Term insurance policy helps your family to live life in your absence. It is the cheapest form of life insurance as it offers a large cover at a low premium. To make term plans attractive these days companies are offering an earning option (premium return or return) with a cover. This is called ROP plan. Insurance experts say that taking a return plan over a normal term plan is a loss deal. This is because it has to pay more premium and does not get returns than that.
Have to pay more premium
If a person of 35 years takes a simple term plan covering one crore rupees for a period of 20 years, then he will have to pay an annual premium of about nine to ten thousand. At the same time, if he takes a return plan, he will have to pay an annual premium of around Rs 30,000. Financial experts say that a person can get higher returns by taking a simple term plan. He can get many times more returns over the maturity of a term plan by paying a lower premium and putting the remaining amount in a PPF or recurring deposit.
Insurance period also decreases
Insurance companies also offer a shorter period of cover in an ROP plan than a normal term plan. A simple term plan provides cover for 40 to 45 years. At the same time, in the ROP plan it is reduced to 20 to 25 years only. In the ROP case, insurance companies also charge a guarantee to return the premium. It requires an additional amount of premium to invest.
Separate investment and insurance
Financial experts say that it is always better to keep insurance and investment separate. Insurance only covers your life risk. At the same time, investment works to increase your wealth. So if you are going to buy a term insurance plan, then only buy a term plan. Do not get caught by the premium returning plan. This is just a way to attract customers that you should avoid.