Ever wondered how a return of premium term plan actually works? These are quite popular among younger customers these days. They add a new facet or dimension to what we know as term insurance. This is nothing but the most basic and purest life insurance form, i.e. the insurance company gives you life coverage for a specific tenure. In case of your unfortunate demise within this period, it will pay out a fixed sum assured to your family members. The amount will help them cope with household costs, debt repayment, higher education costs, and other expenses when you are not around.

Term insurance is a must for every individual and household in the current scenario. You simply cannot do without financially securing your family. It also brings you mental peace in turn. Now, what if you survive the policy tenure? With a regular term plan, there will be no benefits or money in hand after this period is completed. However, the return of premium term plan addresses this aspect for those who are interested in getting a lump sum in hand once their policy tenure is over.

Return of Premium Term Plans- Key Attributes

The term plan itself is just like any other regular term plan, with only one addition. You can get your premiums reimbursed upon the maturity of the policy. This is often called the survival benefit. Once you survive the policy tenure, the insurance company will refund the premiums that you paid throughout all these years, and it is also free from taxation. Hence, the policy cost comes down to almost zero, with only a few statutory deductions in some cases.

In case of the policyholder’s untimely death within the tenure, the sum assured is guaranteed for the nominees. At the same time, if he/she outlives the tenure, then there is a lump sum available that helps meet future financial obligations and requirements. Of course, as compared to regular term plans, the premiums for those with the return of premium features may be slightly higher. A part of the premium is kept separately to accumulate interest throughout the policy duration. If the policyholder is alive at the conclusion of the tenure, he/she will get the premiums paid along with interest.

Why Choose Return of Premium Term Plans

Choosing term plans with the return of premium features is a good option for those who are young. If you buy insurance coverage early on in life (say in your 20s or early 30s), then you can certainly choose this feature. Select a tenure till your retirement, and once you retire, you will hopefully get a lump sum amount that you can use to meet various financial requirements. Thus, your money will not be wasted since the policy cost will come down to near-zero levels. This is the biggest benefit of a term plan that comes with this facility. Many customers often state how they do not get anything once they outlive the term insurance policy period. These plans are the answer to these dilemmas.