Insurance: Why should you buy term plan with return of premium?

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Unit linked insurance plan) because these plans double as investment instruments as well. They argue that the premium paid towards a term plan is a sunk cost, so it is better to opt for an investment instrument. ALSO READ: IRDAI proposes to raise free look period from 15 to 30 days.

Details here Another alternative, meanwhile, for policyholders is to buy a term plan with return of premium, or TROP, wherein policyholder stands to get the premium back upon the maturity of policy. A term plan with return of premium (TROP) is quite similar to a standard term plan. It is just like a life cover and offers a death benefit to the policy’s beneficiaries.

However, the key element that makes it distinct is the return of premium along with maturity benefit applicable. So, the policyholders stand to benefit from a term plan with return of premium by making the payment of additional premium. ALSO READ: What survival period means for your critical illness plans? You can choose the required sum assured and policy period and pay the premiums, accordingly.

After the policy gets mature, the insurer returns the premiums paid to the policyholder. There is no denying the fact that TROP plan is similar to a term plan but offers an added advantage of return of premiums paid. Rhishabh Garg, the Head of Term Insurance at Policybazaar, says that while the fundamental purpose of a term plan is to ensure financial protection for dependents upon the policyholder's demise, a term return of premium (TROP) plan offers an added advantage.