Do Term Plans Have Any Maturity Benefits?

Are you the sole breadwinner of the family? Have you ever thought about the financial security of your family members once you are no longer around? How will they manage their day-to-day expenses and achieve their financial objectives? If such questions are giving you nightmares, then it is time that you get yourself insured.

A life insurance policy is one of the best financial products to secure the economic future of your loved ones. Here, the sum assured offered to the nominees can help them in living a financially independent life. Out of the numerous life insurance plans available in the market, it is advisable to invest in a term plan. This policy offers a large sum assured at a budget-friendly premium compared to any other types of life insurance policies.

Traditional term insurance plans only provide a death benefit to the policy’s nominees if something untoward happens to the policyholder. Such policies did not offer any maturity benefit on survival. However, many insurers today after offering term policies with maturity benefits.

Many people were hesitant about buying term insurance plans, as they were afraid of losing the premium if they outlived the policy period. Term insurance with return of premium (TROP) provides maturity benefits to the policyholder who outlives the policy duration. Here, the policyholder receives the premium paid to date back from the insurer in the case of survival. However, the premium of TROP is more than that of a pure term policy. Let us take an example to understand this plan in a better way.

Shekhar is a 30-year-old individual with no smoking or drinking habits. He is planning to buy term insurance online. After doing some research on the Web and using the term plan premium calculator, Shekhar is considering purchasing a TROP with a sum assured of INR 1 crore for 30 years at an annual premium of approximately INR 10,000. If Shekhar dies during the policy tenure, his nominee will get INR 1 crore. However, if he survives this period, then he will receive the total premium paid until the policy duration back from the insurer. Here, Shekhar will receive INR 3 lakh (INR 10,000 X 30 years).

Who should buy a TROP?

Unlike the pure term insurance plans where the buying age is between 18 to 65, here, any person in the age group of 21-55 can invest in a TROP. It does not matter whether you are single or married with kids, as this plan can be beneficial for anyone.

Features of a TROP 

Here are a few highlights of a TROP: 

• Options in premium payment 

Here, you have the opportunity to opt for the preferred way of paying the premium. You can either pay it as a one-time lump sum or select the regular payment alternative.

• Tax benefits 

You can claim a tax deduction under Section 80C of the Income Tax Act, 1961 on the premium that you pay for the term policy. Here, the maximum deduction allowed is INR 1.5 lakh per annum. Additionally, the maturity benefit that you will receive is tax-free as per Section 10(10D) of the Act.

• Surrender value 

If you want to discontinue your TROP, you are entitled to receive a surrender value. However, there are certain conditions to avail of this benefit. Therefore, it is suggested that you consult with your insurer about this.

 Now, when you know why should invest in a TROP, it is suggested that you use a term plan premium calculator and search for a suitable policy according to your requirements.  With offerings like maturity benefit, death benefit, and tax exemptions, a TROP truly stands out!