
TERM PLAN WITH RETURN OF PREMIUM
Term insurance with ROP feature also offers benefits such as waiver of premium benefit, accidental death benefit, disability benefit, and protection against critical illnesses.
Nowadays, most people look for insurance plans that can provide a higher life cover at the lowest possible cost of the premium. Term plans fulfil this criterion. However, given the fact that there are no maturity benefits on the policy, many are discouraged from purchasing a term insurance plan.
This made life insurance companies introduce term insurance plans with return of premium (or ROP) additional benefits in them. In other words, a ROP (term insurance with return of premium optional benefit) is a variant of term insurance plans that provides both a death benefit (in case of an eventuality) and a maturity benefit by returning the premium invested.
What Is Term Plan With Return of Premium?
TROP refers to Term plan with Return of Premium option. This plan is same as any other standard term insurance plan with one difference of return of premiums option available i.e. survival benefit at the end of the policy term. The primary objective of any life insurance policy is to provide financial protection to your family in case of any unfortunate event in your life.
The primary objective of any life insurance policy is to provide financial protection to your family in case of any unfortunate event in your life. Life insurance plans usually fall into two categories:
1. First in which you can grow your money along with a life cover.
2. Second, which is meant to provide only financial protection to your family called term insurance plans.
In the case of term insurance plans, there will not be any return on investment (ROI). However, the premiums are also nominal. Term insurance plans primarily to fulfil our life insurance needs only by providing a significant amount of money to the nominee in case of the insured’s unfortunate demise.
Most, term insurance plans do not offer any survival or maturity benefit for the policyholder. However, a term insurance plan with return of premium assures the return of the premiums paid for the life cover if you survive the policy term*.
For instance, Mr. Kumar bought a term insurance plan with a return of premium option for a Sum Assured of Rs 1 crore at a premium of Rs 25,000 per annum* with a policy term of 30 years. In the case of his demise within 30 years of buying the policy (i.e., the policy period), his nominee would receive the Sum Assured of Rs 1 crore.
However, if Mr. Kumar survives the policy term of 30 years; he will receive Rs. 750,000 (25000 x 30)*.