Maturity benefit and return of premium of critical illness insurance plan

Anil is a 39-year-old male salaried professional. He is a non-smoker and generally leads a healthy life. He purchased a critical illness insurance plan online for a sum assured of Rs. 5 lakhs and a policy tenure of 10 years directly from the insurer’s website when he was 30. He pays an annual premium of Rs. 2,794 per year including taxes for 10 years for the cover. At the time of its purchase, he decided to go with additional options of return of premium as a payable maturity benefit, in case he survives till the end of the policy term. His policy matures this year, and since he has paid all installment premiums in full, he is eligible to receive a guaranteed maturity benefit equivalent to sum of all premiums paid excluding taxes and other charges.

Critical illness (CI) plans provide an adequate financial cover to an individual and their family for treatment of critical illnesses like cardiac arrest, paralysis, cancer, organ transplant, etc. upon their diagnosis. The insured pays a regular premium amount during the policy term and the insurer pays him a lump sum benefit amount depending on the diagnosis of the critical ailment. This is to say that Critical illness plans work in their full potential as long as the policy cover is utilized by the insured for treatment of critical ailments. Alongside, there are also people who wish to purchase a Critical illness plan but are hesitant due to their belief in the nearly negligible possibility of falling critically ill. After all, when one is making an investment, nobody would want it to go to waste if unutilized. Here are the most common set of questions that this lot asks about Critical illness plans:

  • “What happens to the premiums paid upon termination of the policy, or when I die without claiming any benefit under the policy terms and conditions?”
  • Or, “what happens when I can no longer afford to pay for the policy and will need to surrender it, do I lose all the previous payments made?”

Given that these are valid queries, few insurers have strengthened the critical illness insurance with return of premium rider or a payable maturity benefit.

What is critical illness insurance with return of premium or maturity benefit?

In case of the insured surviving the policy period without availing claim benefits, few insurers offer Critical illness plans that ensure that all the premiums paid during the policy term are refunded to insured as a maturity benefit. This also convinces the insured that his investment has not gone waste even if he hasn’t utilized the CI cover. However, to avail this benefit, individuals have to exclusively purchase a Critical illness plan with return of premium.

How does a Critical illness plan with return of premium work?

The instances when the return of premium benefit will come into effect in Critical illness plans varies from policy to policy, but these are the broad scenarios where the premiums may be refunded:

  • Policy expires with no claims made: If the insured survives the policy term and has not availed any claim benefits, all the premiums paid excluding taxes and other are refunded to the insured.
  • Policy expires after a few successful claims: If the insured has claimed some CI policy benefits during the policy period, then the insured is eligible to be paid a lump sum maturity benefit equivalent to return of premiums paid less the net claims, once the policy term ends.
  • Insured expires while the policy is in force: In case of the death of the insured during the policy period, a guaranteed maturity benefit or a certain percentage of premiums as on the date of death is paid to the nominee.
  • Policy Surrender: In certain cases of immediate cash requirement, the insured may also avail the option of surrendering the Critical illness plan with return of premium to receive a surrender benefit calculated as a factor of premiums paid as of the policy surrender date.

In a Nutshell

A Critical illness plan with return of premium or maturity benefit offers the assurance of receiving a refund of invested premiums, irrespective of being diagnosed with a critical illness or not. They also provide the insured with an additional benefit of recovering the premiums paid after a specified period. Given these manifold benefits of a Critical illness plan with return of premium, individuals can make an online purchase of good Critical illness plans such as the Future Generali Heart and Health Insurance plan directly from their website at discounted rates. Apart from offering the basic CI insurance covers, Future Generali offers CI products with two cover options inclusive of return of premium benefit – Heart Cover with return of premium and Critical Illness Cover with return of premium. Under this Critical illness plan with return of premium, if the Life Assured is alive on the maturity date and if all installment premiums have been received in full, a guaranteed sum assured or maturity benefit equivalent to sum of all installment premium excluding taxes and charges less any critical illness benefits shall be paid at the end of the policy term.