We know that the Term Life Insurance plan offers a low-cost option to cover the risk of death for our temporary needs. Thus it seems a viable and affordable option to many people.
There are numerous types of Term Life Insurance options available. But the downside one may feel is that in a basic term insurance plan, if there is no eventuality (unexpected death) during the term; the coverage expires at the end of the term, no benefit (sum assured) is paid, and the premiums go wasted.
If you need a term insurance plan that offers the survival benefit along with the death benefit, there is a solution in the form of ‘Term Insurance with Return of Premium’ (Money-Back Term Insurance) plan. Its greatest advantage is that in case there has been no claim during the period of coverage, when the policy matures, it pays back all the premiums that you have paid over the tenure of the coverage. So you have the peace of mind knowing that while your family is financially protected in the case of your untimely demise; if you continue to live long, the investment that you have made into the policy through the premiums never goes wasted- you get your entire money back at the end of the term.
Let’s assume that you purchase a TROP (Money-Back Term Insurance) policy with sum assured $300,000 for a period of 20 years with an annual premium of $1200. In the case of an unprecedented event, your family will receive a death benefit of the sum assured $300,000. But with the grace of Almighty, if you continue to enjoy a long healthy life, at the end of the term, you will receive your entire money (100%) - $24000 (paid premiums) back and that too tax-free.
Thus we have seen that the TROP (Money-Back Term Insurance) plan works as a safe investment tool for the majority of the people who want to ensure the financial safety of their family in case they cease to exist.
We can identify the following main benefits of the TROP (Money-Back Term Insurance) policy which are quite appealing:
On balance, we can conclude that the Term Insurance with Return of Premium (Money-Back Term Insurance) is a very effective financial tool that allows you to manage your money efficiently by allowing you the opportunity to build wealth and secure your life simultaneously. While no plan is good or bad, everybody has different financial needs and one single financial product doesn’t suit everybody. People should opt for a suitable plan through a proper ‘needs analysis’ done by an experienced Insurance Advisor.
While currently, the ‘Term Insurance Return of Premium’ (Money-Back Term Insurance) plan is not offered in Canada; it is available in the USA; we wish that in future, it will be introduced here and people will be able to reap advantages of this wonderful plan.
**Disclosure- The above content is for informative purposes only
A: If there is no claim during the period of coverage of the ‘Money-back Term Insurance Plan’; when the policy matures, you will get back all the premiums that you have paid over the tenure of the coverage, provided that the policy is in force at that time. For example, for a ‘Term-20 Money-back Term Insurance Plan’ with sum assured $300,000 and an annual premium of $1200; at the end of the term, you will receive your entire money (100%) - $24000 (paid premiums) back.
A: No. Though the Money-back Term Insurance costs a little more than the basic term insurance, it is still very reasonable as compared to a whole life insurance policy. While a whole life insurance is quite expensive, Money-back Term Insurance costs only 3 – 3.5 times the cost of the basic term insurance plan.
A: No, the death benefit that your beneficiaries will receive is totally tax-free.
A: Absolutely No. At the end of the term, your premiums are paid back tax-free if there has been no claim during the period of coverage.
A: No. You/your beneficiaries may use the refunded premiums/death benefit as per your choice such as living expenses, education/marriage of children, paying off any outstanding mortgages etc. The company doesn’t interfere in the way you choose to spend the amount.
A: Yes certainly, by paying an additional premium, you may customize the policy with additional features that reflect your needs/preferences by including the riders such as Accidental Death Benefit, Waiver of Premium event of Disability of the owner and also Children’s Term Insurance etc.
A: Yes, as per the provisions of different companies, after a certain specified period of time that the policy has been in force, the policy has a cash value that is determined by a formula say for example CV= P x N where the cash value increases in increments of 10%, 20%, 30% going up to 100% (full refund of paid premiums) in set intervals of time.
A: Yes, you may request surrender of the policy in writing, and you will receive the cash value less any debts. Your insurance will terminate on the date the insurance carrier issues the cheque for the cash value.
A: No. The policy doesn’t offer any policy loans.
A: If any premium remains unpaid at the end of the Grace Period, the policy will terminate automatically. The accruing Cash value, if any, will be paid to you as per Money-back Term Insurance Policy provisions.