Premiums paid towards insuring one’s life and their dependents are a recurrent expense most earning individuals maintain to have a secure future and complete coverage. With the unpredictability of one’s future, income patterns and financial obligations; it is imperative that a person finds life insurance plans that duly fulfil every coverage requirement they may have. A good term insurance plan always combines the benefits of present coverage with long-term security such as term insurance with return of premium.
A term plan is made to effectively cover the needs of the insured and their dependents through an assured death benefit sum in the event of the policyholder’s demise. A basic term insurance plan in India is considered to be one of the most affordable means of securing one’s future where premiums are low and one can customise their coverage, add riders and choose payout patterns according to their needs.
There are several combinations and types of term insurance plans available for a policyholder to choose from today; from a personal term plan to a group term life insurance there are many online resources that are evolving with measurement metrics to help compare plans across insurance providers and their best customisable versions.
Term Insurance with Return of Premium
Since markets are replete with plans, costs and variables; a new policyholder can feel intimidated by the details and clauses respective life insurance plans. Insurance and premium costs can also be difficult to navigate or expensive for many, but it helps to understand they ways in which one can avail their returns and insurance coverage through specific features like a term insurance with return of premium.
Since standard term insurance policies do not provide any maturity benefits in the event the insured survives the policy tenure, one can go for a term plan with return of premium that has the option of returning a policyholder’s invested total premium amount at the end of the term if they survive.
Term insurance with return of premium is an asset, which can help one to secure or pay off loans in the long run, even in the absence of the primary income earner. It is a resource to be used at times when unavoidable financial expenses have to be met by the surviving beneficiaries in the absence of the policyholder. To find a term plan that is able to fulfil one’s investment needs is a requirement many investors actively seek today.
There are many benefits of term plan with return of premium, as a policyholder is able to avail their insurance coverage, benefits while also acquiring a monetary sum from the plan. While term plans are mostly directed towards the beneficiaries of the insured to receive an assured sum on their demise, a provision for the return of premiums can also be availed.
Let us look at some of the salient features of term insurance with return of premium:
1. Return of Premium Benefit: As aforementioned, when a policyholder invests in a term plan with return of premium and survives the policy tenure, the insurance provider is liable to pay the premiums back to the insured. Since the premiums that were paid were over an extended period of time, the sum that comes back to the insured is a significant corpus that can be used to meet their financial goals respectively.
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2. Sum Assured Death Benefit: If term insurance with return of premium is then supplemented by coverage from riders such as accident death or disability, the returned premium corpus and the benefit from the rider can be a strong financial cushion for the beneficiaries or the insured during financial distress.
3. Rider Benefits: One can add riders for Income, Waived Premiums, Disability, Accidental Death or even Critical Illness in their existing term insurance with return of premium. The cost of these riders added to the basal premium cost, hence one should choose after adequate deliberation.
4. Paid-up Value: The total sum that is paid to the insured or their beneficiary on maturity is limited to the paid-up value. The paid-up value is the calculated premiums paid by the policyholder against the stipulated premiums to be paid by the insured at the time of the purchase of the term insurance with return of premium.
5. Surrender Value: Surrender value is the amount to be paid by the insurance provider to the insured in the event the latter decides to terminate the policy before the maturity.
6. Low Premiums: There is a range of term insurance with return of premium plans that offer coverage and future benefits to policyholders of all kinds. However, the more complex a plan is, the higher the premiums for them are. Hence, for those who are starting out in their professional careers, can choose to go for a term plan with return of premium as their first investment.
Return of Premium when coupled with the benefits of a maturity benefit causes the insurance policy to become a sizeable and smart investment return which is complete with all insurance coverage.
A policyholder should gauge their requirements duly, and opt for a plan best suited for them. The life cover which protects the insured during the policy tenure, and the monetary benefit they receive at the end of it become an end-to-end solution to an investor’s financial needs.