How much return can you expect from a term insurance?
02 Jan 2020
As breadwinners of the family, people truly prefer to have a peace of mind that in their absence, their families would be safe and well looked after. This desire is made possible for people by availing a term insurance policy. In essence, term insurance is a form of life insurance policy that provides insurance coverage for a ‘term’, that is a specified time period.
This term generally tends to range over several years, since people like to ensure that the future of their families is safeguarded for as long as possible. In the unfortunate event that the policyholder passes away during the course of the term, the term insurance policy provides comprehensive coverage to his or her family. This financial support goes a long way in helping surviving family members cope with the loss and provide for their future needs.
However, keep in mind that no two term insurance policies are alike. When it comes to the matter of securing your family’s future, you would want nothing but the very best insurance plan in the market. Ideally, the perfect term insurance plan for you should be able to provide your family with a substantial coverage to ensure they never have to want for anything. It should also be from a dependable insurer that has a high Claim Settlement Ratio so that you can rest assured that your family will be able to make the most of the insurance policy.
Both of these benefits, and many more, are provided by the Bajaj Allianz Smart Protect Goal term insurance policy available on Finserv MARKETS. The term insurance plan found on Finserv MARKETS offers a coverage of 1 crore at affordable premiums, and a Claim Settlement Ratio as high as 92%.
What are the benefits and returns of term insurance?
Term insurance plans are essentially designed to provide the purest form of life insurance and make insurance an accessible option to as many people as possible. Therefore, while it does not offer the option to receive any term insurance returns like a typical cash value insurance policy, it offers a number of features that make it an incredibly valuable option for a large portion of the population:
Most basic term insurance plans promise the beneficiaries a neat sum of money, called the ‘sum assured’, upon the death of the policyholder. Certain insurers offer you the flexibility of different payment options. You can choose to have the sum assured paid out in a ‘lump sum’ amount i.e. all at once, or have it paid as an income in installments over a certain period of time. You should make sure that your policy is active and that all your premiums are duly paid, so that, in the event something unfortunate transpires, the disbursement of the death benefit can go off without a hitch. What would your death benefit returns look like? Generally, the Sum Assured can range from Rs. 40,000 and go up to Rs. 1 crore and even beyond.
Term Insurance With Return of Premium
Typically, term insurance policies do not provide a survival benefit but instead, make up for it by providing policyholders with a wide variety of advantages. However, there is also a type of term insurance plan that offers a maturity benefit to the policyholder in the event of his or her survival. This type of policy offers term insurance returns on premium to the policyholder in the form of the premium amounts paid until the maturity of the policy.
For instance, Karan pays Rs 5000 per year in term insurance premiums for a period of 10 years. When he survives the policy term, he will receive a survival benefit of Rs 5000 x 10 years, that is Rs 50,000 as a return from the term insurance policy.
However, term insurance policies that offer return of premiums also come with their own share of challenges. Firstly, the policyholder receives the exact amount of premiums paid and therefore, does not receive a return with any additional interest. Also, since these types of term insurance policies have a savings component involved, they take away from the benefits that typical term insurance policies offer. They cost more, and hence offer higher premiums and since you must stay with them till the end of the policy term, they also do not offer much flexibility.
The Bajaj Allianz Smart Protect Goal plan, available on Finserv MARKETS, offers attractive maturity benefits to policyholders, if chosen. If the policyholder doesn’t make a claim on the variants and/or Add-On covers, the plan stipulates that the premiums paid will be returned to the policyholder upon maturity, incase the return of premium benefit is opted.
You can opt for Additional Riders:
One of the greatest features of term insurance plans is that if you have needs outside what is covered by the policy, you can opt for a variety of specific riders. For instance, given the prevalence of critical illnesses such as cancer and various heart diseases in India, it is wise to opt for a Critical Illness rider in your term insurance plan. In the event that you are diagnosed with a critical illness, this rider will enhance your policy and help protect you from any financial loss due to the covered illnesses. There are also several other riders, such as a disability rider and loss of employment cover, that you can choose to go with your term insurance plan to protect you from the impact of other adverse circumstances.
Keep in mind that the more diseases covered by your rider, the better. The term insurance policy on Finserv MARKETS provides a Critical Illness rider, an Accidental Death rider as well as an Accidental Total Permanent Disability Rider.
Term insurance comes with a whole host of tax benefits. The premiums you pay toward your term insurance policy are tax deductible up to Rs. 1.5 lakhs, as per Section 80C of the Income Tax Act. Under Section 10(10D), you get tax benefits on the payout you receive from the insurance provider as well.
Let us also understand the distinctive benefits that term insurance policies have on offer:
Premiums are lower:
The driving force behind opting for insurance for one’s life is to protect our families in the unfortunate event of our demise. However, regular life insurance policies can often weigh incredibly heavy on the pocket with their high premium amounts. This means that in trying to safeguard our family’s finances in the future, we might unknowingly place a burden on their finances today. A term insurance policy is the response to this dilemma.
Term insurance aims to provide individuals with the benefits of life insurance coverage without the burden of exorbitant premiums. People from a variety of economic circumstances can easily avail term insurance and provide ample coverage to their families, by the means of incredibly affordable premiums.
Remember, since it does not provide term insurance returns or investment options, the entirety of the premium amount goes into providing coverage for your nominees. Hence, these premium amounts tend to be far lower than they would be than say, for a cash back life insurance policy.
They are more flexible:
Due to the investment component involved in cash value insurance policies, opting out of them can be fairly tricky. With these kind of policies, you are only eligible to receive the full benefit return when you stay with them for the entirety of the tenure.
However, term insurance policies are far more flexible in that regard since your premiums are not contributed towards any return except the death benefit. As a result, there are term insurance plans that you can simply renew without having to undergo a medical examination again..
At the end of the day, any individual would want to avail a term insurance policy that offers the most favourable and convenient features in the market. Compare different term plans available in the market to adjudge a suitable one that provides good returns with a handsome sum assured, a number of riders, and affordable premiums, like the one available on Finserv MARKETS.
Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.