Exide Life launches term plans with return of premium

The company is discontinuing its existing regular term plan and replacing it with the ROP as there is more demand for ROP plans

Exide Life Insurance has launched a term life plan— Exide Life Smart Term Plan — which offers life cover and guaranteed return of premium (ROP) on completion of the policy term.

It has three variants: Classic — where you pay premiums and you get 100 per cent of premiums on maturity; step-up —  where you can get between 110-150 per cent of the premium back on maturity, depending on the tenure you choose and comprehensive which offers higher coverage for lower premium and partial return of the premium on maturity.

“ROP plans are between pure term and savings plans. There is demand for such plans because the mindset of customers is that they should get back their premium on maturity,’’ said Sanjay Tiwari, executive vice-president-products management, Exide Life Insurance.
 

The company is discontinuing its existing regular term planand, replacing it with the ROP as there is more demand for these plans.

The criticism against ROP plans is that they charge higher premium than pure term plans. But according to Tiwari, since the premium is returned at maturity, the effective premium can work out to lower than the premium for pure term plans.
 
For instance, in the Comprehensive option, for a 45-year old male if the sum assured is Rs 1.1 crore and the policy tenure is 20-years, the annual premium works out to Rs 39,454. At maturity since 31 per cent of the premium is returned, the effective premium works out to around Rs 27,000. This is comparable to the premium for regular term plans.
 
The plan also offer flexible premium paying options like regular pay, five year pay and single pay, and riders like critical illness and accident cover.Other than term plans, there is increasing demand for Unit

Linked Insurance Plans. Currently, Ulips’ share in Exide Life’s product portfolio is 9-10 and the company does not plan to increase it beyond 15 per cent. “We are very selective in selling Ulips and we ensure that our distributors sell it only to customers who understand it,’’ Tiwari said.