Term Insurance : What is term life insurance?

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Term Insurance
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What is term life insurance?
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• Term insurance is the simplest and oldest form of
  assurance and provides for payment of the sum
  assured on death, provided death occurs within
  the policy tenure or term. Should the life
  assured survive to the end of the term then the
  cover ceases and nothing is payable. 
• Term insurance is not investment. It is
  expenditure. Like the premiums you pay for your
  car you do not get any 'benefit' if the event for
  which the cover is taken does not happen and
  there is no claim. What you buy in term insurance
  is peace of mind and risk cover when it is
  basically needed. In life insurance term policies
  you get tax benefit on the premiums paid and
  tax-free payment to your beneficiary in case of
  death. 
• Thus, the purchase of term insurance is
  comparable to purchase of property or car
  insurance where the premiums are paid every year.
  In its purest form term insurance covers risk and
  risk only for one year and can be renewed every
  year by paying increasing premium and this form
  is called annual 'Renewable Term Assurance'. 

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• Term life insurance is just life insurance, and
  nothing more. Almost 100 of the premiums you pay
  are used to cover the cost of the insurance. For
  this reason, term insurance policy holders are
  not eligible to participate in profits earned by
  the insurer on investments.
• No surrender values accrue under term insurance
  plans. A term insurance plan will not acquire a
  paid-up value, unlike say endowment plans, if
  discontinued at any point of time. Loans against
  these policies are not available. Term policies
  do not participate in profits of the insurer. 

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Types of term insurance Several variations of
this purest form are available. 

• Level premium term insurance is one where the
  premiums payable throughout the selected term
  remain the same for a pre-fixed sum assured. This
  eliminates the problem of paying increasing
  premiums year after year. It is generally
  available for periods ranging from 5 years to 30
  years.Convertible term insurance is where the
  life assured initially buys a pure term insurance
  policy with the option to later convert it into a
  plan of his choice e.g. permanent insurance like
  whole life or endowment. For instance, the
  policyholder can convert a term insurance policy
  after 5 years into an endowment plan for 20
  years. In that case the premium changes and the
  policyholder is charged level premium as per the
  newly selected term and plan. 

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• Term insurance with return of premiums comprises
  risk cover and savings element. In this policy
  the premiums paid are returned to the life
  assured if he/she survives the policy term.
  Premium for this policy is normally higher than
  for pure term insurance because some portion of
  the premium you pay is used up for risk cover and
  the balance - savings component is invested in
  order to be able to return the amount you pay to
  you at the end of the policy. The insurer earns
  some return on investing the savings component of
  the premiums you pay. This return plus the
  savings component itself are later used by the
  insurer to return the full premium paid, back to
  you at the end of the policy. 
• Term insurance with guaranteed renewal is a plan
  where at the end of the initial term, the policy
  can be renewed for a chosen term say, another 5
  or 10 years, without any further proof of
  insurability e.g. medical examination

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• Decreasing term insurance is where the sum
  assured steadily decreases year after year to
  match the decreasing insurance need. Such a
  policy is normally taken where the life assured
  has taken a large loan, e.g. a housing loan. Here
  the risk is of the person dying before being able
  to fully repay the loan. Therefore, the sum
  assured of the policy is usually taken as equal
  to the amount of loan to be repaid so that in
  case of demise of the loanee before he/she is
  able to repay the full loan, the sum assured or
  insurance proceeds can be used for this purpose.
  The policy term is equal to the time period in
  which the loan is to be repaid. As the
  outstanding loan amount decreases with repayment
  installments the sum assured under the policy
  also declines to match the outstanding loan
  amount. 

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• Term Insurance as a rider Term insurance
  benefit is also available as a rider to other
  basic insurance plans such as endowment plan, as
  value addition. For example, say a person has
  taken a 20 year endowment insurance policy.
  However, in the fifth year of this policy he
  feels that he should have higher death cover for
  the next 10 years as his children are young and
  would need greater financial support in case of
  his demise. In such a case, he can take a 10-year
  term insurance plan for the required additional
  cover amount as an add-on/attachment/endorsement
  to the basic endowment policy such that both
  policies run together. In case of the person's
  death during this 10 year term his beneficiaries
  would get the sum assured under both the basic
  endowment policy as well as the add-on term
  insurance policy. 

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• E-term insurance Of late, several insurers have
  started offering pure term insurance policies
  online or 'e-Term Insurance' at very reasonable
  rates. Policies sold online are cheaper because
  agent commissions get cut out. 
• Source http//economictimes.indiatimes.com/your-
  money/what-is-term-life-insurance/articleshow/4916
  9208.cms

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To know more on Term Insurance
https//www.bajajallianz.com/Corp/term-insurance/
isecure-insurance-plan.jsp
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