People prefer investing in financial products that provide higher returns on investment. Term plans are designated to offer the returns to the nominee only in case of the policyholder’s unexpected death. However, insurers have provided customisable features to ensure returns from term insurance plans. The return of premium is one such option. Here is a detail about what it means and reasons to suggest why it is worth purchasing.
What is the Term Plan With Return of Premium?
Term insurance is a traditional life insurance plan that provides a life cover to reduce the financial burden for the family in case of the policyholder’s unexpected death during the policy term. Purchasing a term plan is an important financial decision if an individual has a dependent family.
Term insurance with return of premiums helps the policyholder to receive a savings benefit apart from the life cover. The term plan with the return of premium option will refund the premium amount paid during the policy tenure at maturity.
Why is Term Plan with Return of Premium Worth Purchasing?
We have seen what a life cover with a return of premium means. So, let us understand why it is worth purchasing because one can avail of the benefit only at an additional cost.
- Pay off debts – Individuals avail of loans to increase their asset base. For example, availing of a home loan or a car loan in middle age. However, considering their family commitments and dependency, they might also need a life cover to secure their family. With the return of the premium term plan, they can ensure financial security while also accumulating a savings fund to clear off their loans.
- Assured returns – Individuals purchasing the term insurance plan with money back options can ascertain the returns at maturity. Unlike financial products that offer market-linked returns that might fluctuate in value, the term plan with the return of premium provides the refund of the premium amount paid based on the agreed terms and conditions.
- Long term savings benefit – Term insurance plans are considered one of the most preferred life insurance plans due to their high sum assured and affordable premium rate. Therefore, if individuals decide to invest in the term plan early in life, they can choose a longer policy tenure to accumulate a huge savings fund. Also, as the prevalence of health complications or pre-existing illnesses is less at a younger age, the risk coverage is comparatively less for the insurer, providing the term plan at an even cheaper rate.
- Secure savings platform – As the return of premium term is not based on providing market-linked returns, it is a secure savings platform that can protect the money in the long term. And, when the policyholder chooses to purchase an online term plan, they can monitor and maintain their account conveniently and comfortably. For example, the Tata AIA online insurance offers a range of flexible term plan features such as increasing the sum assured, availing of additional riders, etc. So, the policyholder can customise the product to their maximum advantage at any time.
Term insurance plans offer a life cover to secure the financial needs of the policyholder’s family in case of their unexpected death. And a term plan with the return of premium option will provide a refund of the premium amount paid towards the term insurance at the end of the policy tenure. Therefore, it is worth the purchase because it provides assured savings that can help clear off debts. Moreover, it is a secure savings platform that can ascertain a huge accumulated fund in the long term!