Pure Term plan or Term Plan with Return?

Hey reader, how’s it going? Well i am back with a new and very important topic that will make your concept clear as you choose the best life coverage for you. When it comes to life insurance, the simplest form of it is a Term Plan or Term Insurance. And considering the post COVID-19 scenario, it has been very important to us to get our life covered with insurance for the sake of the family at least.

In the past few years Term insurance policies have gained lot of popularity in our country as people are widely accepting it being cheap. But there are two types of a Term plan in the market, one is what we call pure term plan and another is term plan with return of premium. As the same says the later one is going to give you back the premium as per the terms of the policy. Sounds good right? Yes apparently. Now let us dig a little deep and find out which type of policy is actually more worthy for you.

Premium Amount:

The premium you pay is the biggest factor while choosing an insurance plan for you. If you find the premium charts of any reputed insurance company as on date, you will find that there is an approximate 50-70% difference in the respective coverage amount between a pure term plan and a term plan with ROP. If you are tight on budget then a pure term plan definitely suit you better.

Coverage:

Talking about the coverage amount and tenor, there are no distinguishable differences between a pure term plan and a term plan with return of premium. Both type of plans provide a coverage generally up to the age of 65 years and coverage amount as per your requirement and eligibility.

Rate of return:

As you know a pure term plan has no return on offer for the premium you pay, and what about the TROP? Yes, it will give you back the whole amount you paid till the expiry of the policy. Looks good to you? Well let me clarify you before you fall for it. You must have an brief idea about Inflation. Now if you take that into consideration and if your age is 30 now, at the age of 65, what do you think say a 25000/- will be of how much value? Merely some thousands may be! An investment which returns the same amount you invested is not an investment.

Bottomline:

Well, if you go by my opinion, you should always keep a fine line between your investments and insurance needs. A mixture of the both doesn’t serve any of the purposes completely. Find a cheap and well known term plan as per your need, pay the premium as the cost of coverage. With the rest you can save, diversify your investment as per the goals you might have. Its’s that simple.