TROP (Term plan with Return of Premium) is an insurance plan in which the policyholder gets their total premium back at the end of the policy term. Under this plan, if the policyholder survives the policy term, they will get back all the premiums paid (minus GST and ROP rider amount) as long as all the premiums have been paid.
What is a TROP/Term Plan with Return of Premium?
Term plan with return of premium TROP works just like a term policy. It financially protects the life assured and their family. But the main difference between TROP and a regular term insurance plan is that TROP premiums are higher than a regular term plan. Additionally, TROP offers two types of benefits. If the policyholder lives until the end of the policy term, they get back their premium paid. In case the policyholder doesn’t make it past the policy term, then the nominee gets the sum assured.
Why should you opt for a TROP option?
With the rise in the cost of living, debts, and illnesses, it is common behavior to look for ways to handle money in an optimal way. TROP is a great way to protect your finances and build wealth simultaneously. A (TROP) Term plan with return of premium is made for people who want to give their loved ones financial security and get some money back if the need to claim the primary policy benefits never arises.
Also, different insurance companies offer TROP plans with extra benefits like protection against critical illnesses, disability benefits, accidental death benefits, premium waivers, and benefits for people who pass away in an accident. Since there are many insurance plans to choose from, it may be hard for someone to pick the right one. Choosing a plan based on just one factor, like price or policy length, is not a good idea. So, make sure you always think about the benefits of TROP.
Benefits of a (TROP) Term Plan with Return of Premium
- Return of premium benefit: A Term insurance plan with a return of premium gives back the premium If the insured person lives until the end of the policy term. This makes the plan a good choice for investors who want insurance coverage and the benefit of getting their money back when the term policy matures.
- Death benefits: The TROP gives the nominee the total amount of the sum assured as a death benefit if the life assured is no more for any reason. Depending on the plan, the way the premium is paid, or the type of coverage chosen, different insurance companies offer unique amounts of sums assured. The death benefit from TROP helps the family of a life-assured person pay their bills when money is tight, especially after the loss of the primary breadwinner.
- Tax Benefits: When a person buys term insurance with return of premium, they can save money on taxes. Under the Income Tax Act of 1961, the insured can get tax breaks. Sections 80C and 10 state that the premium paid for a term insurance plan and the benefit payment are subject to tax exemptions as per suggested limits.(Taxation varies depending on the plan, old/new tax regime and other factors. Taxes are subject to change.)
Who can buy Term Plan with Return of Premium?
Anyone can buy a term plan with a return of premium, no matter if they are single, married, or married with children. People can easily buy term insurance online after comparing it to other policies they are interested in. TROP is a good choice for the following types of people:
- If you are not married, especially if your parents are retired, you may have some financial responsibilities for them. If you have a TROP, the maturity benefit can ensure your aged parents have enough money to sustain their retired life after your passing.
- If you are married but don’t have any kids, you can also think about a term plan with return of premium. Term return of premium (TROP) may be a great choice if your partner depends on your income for sustenance. This plan gives your spouse financial security for the future.
- If you are married and have kids, then you shoulder the important responsibility of your children’s future in addition to that of your spouse. TROP ensures that your children get a good education, a dream wedding, and a good lifestyle even after you are gone. It even reduces the financial burden on your grieving spouse.
A term insurance premium calculator will help you determine the ideal premium with a TROP choice that fits your needs. It can help you shape your plan as per your needs, before you buy it.
