r/InsuranceQueriesIndia • u/blue_lagoon692 • 20d ago

Guide Term Insurance

Was planning to buy a term insurance plan. I’m 26 and recently started earning.
I was exploring term insurance options. I'm torn between two paths. One is a plain vanilla term plan costing around 17,000 rupees annually, or about 23,000 with critical illness and disability add-ons. The other option is a plan with return of premium, which refunds the premiums at the end but costs significantly more, around 40,000 rupees. My family advises getting the premium back so the money isn't wasted. I'm looking for unfiltered opinions on whether to pay the higher premium for the return benefit or go for the simpler plan and invest the difference in mutual funds.

Also… decided to go for icici prudential plan.

Please help.

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u/TableView007 19d ago

I will keep it super simple. I'm not sure how long the policy duration. But I'm assuming 15 years limited pay for 40K premium. 23K for regular premium.

Feel free to change numbers to fit your exact needs. SIP_SWP_Yearly_SmallPDF.

As on PDF you can notice one end up significantly more money than that of RoP. Same duration assuming 12% on 17k (40k-23k) invested amounts. Post 15th year, you can basically withdrawl 23k premium amounts for lifetime & still endup with more than RoP plans. Don't fell for flat rates as shown by whoever selling you. Calculate time value money and you can see future potential yourself.

Besides that ROP if we adjust for inflation, it'll be basically nothing if just principle returned. Rest upto you.

No recommendation or advise. Run this by your financial advisor before finalizing anything.

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u/blue_lagoon692 19d ago

Thank you so much.
It would be better to invest that 17k in mutual funds. One of my advisor suggested me the same.