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All About Term Plan With Return of Premium

Published On Sep 25, 2021

A term plan with return of premium is also referred to as TROP and is a type of term insurance cover. This insurance plan is designed specifically to cater to the various individual needs of the insurance buyers. Just like any other basic term insurance plan, it also offers financial safety to the insured’s family members against any kind of eventuality that could arise within the plan duration.

How Does TROP Work?

Take into consideration,An individual buys an insurance plan with a coverage of Rs. 20 Lakh for 10 years and an yearly payable premium of Rs. 2000. In case the policyholder dies, the dependents would receive the entire sum assured i.e. Rs. 20 Lakh. However, in case the policyholder survives the term, then the insurance provider would return back the whole premium amount i.e. Rs. 20,000 (2000x10).

Must Read: Why Should NRI Buy A Term Insurance Policy In India?

Some of the benefits of TROP as compared to a pure term insurance plan are as follows:

  • In case of a term insurance plan, only death benefit is given whereas in case of TROP, the policyholder receives the benefit of return of premium in the form of maturity benefit after the plan duration.
  • Due to the feature of “guaranteed all premium back”, the premium rate payable for a TROP plan is higher as compared to a pure term insurance plan.

Salient Features of TROP

Some of the salient features of a term plan with return of premium option are as follows:

1. Maturity Benefit or Survival Benefit

The maturity benefit offered under a term insurance plan with return of premium is what makes it stand apart from a pure term plan. As under a standard term insurance plan, the insured is not entitled to get any maturity benefit. However, under this insurance plan, the policyholder receives back all the payable premium.

2. Sum Assured

In term insurance with return of premium policy, a sum assured refers to the life insurance cover that is provided by the insurance company to the policyholder while signing up for the plan. A TROP provides a low sum assured amount in comparison to a pure term insurance plan, as the premium amount gets refunded.

3. Surrender Value

Under a term plan with return of premium option, the surrender value varies based upon the payment option. Generally, the surrender value is more for single premium policies, wherein the whole premium for the plan is paid towards the start of the plan duration.

4. Death Benefits

Under this plan, the death benefit is offered as a complete sum assured amount to the nominee In the event of death of the policyholder because of any eventualities. Different insurance providers offer the sum assured amount based on the mode of payment or the coverage opted for.

5. Riders

There are various riders offered by the insurance company for the policyholder to choose from in order to enhance the coverage of the insurance plan. Some of these riders include critical illness riders, hospital cash riders, disability or personal accident riders, etc.

Also Read: Important Benefits Of Term Life Insurance Renewal

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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