Ask any insurance expert/advisor worldwide about what the right age is to buy a life insurance policy and the answers will be unanimous – ‘it is never too late or too early to buy insurance.’ But the sooner you buy, the better as you can get the policy at a lower premium.
Over the years the life insurance industry in India has evolved significantly and the insurance companies offer a wide variety of insurance plans to suit different needs of the people. And amongst a host of other life insurance policies, term insurance remains popular among the insurance buyers.
Term insurance is a pure protection plan where the insurance company pays the death benefit to the policyholder’s family in the event of their demise during the policy period. The policy remains active for a specific term and many people prefer buying this policy mainly because it has the lowest premium compared to other life insurance products.
While an affordable premium is a big plus, most people believe that no maturity benefits is the biggest drawback of a term insurance policy.
What is maturity benefit?
In simple words, the maturity benefit is the amount you receive on maturity of the insurance policy, i.e., at the end of the policy term. Typically, maturity benefits include sum assured and the accrued benefits.
Term insurance with maturity benefits
A standard term insurance policy does not offer any maturity benefit. But, if you have purchased a term plan with return of premium or TROP, you are eligible to get maturity benefits at the time of policy maturity. The maturity benefit you receive is essentially the premium you pay over the years.
Features of term insurance plan with maturity benefits
· Any individual who is aged between 18 and 65 years can purchase term insurance with return of premium plan. The minimum and maximum entry age limit for buying a policy may vary from insurer to insurer.
· You can opt for a regular premium payment mode or purchase TROP with single one-time premium payment.
· The premium for TROP can be slightly higher than the standard term plan. The insurance company determines the premium based on your age, profession, medical history, sum assured, etc.
· The minimum policy term for TROP is five years and the maximum tenure can be 30 years or above.
· The maturity benefit is payable only if you survive the term insurance policy tenure. If you meet with an untimely death during the policy term, your family will get only the death benefit.
Benefits of term insurance with maturity benefits
· One of the most obvious benefits of term insurance maturity benefits is that if you outlive the policy period, the insurance company pays back the premium you have paid over the years.
· Like a standard term plan, term insurance with maturity benefits offers death benefits to the family in the event of your untimely demise.
· You get tax benefit on the premium paid for the policy. You can get a deduction up to Rs. 1.5 lakhs in a financial year under Section 80C of the IT ACT.
· The term insurance with maturity benefits allows you to enhance or reduce the coverage as per your changing insurance needs. You can also add riders to get protection against specific risks that are not covered under the original policy.
Term Insurance – A Must-have for All
Whether you buy term insurance with maturity benefits or a standard term plan, make sure that you get an insurance cover to protect your family’s financial future in your absence. Ensure to evaluate the sum assured amount, policy tenure, insurance company’s reputation and make an informed buying decision.