Term plan with return of premium is a type of insurance that returns the entire premium to the policyholder if he/she survives the policy’s tenure.
In this article, we will explain what the return of premium term insurance is and its benefits.
A term insurance plan provides a sum assured to the policyholder’s family in case he/she passes away during the tenure of the policy. Therefore, term insurance can help in making a family secure. However, if the policyholder survives the tenure, then he/she will not receive any benefits. But the return of premium term insurance offers maturity benefit after the end of the policy tenure.
What is Return of Premium Term Insurance?
While a regular term plan can provide financial assistance if the policyholder passes away untimely, it will not provide any maturity benefits. However, term insurance with return of premium can provide cover in case the insured person dies during the tenure or return premiums if he/she survives the tenure.
How Does Return of Premium Term Insurance Work?
In case of a term insurance plan with a return of premium, a policyholder’s family will receive a sum assured if he/she passes away during the tenure of the policy. Furthermore, the policyholder will receive the maturity benefit if he/she is still alive at the end of the term.
For example, a person purchases a policy with a cover of Rs. 20 Lakhs. The tenure of the policy is 10 years. The yearly premium of the plan is Rs. 2,000. Therefore, at the end of the term, the insured person will have paid Rs. 20,000. If the policyholder passes away during the tenure, then his/her family can receive Rs. 20 Lakhs as the sum assured. However, in case the policyholder survives the tenure, then the insurer will return the entire premium of Rs. 20,000 to him/her.
Why Should You Opt for Return of Premium Term Insurance?
A term insurance policy with return of premium is crucial as it can help in securing your family. It can protect them from any financial burden that might occur due to an unforeseen situation. This plan offers life cover as well as the return of premium benefit.
Here are some of the reasons why you should choose term insurance with return of premium-
- Term insurance with the return of premium gives back the premium paid by the policyholder when the policy matures. Therefore, it’s a great option for policyholders who want life cover and the benefit of the return of premium.
- This insurance offers a sum assured along with the return of premium benefit. Therefore, in case of an unforeseen event, the policyholder’s family will receive the sum assured.
- With this plan, a policyholder can also opt various add-ons. Add-ons are the additional benefit that an insured person can purchase by paying a higher premium. By opting for add-ons, a policyholder can enhance his/her cover.
It’s wise to choose term insurance with a return of premium as you can get life cover as well as the return of premium.