduce your financial burden after retirement. In addition to this, your liabilities can reduce as your term plan reaches maturity. Since the cover decreases over the due course, your premium can be relatively less than regular term plans.

The primary objective of decreasing term plan is to help you to pay less premium as well as let you reap the benefits of the high coverage amount. Under a decreasing term plan, you can receive the full sum assured up to 60 years, while the base amount might reduce by 50% later. As the breadwinner of the family, you might want to reduce your financial liabilities in your old age and increase your financial responsibilities towards your spouse. A decreasing cover term plan usually acts as mortgage redemption plans.

In a nutshell, a term insurance plan works towards building a secure financial future by offering relatively low premiums. Therefore, consider your financial requirement and select the right type of term plan based on your needs. Although you can purchase term insurance offline, you should buy an online term plan since it is convenient, affordable, and time-saving. Moreover, you can receive the term insurance benefits similar to offline term plans.