Term insurance is one of the simplest forms of life insurance. It offers many benefits. The policy is not investment-based and guarantees a predetermined payout if the policyholder dies.
In general, term insurance plans do not provide any survival benefits. However, some term plans offer a return of premium feature to meet changing financial needs.
You may consider term plan with return of premium benefits (available with additional premiums) to secure your family’s financial future. Moreover, you can calculate the term plan premium to find a pocket-friendly plan that protects and secures your life.
Read on to learn all about term insurance with the return of premium.
What is Term Insurance with Return of Premium?
- In Return of Premium term insurance policy, the premiums paid during the policy period are refunded if the policyholder outlives the policy.
- The policyholder can add other family members to the life insurance policy.
- In the event of the death of a policyholder while the policy is active, premiums will not be refunded.
- Beneficiaries will receive the death benefit.
Is it Worth Buying Term Insurance with a Return of Premium?
TROP is an ideal option for life insurance coverage with a return on investment.
- Return of Premium
Return of premium term plans differs from traditional term plans. With this plan, you will be able to leave a comprehensive inheritance to your family in the event of your untimely death during the policy period.
However, if nothing happens to you and you live to the end of your term insurance period, the amount you paid as a premium will be returned to you.
- Tax Benefits
Term insurance plans with return of premiums allow policyholders to reduce their tax burden. Under the Income Tax Act, 1961, section 80C, you are eligible for tax deductions of up to ₹1.5 lakh annually for the premium you pay. According to Section 10 (10D) of the tax code, the payout is tax-exempt.
- Comprehensive Coverage
The plan allows you to increase your life cover in the future as and when important events occur, such as marriage or childbirth (on the payment of an additional premium). If you wish to increase your coverage later in life, you can do so under these plans. Therefore, your term insurance policy can provide your family with financial support during critical moments.
- Benefits Under MWPA
Suppose a married individual buys the TROP insurance plan and endorses it under the Married Women’s Property Act (or MWPA), 1874 (nominating his spouse and children as beneficiaries). In that case, no other person will have any rights to the benefits of the term insurance plan (such as parents, friends, or relatives).
Aside from that, the insured person will also be unable to claim benefits from the term policy after surviving the plan period. If you endorse your term insurance policy under MWPA, your wife and children will be entitled to the insurance coverage payout (in the event of your sudden death) and the survival benefits (premium refunds if you survive the policy term.)
Conclusion
Everyone’s goal is to maximise their savings and use them to create wealth, so most people look for investment options that provide a substantial return on investment (ROI). A good term plan should provide wholesome benefits that protect and secure multiple aspects of your life. Buy a TROP plan to meet all these needs.
