Term Plan with Return of Premium: Secure Your Future with Guaranteed Returns

A term insurance with a return on premium, often known as TROP, is a term plan that has maturity benefits. It is basically a replica of a term plan with just an addition of maturity benefit. Under TROP, the maturity amount is paid to family members if the insured dies during the policy tenure, & the premium paid during the policy tenure is returned if the policyholder survives. Basically, this plan offers an exit option to the policyholder at a specified period, where he/ she receivesthe entire premium amount after deducting the applicable taxes.

Features of a Term Plan with Return of Premium

Provided are the features of a term plan with return of premium:

• Return of Premium

In case you opt to exit from the policy, this plan refunds the premium amount paid throughout the policy tenure after deducting the applicable taxes, saving the amount of money paid earlier.

• Huge Life Coverage

This plan comes with a large coverage, which helps you maintain your lifestyle, covering all main expenditures.

• Death Benefit

The insurance company will pay a lump sum amount to the beneficiaries in case of the death of an insured, ensuring financial stability & security.

• Flexible Tenure

It offers flexibility in choosing the policy tenure& policy amount, which will depend upon the requirements & future financial objectives.

• Critical Rider

It also allows for the addition of critical riders such as accidental death benefits & critical illness, ensuring added safety & covering extra risks.

Difference between a Term plan with return of Premium & Term Insurance

Provided are the differences between a Term plan with Return of Premium & a Term Insurance:

Steps to Choose the Best Term Plan with Return of Premium

Provided under are the steps to choose the Best Term Plan with Return of Premium:

Step 1:Ascertain the amount of coverage that is required depending on the financial objectives, lifestyle, number of dependents in the family, future financial objectives, etc.

Step 2:Compare the different plans available on the basis of premium, which will further be dependent on the amount of sum assured & coverage amount.

Step 3:Look for flexible payment options for the premium amounts, i.e., monthly, quarterly, or annually.

Step 4:Further check how much premium will be received upon completion of the policy in case no claim is raised.

Step 5:Opt for an insurance service provider with strong financial background, good credit ratings, & high CSR.

Step 6:Go through the additional critical riders to be added to the current plan to enhance its coverage.

             Step 7:Also features such as renewability &convertibility should be checked.

Step 8:One should also ensure about the free look period, which allows one to cancel the policy after reviewing in case the expectations are not met.

Step 9:You can also get customised suggestions after consulting a financial advisor, depending on the financial objectives.

Benefits of Purchasing a Term Plan with return of Premium

Provided below are the benefits to buy a term plan with return of premium:

• Cost Effective

This plan offers a cost-effective solution with large coverage, ensuring the financial future of all family members without curtailing your expenses.

• Flexibility

This policy also allows you to customise the plan according to your financial requirements. It allows the adjustment of the coverage amount, tenure of policy, frequency of making payment towards the premium, etc.

• Best Suits Salaried Employees

This plan best suits the salaried income class of individuals, allowing you to safeguard the future financial obligations without curtailing your finances.

• Tax Savings

This plan allows you to avail a deduction of tax on the amount of premium paid u/s 80C of the Income Tax Act, 1961. Along with this, the death benefit received is also exempt from tax u/s 10(10D).

• Mental Peace

Due to the financial security you get with this plan, it provides mental peace.

Drawbacks of Term Plan with Return of Premium

Provided are the drawbacks of a term plan with return of premium:

• Limited Coverage

This plan might restrict the coverage amount in comparison to other term plans.

• No Maturity Benefit

There is no maturity benefit or any additional benefit in case the policyholder survives the policy tenure.

• Strict Exit Restrictions

There are some restrictions & penalties on the exit feature, including a restriction on the amount of refund which cannot exceed the premium amount, excluding tax amount.

• No Investment Component

This plan does not include an investment component, unlike other term policies.

• Inflation Factor

This plan does not take the inflation factor into consideration, which further reduces the amount of premium.

Conclusion

A term plan with return of premium benefit is an expensive term plan, but should be considered if planning an investment for a longer tenure. It is a customised plan which not only secures the financial future of your loved ones but also provides monetary returns. This plan provides dual benefits of profit & protection, hence providing mental peace to the policyholder.