Is It Wise To Buy A Term Insurance Plan With Maturity Benefits?

Life is an unpredictable journey, and just like any trip, it is wise to be prepared for the unexpected. Let’s meet Ryan, who loves to drive. He often takes his car and goes on long drives. He loves exploring new places. After getting married, he started taking his wife Maria along with him. Soon, she becomes a traveller as well. However, whether Ryan is driving or his wife, protection always comes first. Hence, they drive with their seatbelts on. This seatbelt is like a term insurance policy. You enjoy the drive and the little memories you make at every turn. But you feel secure that you have your safety seatbelt in place. This is the same protective feeling that term insurance provides you.

Term insurance is one of the most sought-after policies because it is very light on your pockets. Do you know why? Because it does not have a savings component and does not provide any payout if you outlive the policy duration. But what if you can get a maturity benefit even when you buy term insurance? It would be like when Ryan and Maria head back home after their drive, and someone gives them an award for being responsible drivers. But is it actually possible? And is it actually worth it? Let’s find out.

What Is The Maturity Benefit In Term Insurance?

To understand what a maturity benefit is, let’s compare it to planting a small plant (your policy). Over the years, you water it, take care of it, and watch it grow. This is just like how you pay your premiums. When it is time, the tree gives you fruits, and you can harvest them (receive the maturity benefit).
But did you know? Usually, standard term insurance only focuses on providing a death benefit to your family. This is why they are very much affordable. You plant the tree; they enjoy the shade!
However, there is an attractive alternative known as the Term Return of Premium (TROP) plan. These plans stand out by offering a maturity benefit. These plans return the premiums you have paid, following the specific terms and conditions of your policy. This way, you gain a sense of security knowing that your premiums will come back to you if you stay healthy and live beyond the policy period.

Let’s get back to Ryan’s example, for instance,
Ryan loves his family as much as he loves to drive. His parents are ageing, and Ryan takes over the responsibility of providing for them. He decided to buy term insurance. But he understood that if he survives the policy term, he does not get any maturity benefit. He found out from his friend that there is something called a TROP that promises the same financial security, but if you outlive the duration of the policy, it refunds all your paid premiums. He immediately contacted his insurer and bought a TROP plan.

Do All Term Insurance Plans Have Maturity Benefits?

Sadly, no. Not all term insurance plans offer maturity benefits. Regular term insurance plans are just simple and to the point. They are only pure-risk cover plans and don't offer any payout if you outlive the policy term. In short, they only concentrate on providing your dear ones with financial protection.
But wait! A term insurance plan with maturity benefits is actually different. They give you the best of both worlds - They not only offer death benefits but also pay out maturity benefits if you survive the policy term.

What Are The Key Features Of Term Insurance With Maturity Benefits?

Let's see what makes a term insurance plan with maturity benefits stand out -

Return Of Premium Feature:
This means that you get back all the premiums you have paid (subject to policy terms) if you make it through the policy term. While term insurance promises financial safety, this feature is a safety net for your investments.
How about we invite Ryan again to explain this better?
Ryan is checking options to buy term insurance to safeguard his family in case something happens to him. However, he is also pretty sure that he will be around with them for a long time, as he is very health conscious, drives very safely and regularly does Yoga. He thus bought a TROP plan with a cover amount of Rs. 25 lakhs and a policy term of 20 years. In this situation, his family will receive the sum of Rs. 25 lakhs if he bites the dust within these 20 years. However, if Ryan survives the term as per his confidence, he will receive a maturity benefit of all his paid premiums.

Death Benefit:
If something happens to you during the term, the sum assured goes straight to your loved ones.
Let’s take the same example of Ryan again
Ryan bought a TROP plan with a sum assured of Rs. 1 Crore and regularly paid his premiums. One day, when he was returning back from the office, he met with an accident. Though he was given immediate medical attention, the doctors could not save him. His family was devastated. But his TROP came to their rescue by providing them with a death benefit. Though nothing could retaliate Ryan’s loss to his family, he made sure that they didn't struggle financially.

Higher Premiums:
Now, here's the kicker - TROP plans often come with higher premiums compared to regular term insurance. Why? Well, that extra cash buys you the added bonus of a maturity benefit. It is like paying a bit more to pair your safety net with getting a refund for your premiums. So, understanding these features can help you make a smart choice.

What Are The Benefits Of A Term Plan With Maturity Benefits?

Here's why buying TROP is a smart choice -

Financial Security For Your Loved Ones:
Your family will mean the world to you. But if something happens to you, how will they cope? With TROP, if something happens to you during the policy term, your family receives a fixed sum - the death benefit. This money ensures they can maintain their lifestyle, cover expenses like education or debts, and stay financially secure without you.
And if, by god’s grace, you survive the entire policy term, then you get returns-

Return On Your Investment:
If you outlast the policy period, it is worth a celebration, isn’t it? This is why you get back all the premiums you paid. This return on investment can be a game-changer - it helps you get the funds for your future plans and take care of your family’s needs. And what better parting gift would you need? You even get back your hard-earned money.

Include Awesome Add-Ons:
If you need to turbocharge your TROP plan, riders are your secret weapon! They are additional features for your insurance, and they add more oomph when you need them most. Some of them are

• Hospital care rider
• Waiver of premium rider
• Critical illness rider
• Surgical care rider
• Accidental death benefit rider
• Accidental disability rider

Note:
You should remember that this list is just an indicative one. Different insurers might offer varied riders. Hence, before signing the deal, check the policy terms to make sure everything is clear and covered.

Dual Tax Advantages***:
TROP plans come with fantastic tax benefits*** under the Income Tax Act,1961. You can claim a tax deduction on the premiums paid up to Rs. 1,50,000 annually under Section 80C. But that is just not it. The payout you or your family receive is exempt from tax under Section 10(10D)**. This means that it is a win-win for your wallet!

Peace Of Mind:
Some of you might worry about paying term insurance premiums regularly and getting nothing back if you outlive the policy. But with TROP plans, that is not the case. You get peace of mind knowing that your premiums do not get wasted. They are returned to you if you make it through the policy term.

Summing Up!

It is important to check your long-term financial goals against your present demands when figuring out a term insurance plan with maturity benefits. Term insurance provides pure protection, but policies with maturity benefits include a refund option. But this means that you will likely pay higher premiums. Make a wise choice by evaluating your future goals and financial status. Remember that having financial security now and mental peace tomorrow is equally crucial. For a stable and well-adjusted future, work with a reliable advisor to match your insurance requirements with your life objectives.