What are the top reasons why a term plan with return of premium makes sense?

How Term Plan with Premium Benefits?

As someone who is planning to invest in a life insurance policy, I am obviously wondering if ROP makes sense. Well, that's a genuine concern. With an average increase in life expectancy and access to better healthcare and lifestyle, it is likely that many people will outlive the policy tenure. Though that's wonderful news, it also raises questions about whether they should really invest in a term insurance plan.

Here, we have discussed five benefits that prove the worth of a term return on a premium policy:

1. Dual Benefits of Insurance and Savings:
   A term return on premium policy is more than just a life insurance plan. If you think that the entire premium of Term Insurance could be a waste if you outlive the entire policy tenure, then you can opt for a Term Plan with a Return of Premium so that you get the premiums refunded at the end of the policy tenure! You also have insurance coverage for the entire duration, which works as a backup plan to protect your family!
2. Protection Against Unexpected
   Some of the term returns on premium plans also offer add-on benefits, such as accidental death benefits, premium waiver, terminal illness, etc. It may depend on the type of ROP you choose and the insurance provider.
   
   For example, under the terminal illness rider benefit, if the insured is diagnosed with a terminal illness like cancer, cirrhosis, etc., the policy can help them cope with the upcoming medical expenses. So, a ROP can be seen as a combo pack that offers life cover, terminal illness cover, and survival benefits.
3. Guaranteed Maturity Benefit
   The term return on premium policy makes up for the missing part of a regular term insurance plan. Along with death benefits, it offers survival benefits as well. People who want to stay safe from either end of the policy may choose to invest in a ROP.
   
   The survival benefit, the total of the premium paid, can be utilised for multiple purposes. It acts as a financial cushion in the later years of life and is a guaranteed maturity benefit if the life insured survives the entire policy tenure.
4. Life Insurance Cover
   Last but not least, term insurance with a premium return protects against life uncertainties. Whether you are the family's sole earning member or not, investing in a term insurance plan can offer various benefits.
5. Tax Benefits:
   The premium paid for a ROP plan is tax-free upto Rs 1.5 lakhs per annum under section 80C in the Old Tax Regime. Even the death benefit remains tax-free under Section 10(10D) of the Income Tax Act of 1961 in the hands of the nominee.

The death benefit of a term plan can help the family/beneficiary cope with financial challenges, find financial stability, and lead a life without financial stress. Individuals who do not have financial liabilities may leave a pool of funds for the beneficiary.

Knowledge Nugget: Term return on premium policy usually has a higher premium than a regular term insurance plan. However, the feature of survival benefit can eventually square off the premium amount! Advantages of Choosing ROP Over Traditional Term Plans

A Term Return of Premium (ROP) plan offers significant advantages over traditional term insurance. While traditional term plans provide pure risk coverage without any maturity benefit, ROP offers guaranteed maturity benefit by refunding the premiums in case the life insured outlives the entire policy tenure, and no interim claim is made.

This dual benefit of life cover and savings makes ROP attractive for those seeking security with a guaranteed return. Additionally, ROP plans often include optional riders, such as accidental or critical illness cover, for enhanced protection.

Conclusion

Term insurance in India, like ROP, can be a win-win for you. If the insured survives the policy tenure, the survival benefit is payable. However, in an unfortunate situation where the insured dies during the tenure, the beneficiary receives the death benefit.

So, individuals who are expecting monetary benefits from a term plan may invest in ROP. Even though the premium of ROP is higher than that of term plans, the survival benefit eventually covers the additional cost. If you are willing to invest in a term insurance plan, we are there to assist you. At Jio Insurance Broking, you may compare different plans and find the most suitable one for you!

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