Does Term Insurance Have Survival Benefits?

Imagine that you have a trusty spare tyre in your car's trunk. You ensure it's well-maintained and ready for use. If you ever encounter a flat tyre, the spare tyre steps in as your saviour. However, if you drive through the year without the spare tyre, you don’t receive anything back for keeping it in top shape.

Similarly, with regular term insurance, you pay premiums on time. And if something happens to you during the policy duration, your nominee gets the death benefit. But here's the kicker - if you outlast that term, there's no money coming back your way!

However, some insurers are now offering term insurance with survival benefits. Quite the game-changer, right?

Let’s take a look at them.

One option is Term Insurance with a Return of Premium Plan, or TROP. Here's how it works - if you make it through the policy term, the insurance company hands back all the premiums you've paid (minus taxes) when it matures. It's like a little reward for staying alive and healthy! Just remember, you have to opt for this feature upfront, and yeah, the premium tends to be a tad higher than for a regular term plan.

Another option is that some insurers allow you to choose survival benefits as monthly income in regular term insurance plans once you reach a certain age. It's all about making sure you have a worry-free retired life. Take the ABSLI DigiShield Plan [UIN: 109N108V11], for instance. It not only protects you but also includes a savings element for added benefits. When you hit 60, you can start receiving a monthly income as a survival benefit. It's a smart way to plan for a stress-free retirement, don't you think?

Assuming that you’ve kept up with all your premiums and you made it past 60, reaching a policy anniversary under the survival benefit option, then you’ll start receiving a monthly survival benefit based on a certain percentage of your sum assured. This will keep coming until either the policy term ends or you, unfortunately, pass away, whichever happens first. However, if something happens to you later during the policy term, the nominee will get a claim amount equal to the sum assured minus any survival benefit already paid out.

What Are The Benefits Of Term Insurance With Survival Benefits?

Here are some key benefits that you'll enjoy

Maturity / Survival Benefit

One of the downsides of term insurance is that if you’re lucky enough to make it to the end, you won’t get anything in return, which can feel like all that money was for nothing. But with TROP, you can breathe easy knowing that if you make it through the policy period, there’s something waiting for you. If you outlast the policy, you’ll get back all your premiums minus the taxes. Here’s a breakdown of what you typically get back:

• The premiums you've put into your base policy.
• Any additional underwriting premiums based on factors like your health, lifestyle, etc.
• Modal loading premiums, which are extra fees if you choose to pay your premiums either monthly, quarterly, or semi-annually.

Death Benefit

Term insurance plans offer a death benefit to your loved ones, ensuring their peace of mind in case of any unforeseen events during the policy term. This money acts as a cushion, ensuring that your family can continue living comfortably and manage any financial obligations or debts without added stress. The death benefit payout is made based on the option you selected when buying the policy, giving you a bit of customisation in how your family receives the support they deserve.

Tax Advantages***

Like your regular term insurance plans, term insurance with survival benefits also brings along some handy tax perks*** under different sections of the Income Tax Act of India, 1961. According to Section 80C, you can enjoy tax deductions of up to INR 1,50,000 for the premiums you pay each year. And, when it comes to any claim your family receives if you pass away during the policy term, it’s exempt from tax under Section 10(10D). These tax benefits* are like a little gift on top of the financial protection these plans offer, helping you save money while ensuring your loved ones' security.

Peace Of Mind

It's such a relief knowing that if you outlast the policy, you’ll receive some money. It just gives you that extra peace of mind. Isn’t it?

Guaranteed^# Income During Retirement Phase

Having that monthly income during retirement really takes a load off, doesn't it? And knowing you'll get that survival benefit for financial security once you hit a certain age. It's like having the assurance of a worry-free retired life.

What Are The Features Of Term Insurance With Survival Benefits?

Here are the key features available under term insurance with survival benefits -

Customisability

What makes term insurance really great is how you can customise it to fit your family’s exact needs.

Here are some of the customisation options -

• Premium payment frequency - You can choose how often you want to pay the premiums, either monthly, quarterly, annually, etc.
• Premium payment mode - You can choose how you want to pay with these options - single pay, limited pay and regular pay.
• Claim payout option - You can decide on how you want your family to receive the claim amount, either as monthly instalments, lump sum payout, or a combination of both, etc.

Covers Death Globally

One great thing about it is that it provides coverage for death worldwide. The only exception is suicide within the first year of purchasing the policy; otherwise, a term insurance plan covers all types of deaths no matter where they occur.

3-Year Claim Payout Guarantee^#

As per the specifications under Section 45 of the Indian Insurance Act of 1938, if your term insurance has been active for three years straight, the insurance company can't deny a death claim due to fraud, misstatement, or withholding of information. So, your dear ones are guaranteed# to receive the claim amount if you pass away during the policy period, given you keep up with your premium payments.

Planning To Buy Term Insurance? Here You Go!

1. ABSLI Salaried Term Plan [UIN: 109N141V01]

Here are some of the key features you'll find in the plan:

• You get to choose from 4 plan options, each tailored to meet different protection needs you might have.
• The life insurance coverage is available until you're 70, providing comprehensive financial security.
• There's an added layer of protection with the Terminal Illness Benefit already included in the plan.

2. ABSLI DigiShield Plan [UIN: 109N108V11]

The plan offers a range of features to suit your needs:

• You have a choice of 10 different plans, making it easy to pick the one that fits your coverage requirements perfectly.
• The comprehensive term insurance plan provides coverage until you reach 100 years of age, ensuring long-term security.
• You can choose how you receive your death benefit, whether as a monthly payout, lump sum, or a combination of both, giving you flexibility in managing your finances.

Let’s Sum Up!

Term insurance has really evolved beyond its traditional role of just providing financial protection in case of death. Now, we’ve got options like Term Insurance with Return of Premium (TROP) and even survival benefits. These plans are great because not only do they ensure your loved ones are taken care of if something happens to you, but they also give you a little reward for outlasting the policy term by returning the premiums you’ve paid. But before you opt for this option, weigh both the pros and cons - so you know what you're getting into.