Life insurance is often one of the most important investments that you are required to make. When you first start working professionally, it is often one of the investments that most people advise you to make.
Among the different types of life insurance policies available, term insurance has long been acknowledged as the best investment you could make. However, before you opt for any particular term insurance plan, make sure to carefully understand the different benefits you avail. Make it a point to check a term insurance calculator at the beginning to understand the amount you would be required to pay for the policy. On Finserv MARKETS, you can easily check the term insurance calculator, ahead of opting for a term plan which guarantees that your family remains financially secure even when you are no longer around.
A lot of people find term insurance policies that promise to pay back premiums while beginning their search for the best term insurance plan for their requirements. This type of term insurance is usually a policy that allows you to get all the premiums you paid for it back once the policy term expires.
However, while this plan may sound appealing owing to the possibility of getting your premiums back, it often poses several disadvantages especially when compared to the regular term plan.
Read on to learn more.
- Higher Cost:
The cost of a term plan with return of policy is more expensive as compared to the premiums payable on a regular term insurance plan. This is because as a policyholder, you will end up paying more since you are not just paying death benefit, but also paying for an amount that will be repaid to you once the policy term has ended. With a term plan, since you are only paying for the death benefit, your premium is significantly lower.
- Lesser Benefits:
The most significant difference between term plans and term insurance which offer return of premium is that the policy is only beneficial if the policyholder remains alive till the end of the term. If the policyholder passes away before the term period has ended, the family will only receive the sum assured and other death benefits, but they will not receive the premiums paid until then by the policyholder.
- Policy can’t lapse:
Different insurance plans may allow a lapse in the policy term and continue to let you avail the benefits of the plan. However, with a term insurance plan which offers return of premiums, if your policy lapses, you will not receive any of the benefits. The higher premiums that you have paid until that time will also be completely lost to you.
- No interest:
It is also important to remember that the premiums paid toward the term plan with return of premium policy will not generate any interest. Instead, if those funds are invested in a different instrument, you may be able to generate high returns and ensure a comfortable living even after you have retired. However, with a term plan with return of premium option, you will receive only the amount paid as premiums at the end of the term.
It is important to remember these points when you are looking for the best term insurance plan to invest in. Use the term insurance calculator on Finserv MARKETS, as you browse through the different term plan options available to you.