Term Insurance 227 views March 25, 2020

A term plan return with a premium, commonly known as TROP refers to a contract between the applicant and the life insurance company. Under this agreement, the applicant has to pay a specific amount of money annually for a fixed period so as to receive a guaranteed amount of money in the event of death during the policy term. This works like a standard insurance plan, guaranteeing financial protection to the family during an eventuality. The benefit of the return of premium as a survival asset makes it distinct from other policies.

Term Insurance

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Features:

Term plan with return premium provides maturity as well as death benefits. Following are the features one can consider before diving into the insurance policy.

  1. An offer is made by the insurer to the insured person during the signing up for a plan. This agreement refers to the sum assured of the life insurance cover
  2. An ordinary plan will not offer any maturity or survival benefits but under term plan with a premium return, the insured gets all his invested money back
  3. A death benefit is an additional asset. The sum assured varies with different policies/plans
  4. The benefit of paid-up value cannot be availed by everyone, most companies require the policyholder to pay a premium for minimum years before providing this benefit
  5. Your payment option is a determinant of the surrender value. If one has opted for a single premium plan where the entire premium is paid at the beginning of the premium policy then enjoying this benefit becomes easier
  6. Various additional covers are offered alongside the principal cover. We generally refer to them as riders.
    • Under the personal accident or disability rider, one can access these benefits in case of an accident/ injuries, disabilities or even death
    • Under the critical illness rider, chronic and severe illnesses are covered such as heart attacks, cancer, stroke, cardiovascular surgeries, etc.
    • Under the hospital cash, cash benefits can be accessed in case of hospitalization due to pre-defined reasons.

Advantages:

  1. It offers a death benefit as well as a benefit of the return of premium as survival benefit in case the insured survives with the term policy
  2. Offers high sum assured to the policyholders
  3. The premium charged is low and quite affordable
  4. Under the section 80C of the Income Tax Act, a benefit of tax exemption can be accessed by the insured on the premiums paid
  5. The maturity benefit, as well as the death benefit, are also tax-free under Section 10 (10D) of the Income Tax Act.

Who all can benefit from this plan?

The premium rate of the policy is determined by the age of the buyer. The minimum age to enter the policy is 18 years whereas the maximum age can be up to 65 years. Except for the age factor, term plan with premium return can be enjoyed by everyone irrespective of whether the individuals are married, single or have children.

  1. If you are single, you can provide financial protection to not only the loved ones but can also secure your future in a long-run.
  2. If you are married with no kids, then it becomes a requirement to create a financial cushion for your partner in your absence. In case you survive with the term policy, you receive the entire premium amount to date.
  3. If you are married with kids, it becomes a responsibility for you to create a financial backup plan in case of an emergency.

So, buy a term plan with return of premium if you need insurance coverage as well as maturity benefit from your term plan.

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