What Are Term Return of Premium Plans?

Posted by amrina alshaikh on June 1st, 2018

As we know, term life insurance plans are the basic life insurance policies that offer only death benefits to the beneficiaries on the demise of the life insured. But what if someone wants a return on the premiums he/she has paid to the insurer? Well yes, he can get returns on term insurance. Surprised? Read further to know more.

Term Return of Premium plans are nothing but the normal term plans that additionally offer some survival benefits at the end of the policy tenure. If the life insured survives the tenure, the insurance company returns the amount of the number of total premiums paid by the policyholder. 

Things to know about TROP

• Like other life insurance plans, TROP plans also offer premiums back to the policyholder upon maturity, in view of the life insured survives till the end of the policy.
• You can add riders to your TROP plan to get compete cover from the incidents that are generally excluded from the plan.
• When compared with regular term insurance plans, TROP plans offer survival benefits like other cash value plans, hence the premiums are slightly higher than regular term plans.
• TROP plans offer tax benefits in whatever premiums you pay for the policy, the benefits are gained under Section 80C of Income Tax Act. Also, you get the tax benefits on the policy pay-outs under Section 10(10D) subject to the terms and conditions declared by the insurer.
• A few insurance companies have introduced TROP plans that allow you to discontinue paying the premiums and terminate the plan within a certain period. In such cases, whatever the premiums have paid by you to the company will be reversed. The insurance company may charge discontinuation fee to cover the costs of medical tests and other paperwork, if any.

Things to keep in mind before opting for a TROP plan

• Firstly, you must read all the documents carefully, e.g. brochures. This is crucial because it helps you understand the nitty-gritty of the plan along with the inclusions and exclusions.
• The sum assured you choose under the TROP plan should be adequate to help beneficiaries or your family sustain their lifestyle in case of any unfortunate event. Hence, decide your TROP coverage carefully.
• Before buying any TROP plan, figure out which insurance company is doing well and has maximum claim settlement ratio. The customer service and reputation of the company is also important.
• Be aware you should not fall prey to the attractive but false promotions and advertisements. You will find many insurance providers in the market, but only few offer great deals.
• Before opting for a TROP plan, check the premium payment flexibility and the pay-out method flexibility that the plan offers. This helps you plan accordingly for the policy.
• When you discontinue on the TROP, the insurance company charges discontinuation fee. You should always know the charges before purchasing the policy.

By reading this article, you shall get an idea about Term Return of Premium plans and how they work. Choose the best TROP and ensure your family’s future is financially secure. With the help of term plan premium calculators, you can select TROP option and get your quote. Term plan premium calculator is the best tool nowadays that helps you choose the appropriate plan.