Term insurance plans are remarkable life insurance policies that you can avail of for shorter periods of time and at very reasonable rates of premium. The shorter time frame and variety of term plans allow you to explore options to not only secure your family’s future but also plan your finances effectively. They can serve as incredible savings plans if you outrun the tenure of your policy with the right kind of term plan.
Why term plan with return of premium is a mighty investment plan?
A term plan can be availed for anywhere between 10-99 years. A term plan with return of premium guarantees that if you survive the tenure of your policy, then the insurance provider refunds all the premiums you invested towards the policy. The rate of premium is slightly higher for these plans but the benefits are multi-fold:
- In the event of your untimely death during the tenure of the policy, your beneficiaries will receive the entire sum insured as a death benefit. Therefore, they can secure their future finances with a lump sum pay out from the insurance provider.
- In the event that you survive the tenure of your policy, no matter how short or long it may be, you receive the maturity benefit. That means the insurance provider returns all your premiums paid over the years, irrespective of the purpose of using the money. You will receive the lump sum pay out at a future date. Ergo, the premiums you invested in your life insurance aren’t a waste, but rather a savings plan.
- If your premiums are less than 10% of the sum insured and less than INR 1.5 lacs annually, then you receive tax benefits on your term plan with return of premium.
- The death benefit and the maturity benefit are both exempted from taxes as well. The maturity benefit is subject to speculation if your premium is less than the prescribed sum annually as per Section 80C. The death benefit is not subject to any addendums.
Given the tremendous benefits of a term plan with return of premium, the extra cost is absolutely worth it. One way or another, you or your loved ones end up with a lump sum amount of money. You can use it to purchase another life insurance plan, invest it in the market, pay for major life stages such as weddings, planning a child’s future, or to navigate retirement, invest it in the market, or do just about anything that tickles your fancy.
Is term insurance valid outside India?
The question of is term insurance valid outside India has puzzled individuals for years, but the answer is yes. If you are a non-resident Indian, you can still purchase term insurance with return of premium or choose increasing and decreasing plans as per your preferences.
Once you purchase a term plan from an Indian insurance provider, you only need to pay the premiums regularly to secure the policy. It is irrelevant whether you reside in the country or not, or whether you are travelling to another country when an unfortunate death befalls you. As long as you purchase the policy and pay the premiums, you will receive the benefits of the term plan.
How to claim the benefits of term insurance outside India?
If you reside outside India but have a term plan here, then your beneficiaries must follow the steps to apply for the death benefit. They will need to notify the insurance provider right away about your untimely demise. Then, they must acquire the death certificate from the local authorities where the unfortunate event happened. Even if it is outside India, they can obtain the death certificate after the local authorities have assessed the preliminary cause of death. The death certificate will reflect the same.
Your beneficiaries will then have to file the claim on the term insurance plan. The process will take a few days after which the insurance provider will pay the death benefit.
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If you reside outside India and survive the tenure of a term plan with return of premium, you are still privy to the maturity benefit. Once the term plan matures, you can notify the insurance provider. The premiums you paid over time will be credited to your registered bank account after the formalities have been processed.
Is term insurance valid outside India being a big question. The answer is absolutely, positively yes, and the death benefit and maturity benefit are both payable regardless of where you reside.
Conclusion
Term plans are the savings investment plans of the new age. With a little pre-planning, you can use the benefits of term plans to reduce your liabilities and increase the financial security of your loved ones. A term plan with return of premium, in particular, is a type of life insurance policy that benefits you if you live a long life. It helps cultivate a habit of saving money and provides you with a lump sum pay out to tackle tough financial situations or invest wisely in your future. Therefore, the extra cost is totally worth it.
