What is Term Insurance with Return of Premium in India?

Term insurance provides protection to the financial dependants of the policyholder in case the latter meets an unfortunate demise. There are different variants of term insurance plans, term insurance with return of premium being one of them. So, read on to find out all about the best term life insurance with a return of premium in India.

What is Term Insurance with Return of Premium Plans?

Term insurance with return of premiums works like any other term insurance plan, the only difference being that the entire premium is paid back at the end of the policy term. Like a term insurance plan, it also offers life coverage. In addition to life insurance coverage, term insurance with a return of premium also provides maturity benefits once the policy ends. However, it is important to understand that the premium is paid back only if the policyholder survives the policy term. Thus, this type of plan offers dual benefits including both death and survival benefits. 

Who Should Buy It?

Although this plan is suitable for all, there are a few individuals who must definitely consider buying it. Listed below is the group of people who should buy term insurance with a return of premium plans:

• Those individuals who are looking for life insurance cover
• Those who want to support their financial dependants even when they are not around
• Those individuals who want both death and life insurance benefit at an affordable premium
• If you are married, then you should buy this plan as it offers protection to your spouse and family even when you are not around. 

How Does Term Insurance with Return of Premium Work?

Wondering how does term insurance with return of premium works? Let’s understand it with an example:

Mr. Jain is 35 years old and has bought a term insurance policy with Rs. 1 crore coverage. He has no medical history and the term insurance premium he needs to pay is around Rs. 2,782. The policy term is 30 years, now in case he meets an unfortunate demise, then his nominees will receive coverage of Rs. 1 crore. On the other hand, in case he outlives the policy term, then he will receive the entire premium he paid for 30 years as a part of term insurance with the return of the premium plan.

Benefits of Buying Term Insurance with Return of Premium

Listed below are some of the benefits of buying a term insurance plan with a return of premium:

1. Wealth Creation

A plan like this is very useful for wealth creation in the long run. This is because when you buy term insurance with a return of premium, you will get a lump-sum amount once the policy matures. Thus, this plan offers a great opportunity to multiply your savings.

2. Life Insurance Protection

Term insurance with a return of premium also offers life insurance protection. This means that if the policyholder dies during the policy term, then the nominees will receive a certain sum of money as death benefits.

3. Rider Benefits

You can also include a number of riders to the term insurance with return of premium plan. Some of the riders that you can include in this plan are accidental death benefit rider, critical illness rider, disability rider, and more. However, remember that when you include these riders in your plan, the premiums are likely to increase.

4. Tax Benefits

You can also save on tax by buying this type of plan. You can save up to Rs. 1.5 laks as specified under the Income Tax Act of 1961. So, reduce your tax liability on buying term insurance with return of premium plan. 

Tips to Choose the Best Term Insurance with Return of Premium Plans

Listed below are some of the tips that you need to consider while buying the right term insurance with return of premium plans:

• First and foremost, assess the term insurance coverage you require for your financial dependants.
• You should also analyse your budget while buying this plan. Doing so will help you in choosing a plan that best suits your pocket.
• Another thing that you need to check is the claim settlement ratio of the insurance company. This gives you an idea of the insurer’s efficiency in settling term insurance claims.
• You should also check the additional benefits offered under the plan to be clear of what exactly the plan offering.

Difference Between Term Insurance and Term Insurance with Return of Premium

Here are some of the differences between term insurance and term insurance with return of premium plan:

Take Away

So, now that you know all about term insurance with return of premium plans, you can buy it anytime. To know more about these plans, you can also contact us at InsuranceDekho.

Also read: How to Get Life Insurance Without a Medical Exam?