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Life insurance is a basic need in financial planning for families. The main reason people hesitate to opt for an insurance policy is that they believe it does not provide returns if they survive the policy term. A term insurance plan is the purest form of a life insurance contract and the most widely understood policy type. Many believe that term insurance is not useful due to its quite basic features.
Over the years, the insurance industry has evolved to consider such perceptions and introduced different types of term plans to make policyholders derive maximum term insurance benefits and ensure protection simultaneously.
There are ways to make the simple term plan the best term policy for your needs. For example, you can choose the term insurance with return of premium1. With adequate research and comparison, you can get the best type of term insurance plan.
Let us understand what life insurance with returns means and the three types of people who should consider purchasing it.
A term insurance plan is the basic form of life insurance policy that provides a life cover to ensure a sum assured to your family members in case of your unexpected death during the policy term. Therefore, it provides a death benefit and not a maturity benefit.
Term insurance plans provide different types of features to extend the benefits to the policyholder. Term plan with the Return of premium provides a refund of the premium amount you paid towards the policy during the complete term if you survive the policy duration. It will be the total premium paid, excluding the rider# premiums, taxes*, loading for the modal premiums, and other payments made based on the terms and conditions of the specific insurer. Tata AIA term insurance provides an exclusive product with the inclusion of a return of premium feature for the benefit of the policy seekers.
On that note, let us move ahead to know the three types of people who should consider this option when they buy a term plan online.
Sole earning member in a family with big dreams: If you are a person who is the sole earning member of a big family, then you will certainly have many financial responsibilities. Moreover, the commitments keep increasing at different stages in your life. However, as an individual, you will have big dreams that keep your mind optimistic, for example, pursuing a course in a foreign university, going on a world tour, etc. Accomplishing such a dream may not be possible while considering family commitments at different stages in life.
If you are a healthy individual, follow a disciplined routine and happen to survive for a longer time by luck, you can certainly accomplish your dreams if you plan to buy term insurance with a return of premium. Moreover, it will serve your family’s financial needs if you meet an unexpected death and help you achieve your dreams if you survive the policy term. Therefore, term insurance with a return of premium will ensure a maturity benefit, as in endowment plans.
Young investors: At the beginning of your career, as a new investor, you would like to invest in different financial instruments as part of your investment portfolio. Preferably you tend to look for cost-effective products with higher returns in the long term. Term insurance plan is one of the best life insurance products that can provide a higher sum assured in the long term for an extremely affordable premium on a comparative scale.
Insurers consider your health condition while deciding on the sum assured and the corresponding premium rate. It is an important criterion because it will help them determine the probability of the death risk. At a younger age, since the possibility of you having a pre-existing illness or a serious medical condition is very less, the death risk also reduces. Therefore, the premium rates become extremely cheaper.
Also, when you invest early in life, you can afford to stay invested in a term plan for a longer time, which means a higher accumulation of the sum assured. So, you can buy a term plan with a return of premium for a longer time, cost-effectively and ensure that you get a refund of the premium amount paid as a maturity benefit if you survive the policy term.
Newly married individuals: Expenses after marriage keep increasing based on your lifestyle and family commitments. You may not be sure how you can manage your expenses and start building a financial safety net. Taking up other types of investments for market-related returns can be a good option. However, just after marriage, before you understand your financial outflows, it is better not to invest in risky financial instruments for your family’s financial security.
If you feel that your family’s financial security is as important as savings in your life and would like to accommodate both in one affordable plan, a life insurance term plan will be an ideal choice. If your spouse is also working and contributes to the family’s living expenses, then you can take a joint life insurance plan to cover both of your lives and get a huge refund of the premium amount paid.
Term insurance is certainly an important method to protect your family’s financial requirements in your absence. However, if you feel savings are also an important consideration, the term plan with a return of premium1 is a fair option. The sole earning member of a family having big dreams, young investors, and just-married couples should certainly consider term insurance benefits and opt for a term with a return of premium based on their family circumstances and investment opportunities. It is a smart way of looking at insurance from a savings perspective!
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Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
#Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office
*Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfillment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implication mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
1Return of Premiums shall be the total return of Premiums Paid (Excluding loading for modal premiums and discount) by the policyholder and shall be payable at the end of the Income Period