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Nath Balakrishnan

PREMIUM back term plans are a variant of the pure term plan. Here, unlike the pure term plans, the premiums are returned if the policyholder survives the policy term. Birla Sun Life is the latest to launch a term plan that returns premiums.

Policy features

The plan is available under two variants. The first returns 100 per cent of the premiums paid on survival up to maturity. The second returns 125 per cent of the premiums. The premiums returned are only those paid for the basic plan, and does not include those paid for the riders.

The significant departure of this plan from other similar one (offered by ICICI Pru and Aviva) is the payout on death of the life insured. Other plans pay out only the sum assured, but Birla Sun Life's payout includes not only the sum assured but also the premiums paid until death.

The benefit periods under the 100 per cent premium back plan are 10,15 and 20 years; under the 125 per cent premium back plan, they are 15 and 20 years. Premiums have to be paid throughout the chosen benefit period.

Riders

Riders, such as the Accidental Death and Dismemberment rider, Critical Illness Rider and the Waiver of Premium rider, can be attached. If the policyholder dies in an accident, the payout will include the sum assured under the rider, the basic sum assured and the premiums paid for the basic plan.

Surrender value

The policy acquires a surrender value after three years' premiums have been paid. However, no loans can be taken against this plan.

Suitability

Term plans are by far the most basic of all insurance plans as they provide pure life cover. Choosing between different term plans is also easier compared to savings-oriented plans, as the plan with the least premium for a given sum assured will provide a greater bang for one's buck.

In term plans with return of premiums, the premium payout is much higher compared to pure term plans. The only advantage is the comfort of getting back the premiums paid on survival up to maturity. Those looking for such a benefit can consider this plan.

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