Worried about what will happen to your paid premiums if you outlive your term plan? We suggest, buying a term plan with the return of premium feature. A TROP plan does not let your paid premiums go in vain if you do not pass away during the policy tenure as you get them back after you outlive the policy.
...Read more
Term insurance is a popular choice among Indian buyers because it allows policyholders to obtain a large sum assured at an affordable premium. While a basic term plan might give you lifelong annuities, guaranteed returns for critical illnesses, or different payout options, a term plan with a return of premium plan levels up the plan perks beyond your expectations.
There's only one difference between a basic term plan and a term plan with a return of premium, which is the survival benefit. It is the variant of a term insurance plan that provides payback of the premium paid towards the plan to the policyholder at the end of the policy tenure. Under this plan, the insurer gives the policyholder the survival benefits (minus GST) once the policy matures
Some additional benefits associated with TROP include partial or full disability benefits, accidental death benefits, and guaranteed protections against critical illnesses.
As mentioned above, a basic term plan or term plan with a return of premium is quite similar, and they both provide a life cover to the insured person's family members. However, the maturity payout is one feature that sets TROP apart from the regular term plan. Under this plan, the policyholder can receive a return of the premium amounts at the end of the term. It's clear that TROP can bring a sense of overall protection with dual benefits under a single-term plan.
|
Insurance Providers
|
Best Term Plans
|
Claim Settlement Ratio (CSR)
|
Entry Age
|
Maturity Age
|
Check Plans |
| ICICI Prudential life insurance | ICICI Pru iProtect Return of Premium | 97.82% | 18 to 65 years | 85 years | |
| Max Life Insurance | Max Life Smart Secure Plus Plan | 99.34% | 18 to 65 years | 85 years | |
| Bajaj Allianz Life Insurance | Bajaj Allianz Life eTouch Online Term | 99.02% | 18 to 65 years | 75 years | |
| PNB MetLife Insurance | PNB MetLife Mera Term Plan Plus | 97.33% | 18 to 65 years | 99 years | |
| Canara HSBC Life Insurance | Canara HSBC iSelect Smart360 Term Plan | 98.44% | 18 to 65 years | 81 years | |
| Aditya Birla Sun Life Insurance | ABSLI DigiShield Plan | 98.07% | 18 to 65 years | 55 years |
Any company that sells an insurance policy is the insurance provider. A good insurance provider has a high CSR, solvency ratio, good customer reviews, a vast product portfolio, and transparency towards its customers.
A good term plan consists of various coverage options, flexibility to choose death payout, flexibility in premium payment terms, offers premium discounts, lets you add riders, comes with loaded inbuilt benefits, and is easy on your pocket.
Claim Settlement Ratio is the percentage of claims settled by an insurer compared to the total claims received in a financial year. A good CSR lies somewhere between 95 to 99 percent.
The age (last birthday) at which you buy an insurance policy is your entry age to that policy. Insurance policies usually come with a minimum and maximum age at entry which means that you must attain a specific age or should be less than the maximum age to buy a policy.
The date at which your life insurance policy ends is known as the maturity age of your policy.
Here, we've simplified how a term plan with a return of premium works with an example-
The cost of living has suddenly increased in the past few years, placing a strain on people's wallets. However, a term plan with a return of premium option is an efficient way to manage finances and obtain life security. It is among the popular choice among prospective policyholders because it offers survival benefits, making it an excellent choice. It also provides additional benefits with add-on riders, including waiver of premium, accidental death benefit, disability benefit, and protection against critical illnesses.
As insurance plans are specifically chosen on the basis of their benefits, then Term Insurance Return of Premium also offers a set of advantages to the insured, such as:
Death Benefit
Like a standard term insurance plan, Term Insurance Return of Premium offers a death benefit where the sum assured amount is given to the nominee assigned by the policyholder.
Survival Benefit/Maturity Benefit
This plan stands unique with this differentiating factor. Term Insurance Return of Premium allows the survival benefit or popularly known as maturity benefit where the policy is returned the entire premium amount during the policy.
Tax Benefit
Investing in Term Insurance with Return offers a proposition to save tax under 80C of the Income Tax Act, 1961 where the premiums paid for the policy are eligible for tax deductions of up to Rs. 1.5 lakhs per annum. Additionally, the sum assured payout to the beneficiary is exempted from income tax under Section 10 (10D) of the tax laws
Surrender Value
Term Life Insurance with Return of Premium gives freedom to surrender the insurance plan to the policyholder if he/she plans to discontinue the plan. In that scenario, the surrender value is given to the policyholder depending upon the payment done by him/her.
