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Everyone craves a sense of security in life - security from financial worries, health-related concerns, and professional ups and downs. Although it is not possible to have a complete sense of security in life, it is possible to prepare yourself for some of life's uncertainties. One of the ways through which you can achieve this goal is by buying a term insurance policy.
A term insurance plan is a financial product that offers you a life cover in exchange for the payment of a predetermined premium amount. Opposed to the other types of life insurance policies available in India, a term life insurance plan provides more coverage at a lesser premium, particularly if you purchase a term plan early in life.
What is a Term Plan With Return of Premium1?
There are several benefits of a term plan, including more cover, lesser premium, simple and easy to understand policy terms, and the option to include additional features termed as riders#. However, one major limitation of a term insurance policy is that there is no maturity benefit attached; if you survive the policy term, there shall be no payments made to you under the plan.
However, with the introduction of return of premium1 term plans, you can be assured of a return on your term insurance policy. There is a substantial case to be made for opting for a term plan with a return of premium. Let us try to understand why with an example.
With a steady job and a healthy life, Ms Arwen, aged 30 years, saw no cause to buy life insurance for herself. However, when her best friend Ariana and the latter's husband, Robb, succumbed to a tragic car accident leaving two young kids orphaned, Arwen was left shaken. In the wake of the mourning, she decided to look for a suitable life insurance policy.
One of the first things that Arwen decided on was purchasing a term insurance policy due to its multiple benefits and flexibility. However, while researching term plans, she realised that buying a term insurance plan, however prudent, did not carry any assurance of return, particularly if she survived the policy term. She wondered what the plan’s benefit would be for her kids, say, in such a scenario.
Upon more extensive research, Arwen stumbled upon a return of premium1 term plan, and her search immediately ended. She decided to purchase the plan mentioned above because of its unique return on term insurance feature. To put things in perspective, she recalled that the basic term insurance plan that her elder sister had purchased offered a life insurance cover with a sum assured of ₹1 crore at an annual premium of ₹7,500. However, there was no maturity benefit permissible in that plan.
With the selection of a return of premium1 term plan, Arwen got a life cover of ₹1 crore at an annual premium of ₹9,750 but with the assurance of a return of all her premium payments if she survived the tenure of the policy. A term insurance policy of 20 years meant that in the event of her outliving the policy, she would be eligible to receive a sum of ₹1,95,000 (₹9,750*20 years). And in the unfortunate event of her passing, her nominee would be entitled to receive the death benefit of ₹1 crore under the plan.
As illustrated by the example mentioned above, a term plan with a return of premium1 is an excellent choice through which you can add the element of assured returns to your life insurance policy without having to select a complex variant of life insurance. Although most plans with the return of premium benefit offer 100 per cent return of the premium payments made throughout the policy, some plans go beyond that and pay more than said amount. What more could you want out of your term insurance policy?!
However, the return of premium1 clause remains valid only if you keep paying your premium instalments on time. It is important to note that the loading for modal premiums is excluded from the return of premium benefit mentioned above. Therefore, by opting for a term plan with a return of premium1, you do not have to choose between a pure term insurance policy and a life insurance policy with assured returns; you can benefit from both the products in the same plan.
Term Plan With Return of Premium1 For Peace of Mind
Arwen made the right call about purchasing a life insurance term plan, one that had the in-built element of return on term insurance. She purchased the plan at the age of 30 in the wake of a crippling personal tragedy that left her pondering her life choices and the security of her future and that of her husband and young daughter.
However, you need not wait for a jarring personal event to buy a suitable term plan. You can purchase a TATA AIA Life Insurance plan that suits your financial goals and financial strengths. Our life insurance premium calculator is a handy tool to calculate the premium obligations associated with our different plans.
The earlier you purchase a term insurance policy with a return of premium1 option, the better placed you will be in terms of getting more life cover at a relatively lesser premium and ensuring the significant accumulation of your premium payments for the maturity benefit associated with the plan. Therefore, you and your family can be assured of the entire gamut of benefits that the selected plan carries.
Conclusion
Nothing matters more in life than the safety of your family and the knowledge that they will continue to have financial protection even after your passing. Therefore, purchasing a return of premium1 term plan is an excellent financial decision, one that combines the features of a life cover and an assured return on term insurance.
L&C/Advt/2023/Feb/0377
