Term insurance only provides benefits to the nominee, but did you know that term insurance with return of premium is beneficial for the policyholder and the nominee? The benefits of these plans can be so high that they can break the barriers and can be helpful even as investment plans, capable of replacing bank fixed deposits. And if you choose a 1 crore term insurance with return of premium, then the returns will be more than enough for any requirement.
But before moving on with the purchase, you must know how term insurance with return of premium is different from regular term insurance. Here you will get that critical information that will further help you make calculated decisions on the term insurance plan.
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The Major Difference Between a Term Insurance with Return of Premium and a Regular Term Insurance
The most prevalent difference between term insurance with return of premium and a regular term insurance is visible from the definition itself. The former one provides maturity returns to the policyholder at the term-end as repayment of premium, sometimes with extra interest. And the latter one does not have any maturity benefits other than the mortality benefits upon claim during the policy term.
The maturity benefits of the term insurance decide several features of the plan. So, term insurance with return of premium and regular term insurance has vast differences even in the common features. It is clearly visible when the life cover is a high amount, like in the case of a 1 crore term insurance plan. The following section clearly distinguishes both these insurance policies with the help of a 1 crore term insurance.
Critical Features of 1 Crore Term Insurance Plans with and Without Return of Premium
The features of a 1 crore term insurance are the best to differentiate the plans as it has a higher monetary variable deciding the plan outcomes. Below are some of the critical features of both types of term insurance plans.
The premium amount of a 1 crore term insurance is very high if the plan has a return of premium option. As the premiums are refundable, the policyholder can go with a high premium as long as they can afford it.
But in the case of a plan with no returns, the premium amount will be much cheaper in comparison. It is because the plan is a pure risk investment where the premiums can be in vain if the policyholder survives the policy term. So, to reduce the risks, the insurers provide cheap premium rates.
The tax savings component of the 1 crore term insurance with a return of premium option is high due to the high premium. It allows the policyholder to claim a higher relaxation in their ITR filing and reduce their income tax amount.
But in the case of a regular term plan, the premium is low, so the tax savings potential is also similarly low.
Now you have a basic understanding of term insurance with return of premium and regular term insurance. You also know the benefits of a 1 crore term insurance with return of premium. To increase the benefits and have a responsible insurer who will become helpful in dire need.