March 22, 2014 4:12 pm
If i take a term insurance,if maturity period attains and nothing happens to me what happens to the amount which i paid as premiums. whether i will get it with bonus or only premium amount or nothing.
This is the most common reason why term plans are not popular in India. People expect returns even on life insurance. Term plan premium is the cheapest you can pay to get a high insurance value for your life. Dont even think of the investment part while buying it.
When you buy a car insurance and dont claim anything ever, does the car company return your premium back?
Dear Kalyan, in my example, umbrella has no value post Rain period. 🙂
Please post your comment on the calculations provided by dear Curiousraj above.
Kalyan, for pure term plan you won’t get a single penny if you survive the policy term. But if you take a life insurance with return on maturity then premium will be almost 5 to 10 times more as compared to that of pure term plan. I give one example:
For Aviva Pure term policy for 30 year non-smoker mail premium would be around 5000. But for Life Insurance policy with return of the same company have premium 20000 to 25000. And if you survive the policy term then you will get 110% of the total premium paid. so if you pay 30 X 20000 = 6 lac in 30 years then on 31st year you will get 6.6 lac.
Now you decide yourself if you put 5000 for pure term plan and rest 15000/year to any investment then will you earn only 6.6 lac in 30 years.
If you invest 15K in ppf then after 15 years you will get more then 4.6 lac : http://www.ppfcalculator.co.in/calculate/?a=15000
In case of equity mutual fund you will get even more.
Moral of the story: Never mix insurance with investment. Ashal has given very good example.
Dear Kalyan, you purchased an umbrella in anticipation of Rain. The rain did not happen. Now w’d you return the umbrella to shopkeeper to claim back the purchase price? Term cover is similar thing.
Still the umbrella will be with me after the anticipation period,so that i can use it whenever the rain comes after that period.but the case is not the same with term insurence.please dont mind this is my opinion.
Just replaced the word Purchase with HIRE PURCHASE.
So when you hire purchase the umbrella say for 20 years you pay certain nominal rent towards this hire purchase, whether you use it or not. After 20 years you return the umbrella. Will you get the rent back, even if you not use it?
You take the term plan for a certain fixed time period and once the period is over you stop paying premium and term cover is over. Amount you paid, goes towards your security during the term.
there is no maturity value or so. At the end of policy period you get nothing back 🙂
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