What is a Term Insurance Plan with Survival Benefits?

Aiming to secure the finances of your loved ones, term insurance might seem an effective option. However, a common conception is that the plan is suitable in case of an unforeseen event. Also, it is considered that the amount is wasted if you live through the investment. 

The advanced term insurance plans are designed to prove the belief wrong by providing policyholders with benefits in both scenarios. The benefit obtained on living is called the survival benefit of the term insurance plan, and there are two of them. Let’s explore this with some more information about the term insurance plan.

A term insurance plan is a type of life insurance plan. It offers financial security through a lump sum amount as a death benefit to the family of the investor in case of the death of the policyholder. The obtained amount is beneficial for the family or loved ones to meet regular expenses such as living costs, housing, education, and others. The protection is offered up to a specific age, beyond which the policyholder gets survival benefits (applicable in certain new term insurance plans only). 

Survival Benefits in Term Insurance Plan 

The term insurance offers two types of survival benefits: 

• Return of Premium Benefit.
• Steady Income Benefit.

Return of Premium Benefit:

This benefit encompasses the return of the deposited premiums after the policy term. It is applicable if all the to-be-paid premiums have been regularly submitted throughout the tenure. It helps cover the upcoming years of an investor's life. Let’s understand this with an example. 

A person buys a term life cover of ₹ 1 crore at the age of 30. Now till the age of 60, i.e., for the next 30 years, they are supposed to pay the premium of ₹ 1600 per month. This makes the total premiums ₹ 5,76,000. Hence, with the return of premium benefit, the person will get back the complete premium after the expiration of the policy. He/She will receive ₹ 5.76 lakhs on maturity. 

Steady Income Benefit:

This benefit also allows the policyholder to start receiving back their deposited premiums in a periodic manner. It begins at the maturity of the plan. The disbursed amount comprises the premiums paid till the premium paying period and any other additional benefits. Considering the previous example, the premium paying term is 60 years. Hence, the person will start receiving payment after that age. The payment will continue till the remaining policy tenure or the death of the policyholder.

The term insurance plans are best suited : 

• Single individuals: With dependent and retired parents’ responsibility over the single individuals, the unfortunate event will be emotionally straining. Leaving them without finances in such a scenario will further add to the challenges. The term insurance plan will offer them financial assistance as needed. 
• Married individuals: Every individual deserves financial security. If the spouse is non-working, the benefit is more essential. The married individuals can offer financial protection through the term insurance plan. The monetary benefit after them can offer enough time to move forward through the loss and gain control over their life. 
• Married individuals with kids: Having a sweet family with spouse and kids requires timely planning to secure their future. The same is possible with a term plan that offers support to meet the endless expenses of kids’ education, career, lifestyle maintenance, and much more.

The chances and wishes for long-term survival are now compatible with the term insurance plan. The feature available in multiple new policies comes along with the following benefit: 

• It offers peace of mind and financial security that the hefty amount deposited in premiums will be yours at the end, regardless of fate.

• The term insurance plans also provide flexibility to receive the payments as a lump sum or as regular income.

• Tax benefits on receiving the maturity amount that is tax-free under Section 10(10D) of the Income Tax Act.

• Acts as a mode for long-term savings and the retirement fund.

Conclusion

A term insurance plan is an effective tool to safeguard one’s family’s future in case of sudden demise. But the alternative possibility remains as well. To meet the needs of policyholders in both scenarios, term insurance plans allow survival benefits too. Here, policyholders can benefit from the return of deposited premiums in the form of a lump sum or as steady income. 

If you are looking for such plans, here are two suggestions to offer the maximum benefits you might need. These are: iSelect Smart360 Term Plan by Canara HSBC Life Insurance or Young Term Plan by Canara HSBC Life Insurance. Explore the options now or connect to get your queries answered.