A term insurance plan is one of the simplest long-term solutions for the financial safety of your dependents. An adequate term life cover will ensure that your family can maintain their financial status even after your early demise.
However, pure term insurance plans seldom offer any survival benefit, a disadvantage that is only offset by the low cost of the cover.
Can a Term Plan Return the Premium Cost?
The ultra-low premium cost of the term insurance cover is perhaps the best part of the plan given the importance of financial safety for your family.
However, it also warrants the questions:
- Should financial protection cost you anything at all if you survive?
- What if you decide to leave the policy midway?
So, here are the special situations when your term insurance plan may return your premiums:
Cancellation of Policy
Every life insurance policy has a cooling-off period of 15 days. The cooling-off period starts after you receive the policy document. You can check the policy terms and conditions and may return the policy if you find the terms unsatisfactory.
If you decide to return your term insurance policy within this cooling period, the insurer will return to you all the premiums you have paid. The returned amount will not include the expenses such as medical check-ups and underwriting costs.
Although available with all the long-term life insurance plans including term insurance, this option is seldom the cause of getting your premium back.
Term Plan with Return of Premium Option
The term insurance plan’s nominal premium cost allows for insurers to return the entire policy premium to you. Term plan with return of premium option offers the long-term life cover to you with one simple exception.
If you survive the policy term and the life cover expires without a claim, you will receive the total premiums you had paid for the cover.
Click to use : Term Insurance Calculator
Exiting Term Insurance Plan Before Maturity
Another way you may exit your term insurance apart from expiry or claim is if you choose to exit the policy before maturity. A standard term insurance plan with regular premium payment usually does not offer any premium refunds.
However, under the following situations you can expect a refund of premiums after premature exit from your term insurance plan:
a) Single-Premium Term Plan:
If you buy a single premium term insurance plan, you happen to pay the premium for the entire tenure in a single instalment. Thus, if you decide to exit the policy before the expiry of the term, the policy may return the additional premium.
b) Term Plan with Special Exit Value
If your term insurance cover with regular premium payment has the feature of special exit value, the policy may return the premiums upon premature exit. Special exit value ensures that you receive all the premiums you have paid without a claim if you leave the policy.
Term insurance plans like iSelect Smart360 Term Plan from Canara HSBC offers this option.
Special Exit Value in iSelect Smart360 Term Plan
Special exit value is a feature available with the regular payment option of the iSelect Smart360 Term Plan. Special exit value allows you to receive all the paid premiums back if you decide to leave the policy before its expiry. The returned amount will be exclusive of the following:
- Any additional premiums paid due to underwriting risk
- Premiums paid for optional covers, i.e., riders in the policy
Your policy should also meet certain criteria for you to avail of this benefit upon premature exit. Special exit value will be available if:
- You have attained the age of 65
- The policy has completed at least 25 years if the total tenure was 40-44 years or 30 years for longer policy tenure.
This feature is available only for the regular pay term plan where the maximum maturity age does not exceed 85 years. The policy will expire after the pay out under this benefit.
Also Read : What is the meaning of Term InsuranceDisclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.