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What are the Benefits of a Term Plan with Return of Premium?

24-June-2021 |

A term insurance plan is deemed to provide financial security to your family in your absence. However, many people have looked down on it for it does not offer a maturity benefit like the comprehensive life insurance plans. Therefore, insurers have introduced the return of premium@ option to enhance the benefits of term insurance and satisfy the policyholders.

So, how does the return of the premium option work and what are the benefits? Let us delve a little deeper and understand the benefits of making the best use of the option.

 

How does a Term Plan With a Return of Premium Work?


A term insurance plan ensures a death benefit to your family in case of your unexpected demise during the policy term. In addition, the plan offers the return of premium@ option to get back the total premium amount paid when the plan matures, provided you survive the policy term, and it is not terminated either. The premium amount paid will exclude any additional premium paid for the riders# chosen in the policy.

 

Benefits of a Term Plan With Return of Premium


Term insurance plan with return of premium@ provides a range of benefits that we may not be aware of. Here are a few pointers that help you understand the inherent benefits in a little more detail.

 

  1. Provides a refund of the Premium Paid
    - The term plan with a return of premium@ will serve as a financial product that can save your hard-earned money for fulfilling your commitments in the long term. You can use it to pay off debts, reserve it for your retirement needs, pay for your child's education, etc. It will reduce your financial burden at the later stages of your life.

  2. Ensures a Life Cover
    - While availing of the return of premium option, the life cover to ensure a lump sum for your family remains intact. In case of your untimely death during the term policy your nominee will receive the death benefit.

     

  3. Option to avail of a higher sum assured or Return of Premium
    - With a term insurance plan, you can avail of a higher sum assured compared to other comprehensive life insurance plans. Also, when you start investing early and opt for a longer policy term, the sum assured and the money amounting for the return of premium becomes even higher.

     

  4. Affordable Premium
    - Pure term plan is a form of a life insurance policy that is cost-effective comparatively. If you invest in term insurance at a younger age, you can benefit from even cheaper premium rates.

    Insurers consider your pre-existing illnesses and health conditions for understanding the probability of death risk to derive the premium amount. Therefore, you are less likely to have such medical complications at a younger age, which provides the benefits at a cheaper premium rate. However, in the long term, the accumulated premium can be a huge sum when you receive it as the return of premium@ benefit when the policy ends. You can use the online term life insurance calculators to find the right affordable premium based on your income and family commitments when you purchase the online term insurance.

     

  5. Rider# Benefits
    - The add-on rider options enhance the term plan benefits by providing additional financial assistance. There are varied options such as the accidental death rider, disability rider, terminal illness rider, critical illness rider,, hospitalization rider, etc.

    For instance, if you choose the critical illness rider#, you can receive the sum insured to manage your medical expenses during the policy term. And when you survive the term, you can continue treating the illness with the return of premium option available in the base policy.

    Based on the rider#, you can get the benefit as a lump sum, income for a specific period or as a waiver of future premiums. With certain riders, you can receive the return of balance premiums when the policy ends.

     

  6. Flexible features
    - The term plan with a return of premium@ option provides various flexible features. With the Tata AIA life insurance term plan, you can choose to pay the premium regularly or for a limited period based on your steady flow income. Depending on your preferences and family commitments, you can decide on the frequency of premium payment, whether monthly, quarterly, semi-annually ,or annually.

    There is also the possibility to increase the sum assured at different stages in your life. For instance, when you get married or are blessed with babies, you can increase the sum assured to cover up for the requirements.

     

  7. Tax* Benefits
    - You can also avail ax* benefits for the term plan. The premium amount paid towards the term plan and its benefits qualify for the tax* deduction and tax* exemption under Section 80C and Section 10(10D) of the Income Tax Act, 1961.

     

 

 

We have discussed some of the major benefits from the term plan with the return of premium@ option. However, based on the individual needs and financial status, you have to choose the options wisely and stay healthy for receiving the maximum returns.

Conclusion

 

Term insurance with return of premium@ is a product sought after for its benefits because it ensures a death benefit for your family in your absence and a refund of the premium paid as savings benefit if you survive the policy term. In addition, you can utilise the return of premium to pay for your liabilities, go on a vacation, etc.

The plan also offers the option to avail of a higher sum assured for an affordable premium. And, based on your family's medical history, you can choose the riders# with the return of premium for additional financial support. However, the key to receiving such benefits to a considerable extent will be based on your healthy lifestyle, which determines your survival through the policy term!


L&C/Advt/2021/Dec/2131

 

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer
  • 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.

  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch

  • * Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment 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 implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.

  • @Return of premium shall be the return of Total Premiums Paid (excluding loading for modal premiums and discount) by the policyholder at the end of the Income Period