The Long Read
Everything you *need to know* is right above this. Scroll down, only if you'd still like to read more (honestly, why?)
There is both good news and bad news about this possibility. The good news is congratulations, you did not die! :D
The bad news is, that you will not get anything if you outlive your term insurance plan. Term insurance has no maturity benefit. It only pays a payout to your nominee only if you pass away during the policy duration.
But, if you’ve purchased a TROP (Term plans with Return of Premium) policy, you’ll get a refund of only all the premiums paid.
Well, that depends on how much you love your family and want to protect them from the unpredictabilities of life by financially securing their future.
Let’s understand with an example: You buy a car with airbags which won’t be useful if there’s no crash. But in the event of a collision, the airbags will protect you from potentially life-threatening injuries.
Is buying airbags a waste of money knowing how they will keep you safe when driving? No, right?
Similarly, term insurance is worth it as it acts as a safety net, protecting your loved ones from severe financial challenges that they may face in your absence. While it may not provide any maturity benefits, it offers peace of mind, ensuring your family's financial security even in your absence.
Bonus: besides a payout for your family, term insurance also offers you tax benefits!
Sure, TROP (Term plans with Return of Premium) plans sound appealing. Who doesn’t want to get back all the premiums they have paid during the policy term?
In fact, if you are of the mindset that you should get 'something' back if you have paid for it, then you can opt for this plan.
But here’s the thing - TROP plans are also relatively expensive and they refund the premiums paid during the policy duration without any returns.
Instead of paying more premium for a TROP plan, you are better off investing this extra money in a mutual fund or fixed deposit, or another investment instrument. That will get you much better returns than a TROP plan.
Also remember, the value of money reduces over time. Even if you get back the premiums at the end of the policy term, thanks to inflation, the value of the money you will be getting back will be much less.
So technically, you are not getting your "full money back".
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