“Money-Back in Term Life Insurance: Is It a Smart Money Saving Plan?”

A term insurance with a return on premium, often known as TROP, is a term plan that has maturity benefits. It is basically a replica of a term plan with just the addition of a maturity benefit. Many investors look forward to a Money Saving Plan, which not only will offer financial security to the family members, but also ensures a financial benefit in case they survive the plan. 

Under TROP, the maturity amount is paid to family members if the insured dies during the policy tenure, & the premium paid during the policy tenure is returned if the policyholder survives. Basically, this plan offers an exit option to the policyholder at a specified period, where he/ she receives the entire premium amount after deducting the applicable taxes.

How to Purchase a Money-Back Term Life Insurance Online?

Follow these steps to buy a money-back term life plan:

• Visit the official website of any insurance service provider company.

• Under the section “No Cost Term Plan”, click the tab Term insurance with return of premium or 100% refund of premium.  

• Fill in the details required, including name, date of birth, contact number, gender, etc. 

• Click the option “View Plans”.

• Fill out the required details, such as annual income, smoking habits, language, & type of occupation.

• Once all the required documents are submitted, all available term plans will be displayed on the screen.

• Look for return of premium plans by choosing from the above-mentioned options.

• Choose a plan that best suits your financial objectives, risk tolerance level, & investment horizon. 

• Proceed to make payment towards the plan using the most suitable payment mode.

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Types of Money-Back Term Plans

Provided are the different types of money-back term plans:

• Full Return of Premium (ROP)

In case the policyholder survives the plan, this plan includes the return of the total premium amount paid. 

• Partial Return Plan

It involves the return of a partial amount, such as 50-70% of the total premium amount, when the policy matures. 

• Survival Benefit Plan

This plan includes periodic payouts throughout the policy tenure at every regular span of time, such as every 5 or 10 years

• Limited Pay ROP Plan

This includes payment of the premium for a restricted duration, such as 10 years, with return at the time of maturity & the plan remaining in force for the complete tenure.  

• Single Premium ROP Plan 

This plan includes payment towards the premium, providing assured returns in case the policyholder survives the plan.

Different Ways to Get Money Back in a Term Plan

The following are the different types of term plans that offer a money-back guarantee:

A) Type-I Money Back Term Plan, i.e. Term Insurance with returns of premium plans

A term plan with return of premium is a term plan that has maturity benefits with death benefits. Here, the maturity amount is paid to family members if the insured dies during the policy tenure, & the premium paid during the policy tenure is returned if the policyholder survives. 

• Return of Premium

In case you opt to exit from the policy, this plan refunds the premium amount paid throughout the policy tenure after deducting the applicable taxes, saving the amount of money paid earlier.

• Huge Life Coverage

This plan comes with extensive coverage, which helps you maintain your lifestyle, covering all main expenditures.

• Death Benefit

The insurance company will pay a lump sum amount to the beneficiaries in case of the death of an insured, ensuring financial stability & security. Thus, these plans offer long-term Financial Resilience by offering income protection as well as capital safety.

• Flexible Tenure

It offers flexibility in choosing the policy tenure & policy amount, which will depend upon the requirements & future financial objectives.

• Critical Rider

It also allows for the addition of critical riders such as accidental death benefits & critical illness, ensuring added safety & covering extra risks.

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B) Type-II 100% refund of Premium at No Cost term Plan

Zero Cost Term Insurance, also known as No Cost Term Insurance, is a kind of life insurance which provides high coverage benefits at zero cost to the policyholder. The premium paid throughout the policy tenure is returned to the policyholder at the time of maturity. It is a cost-effective plan for policyholders, which provides financial security to family members at no additional cost. 

• Affordable Premiums

It is a cost-effective plan that charges a lower premium.

• High Coverage

This plan offers financial security to the nominees of the policyholder with considerable death benefits.

• Multiple Policies

One can buy multiple policies, which comprise coverage of customised plans.

• Zero Cost

It eliminates the payment of premiums after a specified time period, which helps reduce financial obligations.

• Conversion Options

A policyholder can convert their term plan into a life insurance plan within a specified time span. 

• Flexibility

Get flexibility in the coverage amount & an option to add additional riders as per your requirements.

• Tax Benefits

Get tax benefits on the amount of premium paid, which helps save funds.

C) Type-III Regular Term Plan 

A Term Plan is a pure protection plan with no investment component, which means the policyholder receives no sum if they survive the policy tenure. Let us discuss its features:

• High Coverage at Affordable Premiums

This plan offers high coverage at an affordable premium in comparison to other term plans.

• Financial Security for Family

This plan helps to provide financial security, maintain a lifestyle, pay off loans & debt obligations, & meet routine expenses, etc., in the absence of the policyholder.

• Tax Benefits

The premium amount paid is eligible to receive a deduction of tax u/s 80C & the death benefit received is exempt from tax u/s 10(10D).

• Flexibility

This plan offers flexibility in payment of the premium amount, i.e. monthly, quarterly, semi-annually, or annually.

• Riders & Add-ons

It offers additional riders to enhance the features of the term plan, like critical riders, waiver of premium, accidental death benefits, etc.

• Mental peace

Knowing that the family members will be financially secure in your absence provides mental peace.

• Transparency

These plans are simple to understand, with easy terms & conditions.

• Loan Security

It secures all your outstanding debts & liabilities, leaving your family members financially secure in your absence.

Conclusion

A term plan can either be with or without a money-back option. There is no such provision of money back under a basic term plan, but with a money back term plan, the policyholder gets assured returns at the time of maturity of the plan. 

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