Finance

Know the difference between pure term plan, term return of premium and permanent life insurance

What is a pure term plan?

A pure term plan is the purest form of the life insurance policy. A pure-term plan’s main objective is to help your loved ones sustain themselves financially in your absence. Therefore, a pure term plan provides a pay-out called death benefit to your beneficiaries. However, you would not receive any monetary benefit if you survive your term policy.

What is the term return of premium?

As the name suggests, a term return of premium plan provides your whole premium amount in return at maturity. The returned amount acts as your survival benefit when you survive the tenure of the term policy. In addition to this, your nominees can obtain a death benefit to maintain their current lifestyle in our absence.

 pure term plan

What is permanent life insurance?

Permanent life insurance is also popularly known as a whole-life insurance policy. Under permanent life insurance, you can not only protect yourself for an entire lifetime but also leave behind a financial legacy for your loved ones.

Although a pure term plan, term return of premiums, and permanent life insurance are different from each other, you might tend to get confused about selecting the right one for yourself. Therefore, let’s go through the following features and differences for better clarity on which insurance policy can be suitable for you:

PURE TERM PLAN TERM RETURN OF PREMIUM PERMANENT LIFE INSURANCE
It is a pure protection plan, which offers only death benefits. It is a combination of death benefits and survival benefits. It can allow you to obtain death benefits as well as save for a long duration.
It offers life coverage for specific tenure, which can vary from 10-30 years. It provides financial protection for a maximum limit of 30 years. It covers you for an entire lifetime, i.e., 100 years.
It does not provide survival benefits. It returns your premium amount as well as accrued bonuses. It provides an increasing cash value.
Your term policy can be terminated when you surrender it before the completion of the tenure. You can receive a small proportion of the premium when you surrender the term policy. You can be eligible to receive the accrued interest on your sum assured amount when you surrender a permanent life insurance policy.
The term insurance premium can reach below. The premiums are usually high. The premium amount might vary.
According to Section 80C, Section 10(10D), tax benefits and Section 80D can be valid. You can be able to claim tax deductions under Section 80C, section 10(10D), and Section 80D You can be eligible to receive tax-saving benefits under Section 80C, Section 80D, and Section 10(10D)
Pure term insurance might be the cheapest form of insurance since it offers more at a lower cost. A term return premium plan can be the smartest form of insurance as it offers death and survival benefits. Permanent life insurance can be the most dependable type of insurance product since it covers you and your loved ones for your whole life.
You can purchase a pure term plan to safeguard your loved ones from any unannounced emergency in your absence. You should purchase a term return premium plan if you can outlive the tenure of the term policy. You should purchase a permanent life insurance product if you wish to live independently throughout your life.

In a nutshell, the insurance sector is vast, due to which you can select from several insurance products today. Before choosing any of the three insurance products, you should consider your financial needs and evaluate your family’s routine expenses. After understanding what term insurance is, you should compare multiple term options. In the end, choose a plan that offers maximum term insurance benefits for your loved ones’ safety.

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