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Yes, you can get money back in term life insurance, i.e. the entire premium paid when your policy matures. However, a certain variant of term insurance gives back money, unlike the regular term plan, which only provides death benefits. Let’s understand all about money-back term life insurance, its key features and how it differs from a regular term insurance plan.
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Money back term life insurance is a term plan in which the policyholder’s premiums are returned in the form of survival benefit if he/she outlives the policy term. However, in the unfortunate event of the policyholder's death, the nominee receives the chosen life cover as a death benefit. Know what is term insurance first and then buy a term plan for your loved ones.
Let’s understand this with the help of an example.
Ramesh is a 30-year-old, non-smoking male earning an annual salary of Rs. 12 Lakhs per annum who bought a money-back term life insurance from Policybazaar. He chose Rs. 1 Crore life cover for a 30-year policy term and will now be paying Rs. 14,680 per year for the entire policy term. In the event of Ramesh’s untimely death, his nominees will receive the death benefit (Rs. 1 Crore). But, if Ramesh survives the policy term (30 years), he will be returned all his premiums paid as survival benefit, i.e. Rs. 14,680 x 30 = Rs. 4,40,400.
Term Plans
Yes, you can get back money in the form of a maturity benefit in term insurance plans. These plans are just like regular term plans with the dual benefits of death and survival benefits. Let’s understand the type of term insurance plans that give back money.
Term Insurance with Return of Premium Plan (TROP) provides death benefits to the life assured’s family members in the unfortunate event of his/her death, along with maturity benefit if the policyholder outlives the policy term. Here are the features of Term Insurance with Return of Premium plans:
Affordable Premium Rates: Premiums returned as maturity benefits, tax-exempt.
Payment Options:
One-time payment: Lump sum premium
Regular Pay: Fixed intervals (yearly, half-yearly, quarterly, monthly)
Pay till 60: Premiums paid till age 60, policy till 85
Limited Pay: Fixed installments for TROP
Guaranteed Premium Return: Assured returns on total premium, excluding riders/add-ons.
Maturity Benefits: Premium refund if life assured survives the policy term.
Surrender Value: Available after specific payment intervals.
Single premium type: Valid after single payment
Limited/Regular pay type: Applicable after 2 years
Paid-Up Option: Continuation with lower cover for non-earning individuals.
Additional Riders:
Critical Illness
Waiver of Premium (WOP)
Accidental Death Benefit
Accidental Total and Permanent Disability
Term Insurance is the most simple and affordable form of life insurance that provides death benefit to the policyholder’s nominees after his/her unfortunate death. It is a pure-term insurance plan and is suited for individuals who want to provide financial security to their loved ones. Here are the features of Term Insurance plans in India:
Financial Protection for the Family:
Term life insurance secures your family's future, ensuring financial support in your absence as the primary provider.
Long Term Coverage:
You can choose long-term coverage up to 99/100 years to financially secure your loved ones for longer duration.
High life cover at low premium rates:
Affordable term life insurance provides comprehensive coverage at affordable premiums, to tackle financial burden and liabilities effectively.
Protection against Critical Illnesses:
Term plans with critical illness coverage offer peace of mind, ensuring access to quality treatment for life-threatening diseases without the burden of hospital bills.
Coverage against Disability:
Safeguard against accidents with disability coverage in term policies, providing financial support to your family in case of permanent or temporary disability.
Multiple Premium Payment Options:
Choose the premium payment term that suits you with term insurance plans, offering flexibility in payment options, including regular payments or a limited pay option.
Tax Benefits:
Tax savings up to Rs. 1.5 Lakhs on premium payments under section 80C, while the death benefit is tax-exempt under section 10(10D) of the Income Tax Act, 1961.
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Another way to get your money back from your term insurance plan is cancelling it within its free-look period. You can get to know the details about the free-look period of a plan in the policy documents.
A policyholder can cancel the term plan within the free look time without paying any cancellation charges to the insurance company and get the entire money-back for the premium amount paid.
If you are not satisfied with your term plan T&Cs, you have the option to return it within a period of 15 days and 30 days for online term insurance plans by contacting your insurer.
Note: You can calculate the term plan premium on the term insurance calculator online tool by Policybazaar.
A pure term insurance plan does not have cash value and only offers maturity benefits to the nominee in the unfortunate event of the policyholder's demise during the policy term.
However, a money back term life insurance plan (i.e. Term insurance with return of premium plan) generates cash value. Therefore, if the policy is terminated before it expires, the policyholder receives the total of all premiums paid until that point (minus any early termination charges) as benefits.
You can easily buy a Money Back Term Life Insurance, i.e. a TROP Plan, online by following the below mentioned steps:
Step 1: Visit the official website of Policyabzaar and go to Term Insurance with Return of premium
Step 2: Fill in the required details, such as name, DOB, contact number and gender, and then click on ‘View Plans’.
Step 3: Answer the questions regarding your smoking habits, yearly income, type of occupation, and language.
Step 4: After submitting all the necessary details, a list of all available term insurance with plans will be displayed.
Step 5: Filter out the return of premium plans by clicking on the option mentioned above.
Step 6: Select the term plan that suits you and proceed to pay using your preferred payment method.
A term insurance plan can be a money-back or regular life insurance plan. Under a basic term plan, you don’t get money back at the last of the term life insurance plan. On the contrary, under a money-back term plan, you get assured returns at the end of the policy tenure.
You can easily use Policybazaar’s comparison engine to compare from among insurers of India and buy the plan that suits your needs and situation.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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