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Survival benefit in term insurance is a feature that provides a payout to the policyholder if he/she survives the entire policy term. While traditional term insurance primarily focuses on offering a death benefit to the beneficiaries upon the policyholder's unfortunate demise, policies with survival benefits add an extra layer of financial security.
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Only certain types of term plans provide survival benefits, like TROP and No Cost plans. These plans protect as long as the policy is active, and upon survival, all the premiums paid are returned to the policyholder.
Term Plans
Consider Anil, a 35-year-old man earning ₹14LPA, who bought a Term Insurance with Return of Premium (TROP) plan of ₹1 Crore sum assured for 30 years and pays a monthly premium of ₹17,447/year. If he dies during the policy term, his nominees will receive the ₹1 Crore death benefit as a lump sum payout. However, if Anil survives the entire policy term, he will receive all his premiums (minus GST) back. This means he will receive approximately ₹5.2 Lakhs (₹17,447 x 30) by the end of the policy term. This dual benefit provided Anil with peace of mind throughout the entire policy duration, and after survival, he also saved himself a corpus which he can further use or invest.
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In term insurance, survival benefit works by ensuring that policyholders have a certain savings element if they reach the end of their term without claiming due to untimely death. Let’s understand in detail how survival benefits work in term insurance:
Regular Premium Payments: The policyholder commits to paying regular premiums over the policy term, which can be monthly, half-yearly, quarterly, or yearly. He/she can also choose between regular and limited payment terms.
Policy Term: The survival benefit applies for the entire policy term. During this term, the policyholder is covered against disease and death.
Safety Net: In the unfortunate event of the policyholder's death during the policy term, the term insurance policy guarantees a death benefit to the designated nominees/beneficiaries.
Lump Sum Payout: If the policyholder survives until the end of the policy term, they receive all their premiums back (minus GST). This dual benefit (death benefit + survival benefit) ensures that the policyholder’s loved ones are financially secure, regardless of the outcome. The policyholder also receives a corpus upon survival.
Meet Financial Goals: The survival benefit of life insurance plans can help meet financial goals, such as funding children’s education, planning for retirement, or reinvesting in other financial products.
Encouragement of Long-Term Planning: The survival benefit feature incentivizes individuals to think long-term about their financial health. Knowing they will receive a payout if they outlive the term encourages disciplined saving and financial responsibility.
Here are the term insurance plans that provide survival benefits:
Term Plan with Return of Premium Plan (TROP) is a type of term insurance that provides life coverage and ensures that the policyholder receives back the entire premium paid (minus GST) at the end of the term. This means that if the insured survives the duration of the policy, they benefit from a lump sum payout equivalent to the premiums paid, effectively combining life insurance with a savings element. TROP plans are ideal for individuals seeking both protection for their loved ones and a safety net for themselves, as they can recover their investment if they outlive the term.
No Cost Term Insurance is a term insurance variant offering policyholders the unique advantage of receiving a 100% refund of the premiums paid (minus GST) at a certain age without incurring additional costs. This plan allows individuals to exit the term plan early if they choose to do so while still getting back the full amount they contributed. Essentially, it provides the benefits of a regular term plan, including life coverage, but with the added flexibility of a premium refund option, making it an attractive choice for those who may wish to reassess their insurance needs in the future.
You can enjoy survival benefits in term insurance if you buy Term Insurance with Return of Premium (TROP) or No Cost Term Insurance plans. Let’s understand the process to buy term plan with survival benefits:
Step 1: Go to the official Policybazaar website and click “Term Insurance”
Step 2: Enter your basic information, like your name, age, and contact number, then click on “View Plans”
Step 3: Answer questions regarding your smoking or chewing habits, annual income, occupation, and preferred language
Step 4: Once you submit your details, a list of available term insurance plans will be presented.
Step 5: Click on the “Plans that Return my premium” box on top of the page
Step 6: Select your preferred term plan from the list and proceed to the payment stage
*Note: You can buy No Cost (Zero Cost) Term Plan by clicking on the “Filter” option and choosing Zero Cost Plans
Survival benefits in term insurance offer a unique blend of protection and savings, providing policyholders with financial security during their lifetime. This feature ensures that loved ones are safeguarded in case of untimely death and rewards the policyholder for longevity by returning their premiums. As you consider your insurance options, evaluate how a policy with survival benefits can fit into your financial planning strategy, ensuring peace of mind for you and your family.
†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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