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Is It Wise To Buy Term Insurance with Maturity Benefit?

When it comes to securing the financial future of your loved ones, term insurance stands out as an ideal option. However, with the availability of a wide range of insurance products, the question arises:

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Is it wise to buy term insurance with maturity benefits? Yes, it is a good decision to choose term plans that have maturity benefits after the end of the policy term so that even if you outlive your policy term, you can easily get back all your paid premiums. This way, you are protecting your loved ones for the unforeseeable future and ensuring you enjoy the return of premiums if you survive the policy duration. Let’s learn more about term insurance with maturity benefits in detail here:

What Is Maturity Benefit In Term Insurance? 

Maturity benefit is the amount your life insurance provider pays when you survive the policy term. Under a term insurance policy, no maturity benefit is offered to the policyholder as it only provides a lump sum payout in case of the policyholder's death. On the other hand, a term insurance plan with maturity benefit or Term Return of Premium (TROP) offers a refund of premiums at the maturity date. You can only get all the benefits when you outlive the policy term. 

The maturity benefit is the amount received by a policyholder or nominee after the maturity of an insurance coverage. This mainly includes 3 components: 

  • Sum Assured

  • Accumulated bonus, 

  • Terminal Bonus (if any). 

*Note:The maturity benefit is applicable only when the plan is active. 

*Note: It's essential to understand what is term insurance before purchasing a term plan. 

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Do All Term Insurance Plans Have Maturity Benefits?

No, not all term insurance plans have maturity benefits. Term insurance plans generally provide pure protection, meaning the policyholder buys term insurance and pays regular premiums to keep the plan active. And, in the unfortunate event of his/her death, the assigned nominees will receive a death benefit. There are no additional benefits assigned in a base term plan. But, if the policyholder wishes to receive a maturity/survival benefit, he will have to choose the term plans that have return of premium benefit. 

*Note: You can estimate the premium for your selected term plan using the term insurance calculator.

What Are The Key Features Of Term Insurance With Maturity Benefit?

The key features of term plan with maturity benefit are as follows:

  • Entry Age- The entry age of the TROP plan generally ranges from 18 years- 65 years.

  • Premium Paying options- The policy offers single pay, limited pay and regular pay options of premium payment.

  • Policy Maturity- The maturity age differs from plan to plan. 

  • Premium Payment Mode- The plan offers Monthly or Yearly premium payment modes. 

  • Coverage- Term plan offers both Maturity and death benefits. Also, you can choose a nominee if you avail of term insurance wuith a maturity benefit plan. 

  • Policy Term- The Minimum policy term is 5 years, and the maximum term can be between 30 years to 35 years

  • Premium Rates- The plan quotes are based on the sum assured amount and age of the policyholder. 

  • Free look period- The free look period is 15 days, if the term plan is bought offline and 30 days if you buy it online. 

*Note: The diverse benefits of term insurance allows individuals to buy term plan to safeguard their loved ones.

What Are The Benefits Of Term Plan With Maturity Benefit?

The benefits of term insurance with maturity benefit are as follows:

  • Survival Benefit: Upon maturity of the term plan, i.e. if the policyholder survives the policy duration, the insurer refunds the entire premium amount. 

  • Death Benefit: Similar to a traditional term insurance policy, term insurance with maturity benefit offers a death benefit. In case of the unfortunate event of the policyholder’s death, the nominee receives the sum assured along with any accrued bonus. 

  • Tax Benefit: Policyholders are eligible for tax benefits on premiums paid under Section 80C of the Income Tax Act. 

  • Additional Features: The term insurance with maturity benefit policy offers the flexibility to enhance coverage through riders/add-ons. This allows policyholders to choose options like Critical Illness and Accidental Death or Disability riders.

*Note: Take the time to evaluate and compare the best term insurance policy in India through Policybazaar's comparison engine.

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Term Insurance Plan With Maturity Benefit 2024

The following is the list of life insurance with maturity benefit plans : 

Plan  Entry Age  Maturity Age  Sum Assured 
ICICI Prudential iProtect Return of Premium  18 to 60 years  85 years  25 Lakhs - 20 Crores 
HDFC Click 2 Protect Super  18 to 65 years  85 years  50 Lakhs - 20 Crores 
Max Life Return of Premium  18 to 65 years  85 years  50 Lakhs - 1 Crore 
TATA AIA SRS Vitality Protect 18 years - 60 years 85 years Rs. 50 Lakhs to 2 Crores
Bajaj Allianz Life eTouch 18 years - 55 years 99 years Rs. 50 Lakhs to 10 Crores (2 Crores incase of Rider)
PNB Mera Term Plan Plus  18 to 60 years  99 years  50 Lakhs - 10 Crores 
Canara Young Tem Plan Life Secure TROP  18 to 45 years  99 years  15 Lakhs - 20 Crores 
Aditya Birla Salaried Term Plan  21 to 55 years  70 years  50 Lakhs - 5 Crores 

*Note: Securing your loved ones' future against life's uncertainties is possible with the purchase of the best term plan for 1 crore.

Wrapping it Up!

Even though the term return of premium plan (TROP) comes with a higher premium rate, it also offers the benefit of guaranteed return, and you get a refund of the premium on the policy's maturity. However, it is always advised to compare plans offered by the insurance company and then choose the one based on your suitability and requirements.

FAQs

  • Q: What is TROP?

    Term life insurance plans with a return of premium (TROP) ensure that, upon surviving the policy term, the policyholder receives a maturity benefit equivalent to the total annualized premium payments (excluding taxes) made throughout the policy duration. In the unfortunate event of the policyholder's demise, the family is entitled to receive the Sum Assured under this plan.
  • Q: Should I buy term insurance with a return of premium option?

    Buying term insurance with a return of premium could be a wise choice if you require significant financial security for your loved ones but possess a low-risk tolerance when it comes to opting for term insurance.
  • Q: Can I buy riders with TROP?

    Yes, you have the option to include riders of your choice to increase the coverage of TROP. Depending on individual requirements, various types of riders can be added to get comprehensive coverage.
  • Q: How does smoking affect TROP?

    As the insurer assesses risk, premiums for smokers and non-smokers may vary. Individuals who smoke are classified as high-risk policyholders.
  • Q: What is the grace period in a term plan with a return of premium?

    The grace period for a term plan is usually 30 days; however, if the premium payments are done on a monthly basis, the grace period is reduced to 15 days.
  • Q: Is It Wise To Buy Term Insurance with Maturity Benefit?

    Yes, it's a good choice as it offers financial protection and refunds premiums if you outlive the policy term.
  • Q: Do All Term Insurance Plans Have Maturity Benefits?

    No, only plans with Term Return of Premium (TROP) offer maturity benefits, while pure term plans don't have any maturity benefits.
  • Q: What are the key features of term insurance with maturity Benefits?

    The features include various entry ages, premium payment options, coverage for both maturity and death, and flexible policy terms.

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