Do you ever wonder if there’s a way to get your premiums back from a term plan if you outlive the policy term? Or is it possible to have critical illness coverage along with the return of premium in one comprehensive term insurance plan?
These are common questions that many individuals have when considering life insurance options. In this blog post, we will explore the concept of a term plan with a return of premium and whether it can also provide critical illness coverage. Understanding these options can help you make an informed decision about the right insurance plan for your needs.
What is a term plan with a return of premium?
A term life insurance plan with return of premium is similar to a standard term plan in that it provides life coverage and a death benefit to the beneficiaries. However, the key difference lies in the maturity benefit offered by this type of plan. Policyholders have the opportunity to receive their premiums back at the end of the policy term by paying an additional premium. This means that if you outlive the policy term, the insurance provider will return all the premiums you paid during that period.
How does term insurance with return of premium work?
To understand how a term plan with return of premium works, let’s consider an example. Meet Mr. Patel, a healthy 30-year-old man who wants to secure coverage for himself. He chooses a term plan with return of premium and selects a sum assured of Rs. 50 lakhs. The annual premium payable for his plan is Rs. 12,718 for a tenure of 40 years.
If Mr. Patel passes away within the policy tenure, his nominee will receive the sum assured of Rs. 50 lakhs as a death benefit. But if he survives the policy term, he will be eligible for the maturity benefit. In this case, he would receive Rs. 5,08,720 (Rs. 12,718 multiplied by 40) upon maturity of the policy.
Who can benefit from a term plan with return of premium?
Depending on your financial goals and requirements, a term plan with return of premium can be suitable for different individuals and life stages. Let’s explore who can benefit from such a plan:
Unmarried individuals: If you are unmarried and financially responsible for your parents, having a term plan with return of premium provides financial security to your parents in case of your demise and returns the premiums to you if you survive the policy term.
Married individuals with no children: For married individuals who have a spouse dependent on their income, a term plan with return of premium ensures financial support for their spouse in case of an unfortunate event and offers a maturity benefit at the end of the policy term.
Married individuals with children: Parents have multiple financial responsibilities towards their children. Having a term plan with return of premium provides both life cover and savings for future expenses such as higher education or marriage.
Remember, when considering any insurance plan, it’s always a good idea to use a term insurance premium calculator to determine the premium amount and coverage that best suits your needs.
Benefits of term plan with return of premium
A term plan with return of premium offers several benefits that make it an attractive option for many individuals. Some of these benefits include:
- Returns premiums paid
- Provides death benefit
- Tax benefits
Term plan with return of premium features
When considering a term plan with return of premium, it’s important to understand its various features. Here are some key features to consider:
Affordability: While a term plan with return of premium may be slightly more expensive than a regular term plan, the premiums paid are returned as a maturity benefit and are exempted from taxation.
Premium payment options: Policyholders have flexibility in choosing their premium payment options, including one-time payment, regular pay, pay till 60, or limited pay.
Surrender value: If you discontinue premium payments or surrender the plan after purchasing a term plan with return of premium, you will receive a surrender value. The surrender value depends on the premium payment option and is subject to certain conditions.
Conclusion
In conclusion, a term plan with return of premium offers both life coverage and savings in the form of returning all premiums paid at the end of the policy term. While this type of plan focuses on providing financial security to your loved ones in case of an unfortunate event, it does not typically include critical illness coverage.
If critical illness cover is important to you, it is advisable to explore separate critical illness insurance plans that can offer comprehensive coverage for various illnesses. By understanding your specific needs and financial goals, you can make an informed decision about the right insurance plan to protect yourself and your loved ones.
Explore different options, compare quotes, and choose a plan that offers the right balance of protection and benefits for your unique situation.