Is it Wise to Purchase Term Plan with Maturity Benefit?

Purchasing a term insurance plan is a necessity, to provide financial protection to your loved ones in case of any eventuality that can lead to loss of income. Even though one cannot put any monetary value to human life, the coverage amount of the insurance policy is determined on the basis of loss of income in the future. That is why in erm insurance policy a guaranteed sum assured amount is offered to the family in case of the demise of the insured person.

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However, there are high chances that the policyholder survives the entire policy tenure and nothing unfortunate happens. In that case, will the insurance company repay the entire premium that the policyholder pays over the years? What about the other financial goals that one wants to achieve?

Under pure term insurance policy, no maturity benefit is offered to the policyholder. However, if you want to avail the benefit of life advantage on the insurance plan, then you can consider investing in term plan with maturity benefit. However, to make an informed choice it is first important to know what are the benefits of a term plan with maturity benefit.

Why buy Term Insurance early?

Your premium is decided on age at which you buy the policy and remains same, throughout your life

Premiums can increase between 4-8% each year after your Birthday

Your policy application could be rejected or premiums increase by 50-100%, if you develop a lifestyle disease

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Benefits of Term Plan with Maturity Benefit

Most of the life insurance policies that offer maturity benefit come with a policy tenure of 5,10,15 or 20 years. The maturity benefit policies not only provide coverage in the emergency but also provides guaranteed returns and added advantages if the insured survives the entire tenure of the policy. let’s take a look at the types of maturity benefit policies.

TROP can be called a term plan with maturity benefits. These plans are slightly different from the pure term insurance plan. On contrary to pure term insurance plan, a term plan with maturity benefit offers income replacement and return of premium at maturity, if the insured survives the entire tenure of the policy. These benefits are offered along with the other advantages of the traditional term insurance plan.

Moreover, along with the benefit of the return of premium and death coverage, the TROP plan also offers the benefit of tax exemption U/S80 C of the Income Tax Act as any other life insurance plan.

Term insurance plan with maturity benefit also offers the benefit of add-on riders like critical illness and accidental death benefit or disability rider to enhance the coverage of the policy.

Term plan with return of premium (TROP) can be considered as an insurance cum investment avenue for individuals who want to achieve the long-term financial objective.

Key Features of Term Insurance Plan with Maturity Benefit

  • 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 option of premium payment.
  • Policy Maturity- 25 years- 65 years.
  • Premium Payment Mode- Monthly/yearly.
  • Coverage- Maturity and death benefit
  • Policy Term- Minimum- 5 years Maximum- 30-35 years

Term Insurance Plan with Maturity Benefit

The following are the term insurance plan that offers maturity benefit.

1. Aviva iShield Plan

This is a non-participating non-linked insurance policy, which can be purchased online. The plan offers guaranteed maturity benefit which is 110% of the total premium paid.

2. LIC Jeevan Pramukh

This LIC term plan with maturity benefit is a comprehensive insurance policy that offers financial protection to the family in case of any eventuality. As a term return of premium plan, maturity benefits is offered by the policy as the return of premium in case the insured survives the entire tenure of the policy. On maturity of the policy, the sum assured on maturity is paid to the insured along with accrued guaranteed additions, terminal bonus, and simple reversionary bonus (id any).

3. Max Life Premium Return Protection Plan

As a comprehensive term insurance policy, the plan provides insurance coverage to the family of the insured in case of any eventuality. Moreover, the plan also helps to achieve the long -term financial objective of life by paying the return of premium at the end of the policy tenure if the insured survives the entire policy term.

4. PNB Metlife Suraksha

It is a non-participating term insurance plan that offers insurance coverage to the family of the insured along with the benefit of the return of premium. In case the insured survives the tenure of the policy, the entire amount of premium paid till date is returned to the policyholder.

5. TATA AIA Raksha Plan

As an inclusive term insurance plan, TATA AIA iRaksha can be purchased online in a simple and hassle-free way. The plan offers higher insurance coverage at a minimum premium rate. As a term return of premium plan, the entire premium of the policy paid till date is returned to the insurance holder if he/she survives the entire tenure of the policy.

Disclaimer: “Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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 the refund of premium on the maturity of the policy. However, it is always advised to make a fair comparison of plans offered by the insurance company and then choose the one based on your suitability and requirement.

Written By: PolicyBazaar

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