Online Term Insurance Plans that Reward You With Survival Benefits

Term insurance plans are known for their relatively inexpensive nature. This is because the amounts of premiums charged by any term insurance policy are much lower than that required by other financial instruments. Despite term insurance benefits assured to make up for the loss of the income resulting from the death of the insured, an increasing number of people are seeking added benefits from their term insurance policies. To cope with such increasing demands wherein people are looking for more than death benefits, some insurance companies have doled out term insurance plans in India with survival benefits too, i.e., with a return of premium option.

Term Insurance Plan With Return of Premium Option

Term insurance return of premium (TROP) plans avail dual benefits of a level term insurance plan coupled with extra benefits including income replacement and refund of premiums on maturity. This means that the insurance company is liable to pay the sum assured to the nominee(s) of the insured in case of his or her death. However, if the policyholder survives the policy period, then he or she would be handed over the total amount of premiums paid on the term insurance policy. However, there is a caveat on term plans with a return of premium benefits. These plans charge higher premium amounts in contrast to level term plans.

This can be explained with the help of an example. Suppose, Mr. Ankush Bhatia, aged 30 years, chooses to pay an annual premium of Rs. 13,402 for the TATA AIA Life Insurance iRaksha TROP that promises coverage up to the age of 60 years with an assured death benefit of Rs. 75 lakhs. If Mr. Bhatia survives the policy period, he would be handed over survival benefits worth Rs3.84 lakhs.

Survival Benefits = (Annual premium * Policy Period) – Goods and Services Tax

However, Mr. Bhatia is looking to buy the TATA AIA Term Plan Sampoorna Raksha level term plan that promises his family a life cover till he reaches the age of 70 years. To ensure that his nominee(s) avail the death benefits in case of his sudden demise during the policy period, he will be required to pay a premium worth Rs. 9,794 each year. While this plan is ideal for those with undulating income levels, TROP plans offer a “paid up” option in case the policyholder defaults on premium payments. Though irregular income levels may make it difficult to pay their premiums regularly, it still allows them to avail the benefits of the policy or fulfill the purpose for which it was intended.

Which Online Term Insurance Plans Offer Survival Benefits Too?

While death benefits are synonymous with the idea of buying term insurance plans, a detailed term insurance comparison reveals the following term insurance plans in India that allow the benefit of the return of premium as survival benefits.

1. Aviva i-Shield Term Insurance Plan
2. Aviva Life Shield Advantage
3. AEGON Life iReturn Insurance Plan
4. LIC New Jeevan Mangal Plan
5. PNB Metlife Suraksha TROP
6. TATA AIA Life Insurance iRaksha TROP
7. Max Life Premium Return Protection Plan
8. ICICI Prudential LifeGuard Plan- Return of Premium
9. Bajaj Allianz Term Care Plan
10. HDFC Premium Guarantee Plan

Salient Features of Term Insurance Return of Premium plans

Though the features and benefits are specific to each policy, there are certain characteristics common to almost all TROPs. They are:-

1. Free look period: 15 days for policies purchased manually, One month for policies bought online
2. Policy period: 5 years (Minimum), 30-35 years (Maximum)
3. Entry age: 18 years (Minimum), 65 years (Maximum)
4. Type of plan: Single or joint as per need
5. Premium amounts: Depending on the sum assured and applicant’s age
6. Sum assured: Varies from one insurance company to another
7. Policy coverage: Death benefits or survival benefits, whichever is earlier

In addition to the death or survival benefits depending upon the policy period and survival opportunities to the policyholder(s) involved, these plans also offer tax benefits under Section 80C of the Income Tax Act, 1961.

Making the Right Choice of Term Insurance

Term insurance with return of premium (TROP) plan is an extension of level term insurance plans, albeit with changes in benefits involved along with differing premium charges. The kind of term policy you choose depends on the extent of responsibilities you have to shoulder, your ability to pay premiums regularly and the kind of benefits you want your nominee(s) to avail.