Whenever you think of securing the financial future of your family, a term insurance plan naturally stands out as the best possible option. This is mainly because it offers high coverage at relatively affordable rates. Yet, traditional plans come with certain disadvantages, namely that there are no returns in case you outlive them. This is where you can consider a term plan with return of premium (ROP). It will offer a dual advantage of premium refunds if your policy tenure concludes without any claim, along with life coverage. Here is a closer look at the same.
Financial Safety for Your Near and Dear Ones
When you get a term plan, it majorly works as a safety net for you financially. It offers sizable life coverage at reasonable premium rates. In case something happens to you within the policy period, then the family gets a lump sum amount from the insurer. This naturally helps them meet household, educational, and other costs. They can also use the proceeds to settle debts or liabilities that you may have left behind. The best part? With ROP, you don’t have to feel like you’re gambling with the premium amount, as your money returns if you stay healthy.
Refund of Premiums on Maturity
The main attribute of a ROP is the refund of all your paid premiums if you survive the policy duration. It can be structured in different ways, such as a lump sum or installments, ensuring that you won’t lose out on the money you invest even if there isn’t a claim. Thus, you’ll get something back, which can be used to meet diverse life goals.
Affordability with Added Benefits
Although ROP premiums are slightly higher than traditional term plans, they’re still affordable compared to other insurance types. If you account for the return of premiums, it can be a reasonable option for investment, offering both savings and coverage. You will essentially pay to get mental peace, knowing that your money won’t be at risk and your loved ones will always be financially covered.
Tax Benefits
In India, tax savings are a big motivator, and ROP scores well here too. The premiums paid for the term plan will be eligible for deductions under Section 80C (up to Rs. 1.5 lakh annually). The maturity benefit will also be free from taxes as per Section 10(10D), provided the sum assured is at least ten times the premium you pay annually.
Disciplined Saving Habit
Investing in a ROP is a systematic way of securing your future. The policy encourages you to regularly set aside money in premiums that will eventually come back, fostering a disciplined approach to savings. It’s a plan that ensures financial readiness without compromising on immediate lifestyle needs.
In Conclusion
A Term Plan with Return of Premium (ROP) ensures a best-of-both-worlds scenario for you. You can get adequate life coverage while also getting your money back if you survive the policy period. However, it’s important to evaluate your individual financial needs and goals before making a decision. So, if you’re weighing options, a ROP is a balanced and financially rewarding choice worth considering.g factual accuracy.
