Do Term Plans Have Maturity Benefits?
Our life has great value. This value is not just for us, but for the ones around us as well. This includes friends, family, etc. For these people, the thought of losing you is the worst thing to happen in their life. This situation gets even worse if you are the breadwinner of the family. Not only does losing you, hurt your family emotionally, but it also can leave them helpless financially. This situation is one that you can see all too often today. The reason for this is that people often put off securing their family’s future until later. If you do not want to be another one that makes that mistake, the best thing to do is to get term insurance.
Term insurance can be a turning point in your family’s life and just the ray of sunshine they were hoping for in your absence. Moreover, the claim amount of term plan is often very high. This means that your family will likely be set for a long period of time when it comes to their financial needs. In addition to the death benefit, term plans have also included a lot of additional benefits. However, many people suggest that the lack of maturity benefit in term plans is reason enough to not buy the plan.
Why Do Term Plans Not Have Maturity Benefits?
Term plans are the simplest type of life coverage you will find that offers a pure risk cover. They are purely focused on life coverage. This offers many advantages to the buyer of a term policy. One of the biggest term insurance benefits is that it makes the most out of your premium. In traditional life insurance options, there are options for savings and investment along with the life coverage. This means that the premium you pay is divided across these options. While this allows you to diversify your portfolio, it also offers a few disadvantages. Firstly, the premium rate can be more expensive as it is also being invested towards a maturity benefit. Secondly, you cannot avail a higher coverage amount for an affordable price.
On the other hand, all the money you pay as premiums for term plans goes into life coverage for the term of the policy. Hence, if you outlive the policy tenure, there are no returns or maturity benefit available.
How Can You Have Maturity Benefits with a Term Plan?
It is completely reasonable to be disappointed that there is no maturity benefit if you survive the policy. A term policy spans over the course of years, sometimes even decades. Paying premiums regularly over the course of the plan takes a lot of effort. However, in the end if you survive the policy term, you get no payouts from your insurance policy.
This means that the premiums that you paid for so many years for the term plan is just money that you will not get back. The lack of maturity benefit is what makes people think about whether they should buy a term plan or not. While the plan does offer a high cover amount along with a low price, the concern of not having any maturity benefit is valid. But there is a way you can have term insurance and have a maturity benefit. This type of plan is called ROP term insurance.
What Is ROP Term Insurance?
ROP term insurance, an abbreviation for return of premium term insurance policy, solves the concern of having a maturity benefit. This type of term insurance ensures that there is some reward for outliving your insurance policy term. At its basic working, it is the same as a regular term plan. The difference in this type of term insurance is that the premium you pay throughout the plan’s duration is returned to you if you outlive the policy.