Term Insurance with Return of Premium: A Comprehensive Guide to Smart Coverage

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, and the premium paid during the policy tenure is returned back if the policyholder survives.

One can choose the below-mentioned details with TROP:

• The sum assured
• Policy tenure
• Premium payment term
• Premium paying frequency
• Riders (if any)
• Any other optional features that are available and you want to choose

Difference Between Term Life Insurance and Term Insurance with Return of Premium

Provided are the differences between Term Life Insurance and Term Insurance with Return of Premium:

Reasons to Choose the Term Insurance with Return of Premium

The mentioned reasons should be considered for choosing a Term insurance with a return of premium option:

1. Life Insurance Coverage: This plan offers financial security in case a premature demise occurs for the policyholder. This is because it provides a huge sum assured to be opted so that the family of the policyholder receives adequate financial support afterwards.
2. Maturity benefits: Though the insurance cover offers financial security to the policyholders, the TROP plan pays back the money paid for the plan at the time of maturity.
3. Tax Benefits: Under the old tax regime, deductions for the premium paid under section 80C up to INR 1.5 lakhs are required, subject to the terms and conditions that may apply. The death benefit that will be received is completely tax-free. At last, the maturity benefit that will be received entitles to be exempt from tax u/s 10 (10D) subject to certain terms and conditions.
4. Mental Stability: It is quite obvious that there will be peace of mind when we know the family is secure financially, and we need not worry about unforeseen events.
5. Achievement of Financial Goals: You, along with your family, can achieve financial goals such as marriage, education, repayment of loans, purchasing a car or home or retirement planning.

How to Choose the Best Term Insurance with TROP?

The mentioned points should be considered while choosing the best Term Insurance with Return of Premium:

1. Coverage Offered: Though most of the plans offer similar coverage, you should still look for coverage, such as value-added benefits, etc. Also, select a plan that provides a comprehensive scope of protection that is required.
2. Premium Amount: The premium amount must be compared across multiple plans on the basis of coverage offered, and the plan providing the most inclusive coverage at a competitive premium rate should be opted for.
3. Rider Benefits: The rider benefits, and their premium should be looked upon, and affordable premium rates should be chosen.
4. Available Discounts: Sometimes, insurance providers offer discounts in case of TROP to reduce the outgo of premium at the time of maturity. Hence, one should look for such insurance providers.
5. Claim Settlement Ratio: A higher claim settlement ratio is recommended as it shows that the insurer has settled most of the claims by the customers, fostering trust in the company.

Eligibility Criteria

Choosing a Term Insurance with the return of the premium plan can be a good option for the mentioned categories of people:

1. Unmarried: In the case of an unmarried applicant, the death benefit will help secure the financial responsibilities towards their parents in the case of an unfortunate demise.

2. Married, but no children: In the case of a married applicant, where the spouse is totally dependent on the income of the applicant, this plan will be ideal for you. This is because it provides them with financial support against the uncertainties of life.

3. Married and have children: In this case, it becomes your prime responsibility to protect your child’s future. This plan ensures the financial security of children in case of any eventualities, hence ensuring their education and career are unhampered.

How to Buy a Term Insurance with Return of Premium Online?

One can buy term insurance with a return of premium online by following the mentioned steps:

• Open the TROP page provided on the insurance company's website.
• You will have to provide the details like name, age, location, and contact details.
• Provide education-related details, such as occupation, smoking habits, and annual income.
• You are next required to provide the amount covered, policy tenure, and payment term for premium depending on the choice and suitability.
• Select the option “Return of Premium” and optional riders, if any.
• In case any medical formalities are required, fulfil all of them.
• Pay the premium amount to submit the proposal.
• The insurance company underwrites the proposal form and issues the insurance policy when they find out everything is up to the mark.

Conclusion

In the case of the survival of the policyholder, no benefit is provided in the case of normal term insurance plans. TROP basically offers financial security to the family in case of their absence, in case of the death of the policyholder, and in case the policyholder survives. Hence, before finalising things, consult a financial advisor to assess your needs and decide what will help in securing a better future and ensure peace of mind.