If you’re looking for a simple and cost-effective solution to cover your family’s requirements in the event of your unfortunate demise, a term plan is hands down the most promising solution for you. This variant of life insurance covers you for a specific term ranging from 10-30 years.
In case you die during your policy’s tenure, the financial corpus accumulated is provided to your beneficiaries, allowing them to manage their financial expenses, repay any existing mortgages, support your child’s education, bear medical treatment costs, and even act as a source of income.
As a policy owner, you’re required to pay a predetermined premium in return for the coverage offered by the insurer for the death benefit. There are two major types of term plans – Regular term plan and term plan with return of premiums.
This article will discuss the various aspects in which a regular term plan differs from a term plan with a return of premium option. Moreover, as you progress through the article, you’ll be able to identify which one fits the bill for you.
Regular Term Plan and Term Plan with Return of Premium – What’s The Difference?
When it comes to a traditional term insurance policy, it doesn’t offer you any fund accumulation feature. On the other hand, a term plan with a return of premium option allows you to gain premium returns in case you survive till the end of the policy tenure.
Based on your current responsibilities and living expenses, you may consider choosing a reliable way to manage your money. A term plan with a return of premium can be a great option to accumulate wealth and gain financial security among the various financial instruments available in the market.
Additionally, it also provides you extra benefits like accidental death benefit, disability benefit, critical illness protection, disability benefit, waiver of premium, and a lot more in the form of riders. That’s why a TROP is considered a comprehensive protection plan for you.
You may already be searching for a reliable term plan, but with such a wide range of options available, feeling overwhelmed is evident. Moreover, it’s not wise to make your decision solely based on the price or policy period.
With that said, take a look at the benefits of a term plan and compare term insurance quotes with a return of premium option to help you make a satisfactory investment decision.
Benefits of Term Plan with Return of Premium
Here’s a complete rundown of some exclusive benefits of term plans with return of premium option:
- Complete Fund Safety
A lot of policyholders hinder from investing in term plans as there is no maturity benefit involved with it. However, with a reliable insurance partner, you can purchase a term plan with a return of premium option to gain returns from the policy even on your survival. With such plans, you’re eligible to receive your premiums back in case you survive till the end of your policy tenure.
- Financial Protection for Family
When you purchase an insurance policy, the main purpose is always to provide financial safeguard to your family in case of any eventualities. A term plan with a return of premium option also provides a death benefit to your chosen nominee in the event of your unfortunate demise. This monetary benefit allows your family to manage their daily expenses in your absence, especially if you’re the only earning member of your family.
- <h3>Savings on Taxes</h3>
Term insurance with a return of premium also allows you to save money on taxes through exemptions. Based on the prevailing laws of the Income Tax Act of India, the premiums paid towards a TROP are eligible for tax benefits under section 80C and new tax slab 2021-22. It provides you a maximum deduction of up to Rs. 1.5 Lakhs on the premiums paid in return for the insurance benefits.
Why invest in a Term Plan with Return of Premium?
With a term plan with a return of premium option, you enjoy the combined benefits of assured returns and insurance coverage. However, there’s a lot more offered by a TROP as stated below:
- Numerous Riders
If you want to increase your policy’s coverage, a TROP allows you to choose from a wide range of riders. Depending on your requirements, you can add riders to your policy in exchange for an additional premium to extend its coverage. There are several riders available such as critical illness, physical disability, personal accident, and so on. This also makes it easier for you to reconsider the policy as per your life’s progression.
- Greater Flexibility
With a TROP, you can choose from a range of premium payment options at your convenience. From monthly and yearly to quarterly and half-yearly, you can feel free to pay your premiums based on your preferences. This adds great flexibility to the plan and provides you a completely hassle-free investing experience.
- Paid-Up Benefit
A term plan with a return of premium option also features a “Paid-Up” benefit that proves to be highly beneficial for people with an irregular income source. With this benefit in your policy, your policy continues to stay active even if you miss a premium payment. This prevents your policy from being surrendered and allows you to enjoy the policy benefits with a lower cover instead. Depending on the insurance company you prefer, you may require holding your investment for a specific period to enjoy this benefit.
If you want to make sure that your family members and dependents stay financially sustained in your absence, you should certainly consider investing in an insurance policy as early as possible. A term plan with a return of premium option is a great way to gain adequate coverage at a very affordable price. Unlike traditional term plans, it also allows you to gain your paid premiums back in case you survive till the end of the policy tenure, which makes it one of the safest and most convenient investment options in India.