Term Insurance Return of Premium (TROP)-term-insurance-return-of-premium

Embedded with all the benefits of simple term plan, TROP offers income replacement and premium refund at maturity. Compare these cost effective plans at before zeroing in on one plan. Consider a policy with Rs 20 lakh cover for 10 years for which the yearly premium is Rs 2000. If the insured dies, the family will be paid Rs 20 lakh (sum assured). However, if the insured survives the term, the insurer will return the entire premium amount i.e, Rs 20,000 (Rs 2000×10). Technically, a term plan with return of premium is a non-participating term assurance plan. When compared with a term plan following features are notable: Term plan offers only death benefits whereas a TROP plan has maturity benefit as well. Because of this guaranteed “all premium back” feature, it is slightly higher priced than a term plan There is a one segment of customers who expect to get returns from an insurance policy. To cater to this section, companies have launched TROP plans. This type of term plan provides the dual benefit. Firstly, they give you peace of mind by providing financial security to the family in case something unfortunate happens. Secondly, the plan offers an assured premium return, which means total premiums paid during the tenure of the policy are paid back to the policyholder. Offers premium refund at maturity if a policyholder survives the tenure. So you dont lose premium paid over the years. This makes the plan ideal for investors who are looking for term policy insurance covers but are not very keen on not receiving money back. As such, the term insurance return of payment plans try to get the best of both worlds – the large cover of term plans and the savings aspect of traditional plans such as endowment plans. Provides assured returns on the total amount of premiums paid, which excludes additional premium(s) for enhances coverage with rider, (if any). Term insurance return of payment plans guarantee that the insured party will get their money back. The policyholders do not have to worry about their money not being returned back to them. Moreover, taking on additional riders that help build up savings means that the insured person may actually get back more than what they invested in the term insurance return of payment plan. Optional riders that can be added handily for enhanced protection, making the plan offer comprehensive protection to the family, in case of unfortunate death of the policyholder.. Most insurance companies offer a range of optional riders that the insured party can take in addition to the term insurance return of payment policy. These can be taken at the time of signing up for the policy or added later. It is better to take the riders such as personal accident, physical disability, etc. at the time of taking the policy as they offer a comprehensive cover right from the time of signing up for the term insurance return of payment policy, and that too at a very low additional cost. TROP plans offer more premium payment options like yearly, monthly, etc. Term insurance return of payment plans offer an individual the option to choose the payment option which suits them best. For instance, if the policyholder is starting out on his career or has other considerations to take care of, then the single payment options are the best as they are smaller amounts and have a lower impact on the outflow than the higher amounts that need to be paid if the quarterly, half-yearly or annual payment options are chosen. On the other hand, if the insured individual can make the payment, then opting for the annual payment option is the best as the overall outgo is lesser than the other alternatives in the term insurance return of payment plan. Offers a `paid up option if you default on payment of premium. This feature makes these policies ideal for people who do not have a regular income but still need a policy that takes care of their needs. Offers tax benefits as per the prevailing tax laws. Currently, the premium paid and the amount drawn are tax-free under section 80 C and 10 (10D) of Income Tax Act, 1961. The Income Tax Act offers a deduction up to Rs. 1.5 lakh if the sum is invested in the right vehicle. Conservative policyholders can use the premium they have paid for the term insurance return of payment plan to considerably reduce their tax liability. Works on the level premium concept that requires paying a fixed premium amount, except the policy is lapsed. This particular feature makes this plan affordable and beneficial at different life-stages. The mortality tables used by the insurance companies provide a lower risk weightage to younger people. That is why the insurance premium is lower for people in the younger age group. The amounts gradually increase with age. Opting for a term insurance return of payment policy with a longer tenure when one is in his or her 20s means they have to pay the lower premium even when they are in their 30s or 40s.