Insurance and financial experts worldwide have corroborated that it is never too late or too early to buy a life insurance policy. Buying an insurance cover is one of the most efficient ways to safeguard your family’s financial future. And, while there are many types of life insurance policies in the market, term plans with maturity benefits remain a hot favourite among Indian customers. Let us know more about what a term plan with maturity benefits is.
What is the maturity benefit in insurance?
As the term suggests, the maturity benefit is the amount you receive after your insurance policy expires or matures. Generally, maturity benefits in insurance include three critical components, i.e., the sum assured, terminal bonus and accrued bonus (if any).
What is term insurance with maturity benefits?
A standard term insurance plan does not offer maturity benefit; it pays the sum assured in a lump sum to the family members in the event of the policyholder’s demise during the policy term. However, with the evolving insurance needs of the customers in India, many insurance companies nowadays offer term insurance with maturity benefits. Such plans are called TROP (Term Insurance with Return of Premium).
In TROP, the insurance company pays back the premium you have paid till the end of the policy term, upon policy’s maturity. You can avail of the maturity benefits only if you outlive the policy tenure.
Features and benefits of term plan with maturity benefits
Anyone over 18 years can purchase a term plan with maturity benefits.
Just like a regular term plan, when you buy TROP, you get the flexibility to choose the premium payment mode. You can choose between standard premium payment mode or opt for single premium payment. In regular premium payment mode, you must pay the premium periodically (it can be monthly, quarterly, half-yearly or annually). You must pay the full amount in a lump sum in the latter option.
The premium you pay would depend on critical factors like your age when buying the policy, medical history, lifestyle habits, policy tenure, sum assured, etc. The earlier you buy the policy, the better your chances of getting the coverage at an affordable premium.
Depending on your specific insurance needs, you can choose the policy tenure; it can range from five to 30 years or more. Generally, the insurance advisors suggest buying a long-term policy. This will help you provide financial security to your family for a more extended period. Also, if you have any long-term debts like a home loan, it is best to choose a term plan that covers the loan tenure.
One of the most significant benefits of a term plan with maturity benefits is that you get a refund of the total premium amount if you outlive the policy tenure.
Apart from the return of premium and death benefits, you can enjoy tax benefits every year on the premium paid. You can claim a tax deduction up to a maximum limit of ₹1.5 lakhs in a financial year under Section 80C of the IT Act. If you choose any riders like a critical illness benefit rider, you can get an additional tax benefit up to ₹25,000 under Section 80D of the IT Act.
With so many unique features and benefits of term insurance with maturity benefits, it is worth buying. However, ensure that you choose a policy with a high sum assured so that you can give your family ample financial protection to take care of their expenses and be financially-independent even in your absence.