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. 

Let us understand what life insurance with returns means and the three types of people who should consider purchasing it. 

What is Term Insurance?

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.

What is the Term Plan with the Return of Premium¹?

Term insurance plans provide different types of features to extend the benefits to the policyholder. Term plan with the Return of premium¹ 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 premium¹ 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.

1.  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.
   
   
2. 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 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 premium¹ 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.
   
   
3. 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.

 Conclusion

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 premium¹ based on their family circumstances and investment opportunities. It is a smart way of looking at insurance from a savings perspective!

L&C/Advt/2022/Jul/1749