Term insurance or a term plan is a simple insurance plan that provides financial facilities as a life cover for a specific period until the policy matures. The term insurances are planned in such a way that they would cover your family’s expenses in your absence.
What is a Term Insurance with a Return of Premium (TIRP)?
A Term Insurance with a Return of Premium (TIRP) is an alternative Tern Insurance with maturity benefits applied to them. That this insurance plan covers the family’s financial expenses in the absence of the Insured until the policy matures.
The difference comes because a TIRP offers a premium payment coverage that is given to the Insured when the policy matures. It is important to note that the assured maturity benefits are given only if the insured survives the insurance policy.
How Does a TIRP Work?
Consider a policy that you have taken. Say a ₹40 Lakh cover for 10 years with ₹4000 yearly premium. If, during the 10 years, the Insured dies, then the family/nominee of the insured is given the complete ₹40 lakh as an insurance cover. However, if this doesn’t happen, then all the Insured’s investments i.e. the ₹40,000 are returned to the insured at the time of maturity.
Features of Term Insurance with Return of Premium
|Policy Term||Lasts From 5 to 35 Years|
|Entry Age||It can be availed from 18 years itself|
|Plan type||Protection Plans|
|Age at maturity||Up to 75 years|
|Policy revival||If a policy has lapsed due to non-payment of premiums, it can be revived within 2 years from the last premium paid.|
|Premiums||Payment can be made: |
1. One-time lump sum
|Premium paying term||Can be paid at regular intervals during the term of the policy period. It can also be paid as a one-time payment.|
|Nomination||Offer nomination of someone else after the insuree’s death or sudden demise.|
|Sum Assured||The sum is subjected to the insurer’s approval in line with the company’s policies.|
|Free-look period||It has a 15 day free-look period|
|Grace period||A TIRP has a 30-day grace period within which the pending payments can be made|
Benefits for TIRP
1. Maturity Benefits / Survival Benefits
The survival benefits or the maturity benefits are gained when the policy period has ended. Under a typical term plan, the insured may not receive the maturity benefits; however, in a TIRP, the insured receives all the money he had invested during the policy term.
2. Assured premium Returns
The sum that is assured in the TIRP refers to the life insurance cover that the insurer offers to the insured person. The TIRP offers a lower sum than the typical term plan, as the premium is refunded.
3. Death Benefits
If the insured dies before the maturity of the policy the total sum that was assured to the insured is given to the nominee. The sum is given to the nominee depending on the company’s different payment methods.
4. Tax Benefits
The premiums of these policies, if submitted for tax benefits under section 80C of the IT Act, the insured is bound to receive Tax benefits against the receipts.
5. Rider Benefits
Personal Accident or Disability riders, Riders with critical illnesses, and hospitalized riders are all given rider benefits under the TIRP.
6. Paid-up Value
This benefit could be provided under a TIRP. If the insured fails to pay the insurance on time, the TIRP continues at a lower cover. Most companies, however, ask the insured to pay the minimum premium for a certain number of years before enabling this feature to them.
7. Surrender Value
The surrender value depends on the payment option that the insured chooses. The surrender value is generally for the people who have paid the cover, all in one single payment.
8. Premium Payment Options
TRIPs provide several different methods through which the insurance could be paid with. The payments can be made annually, half-yearly, quarterly, or monthly. Some TIRPs offer the one-time payment method as well.
Who Can Avail of TIRP?
Even if you are single, you can avail a TIRP to help secure your future family. Not just that, a TIRP helps you if you ever are in an accident; the TIRP covers your hospital bills, reducing the burden off your shoulders.
2. Married With No Kids
After marriage, if you ever decide to have kids or not, even if you choose to adopt kids, term Insurance makes sure that your spouse is financially stable after you have gone.
3. Married With Kids
Kids are a huge responsibility. If you are married with kids of your own or even adopted and somehow, leave them via an accident, your spouse and kids wouldn’t have to worry about financial funds if you already have term life insurance.
Why Invest in a TIRP?
- Offers a premium refund on the maturity of the policy
- Assured returns of the premium payment made on cancellation of the policy
- Enhanced coverage
- Low additional cost
- Offers tax benefits
- Is sufficient to secure the family’s financial future
- It is affordable with high benefits
- Has good claim settlement ratio
- Allows annual, half-yearly, quarterly, or monthly payments instead of a one-time payment
Tips to Simplify the Purchase of a TIRP
- Do not consider only the maturity benefits
- Make sure the TIRP is cost-effective along with great benefits
- Consider taking the TIRP during the discount period
- Go for the highest term available for the insurance
- Make sure you get all the information before settling down on a TIRP
Reason to Purchase a TIRP at Early Age
- The premium is decided on the age at which you buy and remains the same throughout your life.
- The premium increases by 4% to 8% every year after your birthday
- If you develop a lifetime disease like diabetes, cholesterol, etc., the premium could increase by 50% to 100%
FAQs Related to TIRP
Q. How is a TIRP different from the typical term insurance?
Ans – A TIRP offers maturity benefits at the time of maturity, whereas in term insurance, no refunds are mode.