People who invest in a life insurance policy usually look at it like any other type. They pay the premium expecting a huge payout when their policy matures. When you invest in term insurance, your insurer is expected to pay your family the guaranteed sum assured under your plan.
This payout, however, will only be given to your family in the event of your untimely demise. If you survive the term period, there is no maturity benefit. This could be discouraging for many who expect some maturity benefit. You can opt for an online term plan which offers a return of premium (ROP). What is this ROP term insurance? And what are the benefits? Read more to find out.
What is a term plan?
A term insurance plan is a type of life insurance policy. When you invest in this plan, your insurer will give your family a specific sum, as mentioned. This amount is given after the sudden demise of the policyholder. The payout can help the deceased’s family to cover major expenses without facing financial uncertainty. When you opt for an online term plan, you can choose from a range of plans that suit your requirements and budget.
Let us consider an example. Rahul decided to invest in a term insurance plan for 30 years. The yearly premium of the project is Rs.10,000, with the sum assured of the project being Rs.30 Lakhs. If Rahul were to pass away during this policy duration of 30 years, the insurer would pay Rahul’s family the sum assured under the plan. That would be Rs.30 Lakhs in this case.
However, if Rahul survives the term of the plan, he will receive the entire premium amount he paid for the goal. That would be Rs.3 Lakhs. This is what is known as the return of premium in term insurance. The feature guarantees that the policyholder receives some form of maturity benefit for their investment in the plan.
When one talks about term insurance benefits, they are mostly referring to the sum assured that their loved ones get as compensation. However, with the return of premium term insurance, you get to enjoy the following benefits:
1. Premiums are returned
Just like the name of the policy suggests, the premium you pay towards the procedure is returned to you if you survive the term of the plan. This could be beneficial as you receive some form of maturity benefit for the money you invest in the policy. The use would be less than the sum assured as it is just the premium being returned. However, this can be viewed as minimal investment returns instead of getting nothing after your plan matures.
2. Death benefit is available
Opting for this plan does not cancel out the death benefit your family would receive in the event of your sudden demise. The premium’s return is entirely dependent on survival during the term of the plan’s time to pass away during the period; your family would receive the sum assuredly offered under the program. So, the death benefit remains regardless of which plan you invest in.
3. You get tax benefits
The premium you pay for your term insurance is tax exempted under Section 80C of the Indian Income Tax Act. This is not the only benefit. If you survive the term and get your premiums in return, this payout is also eligible for tax exemption. Under Section 10(10D), the returns from the plan contact tax-exempted.
4. Add-ons are offered
Apart from the sum assured and the maturity benefit, you can add riders to your plan to enhance its coverage. Riders such as critical illness riders, hospital cash, and personal accident riders can be included in the program. This would increase the premium; however, it also provides added benefits.
If you want to invest in a term plan but are also concerned about term insurance benefits apart from the sum assured, you should opt for return of premium (ROP) term insurance. You can get in touch with your insurance advisor to know more.