TERM RETURN OF PREMIUM PLANS: Get cover & also your premiums back
A ‘Term Return of Premium’ plan (TROP) is ideal for individuals looking for both life coverage and return on the premiums paid. However, these plans cost twice that of pure term plans because of the maturity benefit. Experts say TROPs are suitable for those who are not sure of their retirement age or dependency of family members on their income at an older age.
In a regular term plan, the individual does not get any maturity benefit if he survives the policy period. However, in a TROP plan, he will get back all the premiums paid if he survives the policy period, which is usually 105% of the total premiums paid. Like a pure term plan, a TROP plan will offer death benefits to the policyholder’s family in the event of death. So, such a term plan offers dual benefits of cover as well as return of premiums .
Like pure term plans, TROP plans also have additional features like the waiver of premium benefit. In case of disability or critical illness, this feature ensures that future premiums are waived off, allowing the policy to continue without financial strain.
Shilpa Arora, co-founder and COO, Insurance Samadhan, says a TROP plan offers the policyholders a unique blend of term insurance with a regular savings component. “The plan coverage continues till the end of its policy term, and the premiums are returned when the tenure ends. Individuals have the flexibility to choose this tenure.”
Weigh in the costs
Before buying a TROP plan, an individual should weigh the cost of the policy, returns and the early exit strategy. This will help them understand whether such a plan will suit their needs and allow them to realign their financial plans accordingly. Experts say an individual should select a TROP plan that enables him to pay
