If you are considering whether it’s a good idea to buy a term insurance plan with return of premium, here are some key points that you should keep in mind while making the decision.
1. Return of premium term insurance plans offer higher value proposition
Even though pure term insurance provides one with the necessary coverage to keep their own as well as their family’s life goals on track, the return of premium plans go one step further and ensure that there are no sunk costs (or lost money) if they survive the policy period. By returning the premiums paid during the policy term, these plans help create a corpus for the life assured.
2. Return of premium term insurance plans incentivize healthy lifestyle
By offering the option to get one’s total premiums paid returned after the policy term on surviving the policy period, the return of premium plans tend to incentivize healthy living among life assured. To avail this feature, people will most often than not maintain a healthy and active lifestyle.
3. Return of premium plans carry tax benefits
Even though these plans work as a long-term investment tool for individuals who survive the policy term, the return of premium term insurance plans has the same Section 80C tax exemption under the Income Tax Act, 1961 as pure term insurance plans. This means that premiums paid, and the amount withdrawn is tax-free under Section 80C and 10(10D) of the Income Tax Act.
4. Assured returns of premium
Return of premium term insurance plans are considered better value proposition by individuals seeking the protection offered by term insurance, yet get back the premiums paid by them, if they outlive the policy tenure. This assures them that their money does not become a sunk cost.
Conclusion
For those seeking higher value for their money, the term plan with return of premium can prove to be a better choice as the premium paid is assuredly returned once the life assured survives the policy term. Additionally, the return of premium term insurance plans come with benefits such as tax exemption as well as incentive to healthy living which make them a more power-packed proposition than pure term insurance plans. This means that the return of the premium term insurance plans not only provide the protection of life insurance but also promises to keep the individual’s life goals on track by assuring them of a cash inflow at the end of the policy term, if they outlive the policy tenure.
An ISO 9001:2015 