We understand that making a selection for any plan or its benefits is always crucial to leverage the maximum profit of the plan. Likewise, it is also important to understand that who should take the Term Insurance Return of Premium plan.
Pure term insurance and the return of premium are variants of term insurance that come with their own set of extra perks and limitations. So, it takes a lot of work to select which one buyer should purchase. Here, we've simplified the comparison between pure term insurance and the return of premium to help buyers end their confusion.
| Pure Term Insurance Plan | Term Plan with Return of Premium (TROP) | |
| Definition | It is a part of life insurance that provides life coverage for a specific term. Under this plan, buyers only get death benefits and don't receive survival benefits if they complete the policy tenure. | It is one of the variants of term insurance where the policyholder receives life coverage for a specific term. Under this plan, the insured person opts for both Death Benefit + Survival Benefit. |
| Surrender | If policyholders surrender their policy before the tenure, their cover will be ceased, and they end up getting nothing. | If policyholders surrender their policy before the tenure, their cover will be ceased, and they will get a small amount of the premium paid. |
| Tax Benefits | Under this plan, policyholders get these benefits:- Sec 80C - Premium paid eligible for a tax deduction Sec 80D - Critical illness add-on rider eligible for a tax deduction Sec 10(10D) - Death benefit is tax-free |
Under this plan, policyholders get these benefits:- Sec 80C - Premium paid eligible for a tax deduction Sec 80D - Critical illness add-on rider eligible for a tax deduction Sec 10(10D) - Death benefits and maturity benefits are tax-free |
| Cons | Keep that in mind: the premium will keep increasing as the policyholder's age increases, and no maturity benefits will be paid if the insured person clears the policy tenure. age increases, and no maturity benefits will be paid if the insured person clears the policy tenure. | The premium is expensive as compared to the basic term plan. However, the premium will keep increasing as the policyholder's age increases, but you'll receive a refund of all the premiums paid if you outlive the policy tenure. |
| Who should buy it? | To protect your family members financially in case of your demise so your loved ones can freely manage their finances in your absence. | If you're living a healthy lifestyle with no medical history or harmful addiction, then you should consider buying a term insurance plan with a return of premium. |
Term Insurance with Return of Premium is a great option for the people who are looking for protection for their families as well as an investment plans for themselves. Thus this plan gives a complete win-win situation to the policyholder by giving one or another benefit.
Check and compare plans from 21 IRDAI-approved term insurance providers before purchasing a term plan.
Know More About Term Insurance Companies
Know More About Life Insurance Companies
See More Term Insurance Articles
See More Term Insurance Articles
April 20, 2024
Review: HDFC Life Insurance Term Policy HDFC Life Insurance Term Policy stands out as a beacon of financial security and peace of mind in the ever-changing landscape of life insurance offering...
April 8, 2024
I am very grateful to the insurance experts of PolicyX and Mr. Ankur, who kindly helped me settle the claim of Aegon Life Insurance. Thanks again, I& 039;ll always remember this favor.
April 8, 2024
I bought a Bajaj Allianz Life Insurance through PolicyX, and I must say the level of communication and assistance I have received has been truly impressive.
April 8, 2024
Got ICICI Pru iProtect Smart term insurance plan via PolicyX; so far, I& 039;ve hassle-free renewal service and have not faced any kind of nuisance.
April 8, 2024
The PNB MetLife Mera Term Plan Plus I& 039;ve bought it at a low premium, and it is fully satisfactory to me. The insurance expert of PolicyX is too polite, and their online buying facility red...
March 28, 2024
I would like to inform you that my maturity claims have been settled by SBI Life Insurance on 04.15.2024 and thanks all of you for helping me throughout the claim process.
March 28, 2024
I& 039;m writing this review to let you all know that I& 039;m very satisfied because I got my kotak mahindra life insurance policy today as a result of your team effort.
March 18, 2024
I had to add some riders to my Sbi life insurance, policy.com team helps to me to understand which rider is more important and which is not. Resulting helps me to save lots of money. Happy with...
Sahil is a passionate content writer with over two years of expertise in the insurance domain. He uses his knowledge in the field to create engaging content that the customer can relate to and understand. His passion lies in simplifying insurance terminology, ensuring a hassle-free understanding for potential policyholders. With his outstanding collaborative efforts with people, he understands different perspectives and keeps readers' viewpoints at the forefront of his content writing approach.
