Term Insurance Return of Premium
Return of Premium term life insurance policy is also referred to as Term Insurance Return of Premium (TROP). Having all the benefits of a simple term plan, with TROP, you can even avail of income replacement and premium refund at maturity. Basically, ROP is a term plan with death benefits, in which, if the policyholder survives the policy term, it returns the premium that’s paid. On the other hand, in a regular term insurance, insurers pay only when the insured person dies. The following case study can help you understand ROP term life insurance policy better.
What is Term Plan with Return of Premium?
Term plan with return of premium is a type of term insurance that caters to the requirements of the insured individuals like a standard term insurance plan, by also providing financial protection to the family of the insured individual against any unfortunate events. Just like any standard term insurance plan, the term insurance with return of premium plan offers death benefits, and along with that it offers a guaranteed return of premium as a maturity benefit, in case of the insured person being healthy and hearty at the time of the end of policy tenure. Because of the guaranteed return of the premiums, the term plan with return of premium has a higher rate of premium. This type of term plan also provides additional benefits such as accidental death benefit, premium waiver benefit, protection against critical illness, as well as disability benefit. Hence, a term insurance with return of premium is a term insurance plan that provides both death benefit, in case of the death of the insured individual, as well as maturity benefit by the return of premium invested, if the individual survives the policy tenure.
Top Reasons to Buy Term Insurance Plan with Return of Premium
A Term plan with return of premium is specifically designed for customers who want to provide financial security to their loved ones along with the benefit of returns. As the name suggests, Term Return of Premium offers the combined benefit of insurance coverage and return of premium.
Firstly, they give you peace of mind by providing financial security to the family in case something unfortunate happens. Secondly, the plan offers an assured premium return, which means total premiums paid during the tenure of the policy are paid back to the policyholder.
Let’s take a look at the top reasons why you should consider purchasing a term plan with return of premium policy.
- Term insurance with return of premium offers a premium refund on the maturity of the policyIn case the insured survives the entire tenure of the policy, then they are eligible to receive the total amount of premium invested towards the plan on completion of the policy term. This makes the plan ideal for investors who want to have insurance cover along with the benefit of premium refund on maturity.
- Term plan with return of premium provides assured returns on the total amount of premiums paid. Term plan return of premium guarantees that the insured person will get their money back. The policyholders do not have to worry about their money not being returned back to them.
- The term insurance return of premium plan offers the option of rider benefit in order to enhance the coverage of the policy. Most insurance companies offer a range of optional riders that the insurance buyers can purchase. These can be taken at the time of signing up for the policy or added later. It is better to take the riders such as personal accident, physical disability, etc. at the time of taking the policy as they offer a comprehensive cover right from the time of signing up for the term insurance with return of premium plan and that too at a very low additional cost.
- Offers tax benefits as per the prevailing tax laws. Currently, the premium paid and the amount drawn are tax-free under section 80 C and 10 (10D) of Income Tax Act, 1961. The tax exemption is applicable up to the maximum limit of Rs.1.5 lakh.
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