Appraisals and performance bonuses give you a big paycheck and an even bigger reason to smile. This is also one of those vulnerable moments when you will be tempted to book a luxury tropical vacation with friends rather than investing the extra cash in something more rewarding like tax-saving investments.
However, it is not to say that you cannot plan holidays anymore. But unlike vacations that can be planned anytime without affecting the quality of your holiday, tax-saving investments such as a term plan with return of premium plan must be purchased as early as possible. You know why? Because the sooner you start, the better returns you will get.
Besides, you do not need to peg your entire earnings towards an investment. Even a small portion of that massive bonus can be used to buy term insurance online that will give you a lifetime of tax benefits and financial security for your dependents.
Did you know that products like term plan with return of premium plans give you an added advantage of returning all your premium if you outlive the policy term?
Let us look at this article and see why you must consider investing in a term plan with a return of premium and do so as early as possible!
Benefits of Having a Term Plan with Return of Premium in Your Portfolio
Having term insurance, especially a term plan with return of premium plan or TROP, allows you to provide standard financial protection to your loved ones in case something happens to you. There is an added advantage of survival benefits if you outlive the policy term tenure!
Investing in a term plan with return of premium is perfect for young investors, who have started their careers and have minimal responsibilities, to invest in these tax-saving investments easily. Besides, the sooner you start, the more benefits you enjoy because you pay a much lower premium than someone older.
A term plan with return of premium plan is one of the best tax-saving instruments that provide you and your family with a lifetime of financial security. By investing in this term insurance, you will enjoy the peace of mind knowing that your family’s financial health is secure, should something happen to you.
Besides, numerous other benefits of this term insurance plan make it an ideal investment for your financial portfolio as opposed to traditional term plans.
- Term insurance typically offers death benefits only. However, with a term plan with a return of premium plan, you will also get the maturity benefit after the completion of the policy tenure. The all-premiums-back feature of this plan is what makes it more desirable than the other term plans when you are looking to buy life insurance online.
- The premium rate paid towards the term plan with return of premium plan is higher than a pure term insurance policy.
- Enhance the coverage of your policy by attaching term plan riders to your insurance plan. Most insurance providers, such as Max Life Insurance, offer a range of optional riders when you buy life insurance online. These can also be added later at a minimal cost.
- You can also save tax as per prevailing tax laws that give you an exemption of up to Rs. 1.5 Lakhs. Additionally, the premium paid and the amount drawn are also tax-free under section 80C and 10 (10D) of Income Tax Act, 1961.
Features of Term Plan with Return of Premium
If you are looking for insurance plans that can give you a higher life cover at the lowest premium, then term plans are the ideal product. But if you want to get more value for your investment, then term plan with return of premium will be the best option for you.
- Maturity benefits: Under the pure term plan, you are not entitled to receive any survival or maturity benefits. However, term plan with return of premium gives you back all the money you have invested as premium towards your policy.
- Death benefits: Your family enjoys a hassle-free death benefit claims process where the insurer will provide them with the total sum assured to the nominee in case of an eventuality, allowing them to move on in your absence.
- Paid-up value: This benefit may also be provided by your insurer, allowing you to continue your insurance policy, even if you are unable to pay the premium, albeit with a lower cover. However, you will be required to pay the premium for a certain number of years before being eligible for this benefit.
Want to make your insurance plan more robust? Consider adding riders to your term plan with a return on premiums.
If you want to sweeten the pot, you can enhance your insurance by adding rider coverage. Some of them are mentioned below:
- Personal Accident or Disability Rider: This rider provides you with certain benefits in case of an accident, disability, or even your demise.
- Critical Illness Rider: Protect yourself against deadly diseases such as cancer and stroke with this rider.