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What is a Term Plan with Return of Premium
and How it Helps?

Term insurance with return of premium, which is also known as TROP, is a type of term insurance plan that is explicitly aimed to meet the needs of insurance investors who are looking for a little more than just the term insurance benefits. 

As is with any other insurance plan, term insurance with return on premium also provides your family with financial security in case of an eventuality. However, one unique feature that makes it better than the regular term plan is the return of premium as the maturity benefit that the policyholder can avail if they outlive the policy tenure. 

To help you understand the term plan with the return of premium, let us discuss its benefits in detail. 

1. Benefits of TROP

• Return of premium
  Most policy buyers are discouraged from investing in a term plan because it does not offer any survival benefit to the investor. However, term insurance with return on premium changed by giving them a maturity benefit at the end of their policy. 
• Death benefit
  Just like any other life insurance, its primary objective is to provide life cover or a financial shield to protect their family against uncertainties, such as untimely demise. If you invest in term plan with return of premium, your beneficiary will become entitled to the sum assured as a death benefit in case of your passing. 
• Saves tax
  Investing in term insurance with return of premium makes you eligible for the tax benefits, such as exemption of up to Rs. 1.5 lakhs towards the premium payment u/s 80C of the Income Tax Act. You can also avail of tax-free maturity benefit u/s 10(10D) of the Income Tax Act.
• Riders
  If you want to expand the coverage of TROP beyond the maturity benefit, you can supplement your policy with add-on benefits, known as the riders. For example, adding a critical illness rider to your policy protects you against unexpected medical expenses arising due to the diagnosis of a serious health condition mentioned in your policy document. The cash benefit you receive will help you pay for medical bills and other expenses. 

2. Term Plan Vs. Return of Premium

There has been a considerable rise in the cost of living these days, and it has become necessary to manage your money efficiently. Therefore, financial instruments that allow you to secure your family’s future and help you build wealth are preferable over simple life insurance plans. 

Term insurance with return of premium option gives you additional benefits, such as accidental death benefit, waiver of premium, protection against critical illnesses, etc. That is why experts recommend investing in TROP to achieve complete protection against life’s unpredictability. 

Compared to traditional life insurance policies, TROP gives you the option to earn back the amount you invested over the years. This is the most compelling advantage of buying term insurance with return of premium. If you survive the term duration, you are still eligible to receive the benefit. This is a perfect instrument for someone who wants to invest in a low-risk financial product with assured returns. 

3. Features of TROP

Here are some of the features of TROP: 

• Affordability 
  Term insurance with return on premium is costlier than the regular plan. However, the maturity benefit at the end of your policy term and tax savings through the years outweigh the cost factor. 
• Multiple payment options
  You can choose from multiple payment methods as per your convenience. There are two main options available:
  • One-time payment
    You can pay the entire TROP premium as a lumpsum amount in a single payment, rather than paying it over a period of time. 
  • Payment at regular intervals
    You can also make payments at regular intervals, such as annual, half-yearly, quarterly, or monthly, throughout the policy tenure. 
  • Payment till 60 years of age
    With this option, you can pay your premium till the age of 60, even though your policy can be extended up to 85 years. 
  • Fixed instalments
    Under this option, you can pay the premium for a specific period of time under the limited pay option. 
• Surrender value
  If you, for some reason you want to discontinue the term insurance with return on premium, you will receive the surrender value applicable. However, it is subject to certain conditions. So be sure to read the policy document carefully before you make the investment. 

4. Eligibility

The minimum age for TROP is 21 years, and the maximum age is 55 years. Since age plays a big role in determining the policy premium, it is advisable to start investing as early as possible. 

According to the insurance experts, such as Max Life Insurance, you must not consider the maturity benefit when you are buying term insurance with return of premium. Believe it or not, the ones offering the highest return may not always be the most cost-effective option. 

It is sensible to check the websites of reliable to insurers to see available offers on these insurance plans. Some may even offer some discount if you choose a higher sum assured, making it a better proposition. It would hugely help if you also remembered to choose the highest tenure because TROP does not allow you to change it later.