Term insurance plans are the most affordable kind of life insurance policy. The life cover offered is valid for a specified period, known as the policy term. In case the insured person passes away during the policy term, the insurer pays out the financial benefits due under the plan. However, in case the insured person survives the policy term, no payouts are offered. This makes term plans a pure life insurance policy, which is why they are so inexpensive.
But is it possible to get your premiums back? As it turns out, term insurance with a return of premium offers exactly this advantage.
A term insurance plan with a return of premium is similar to a standard term insurance plan in many ways. In a TROP too, you purchase a life cover and pay premiums for the same regularly. The life cover offered by the insurer is valid over the policy term. And in case of your demise during this period, your nominee gets the death benefits guaranteed under the plan.
The key point of difference between a regular term plan and a TROP, however, lies in the payouts offered at the end of the policy term. In case you survive the policy term, a term plan with the ROP feature will give you your premiums back at the end of the policy duration.
This feature can be very useful for people who want to receive some funds back at the end of the policy term. If you are one of them, all you need to do is opt for this additional feature in return of a nominal extra premium when you purchase your TROP.
To create the right financial plan for your future, you need to first understand how term insurance with return of premium works. An example can make the details of a TROP clearer for you. So, let us look at a hypothetical scenario, as explained below.
Say, a 30-year old person wishes to secure the future of his family today. He is married and has two children. So, taking into account their current and future needs, he decides to purchase a term plan with a cover of Rs. 1 Crore.
Here are the particulars of the plan:
The premium for the plan comes up to Rs. 25,000 per year.
He opts for the coverage for a period of 30 years, up to the age of sixty.
However, he does not like the idea of not receiving any sum back if he survives up to the age of sixty. So, he opts for the Return of Premium feature. As expected, he lives well past the age of sixty. So, when he attains the said age, his policy term comes to an end.
At this point, he will receive a payout of Rs. 7.5 lakhs (i.e. Rs. 25,000 x 30 years).
If he had not opted for the TROP plan, he would not have received any amount at the end of the policy term.
So, you now know the benefits of the best term plans with return of premium. But how do you figure out if a TROP is the right kind of insurance plan for you? As it turns out, the Return of Premium feature may be ideal for people in every life stage. No matter what your profile may be, you can benefit greatly from a term plan with ROP.
In case you are unmarried, chances are that you have no dependents. In some cases, your parents may be financially dependent on you after they have retired. A term plan can ensure that even in your absence, they are financially secure. Furthermore, the Return of Premium feature is handy if you survive the policy term. You can use the premium returned to meet any major life goals you may have at that life stage.
In case you are married, your spouse may be financially dependent on you. Even if your spouse is a working professional, your common goals may rely on both your incomes. A term plan with return of premium protects your spouse in case something untoward happens to you. But if you do outlive the policy term, you and your spouse can use the ROP payouts to settle any pending debts or check off your life goals.
Lastly, if you are married and have a child or children, a term insurance plan helps you secure their future at an extremely economical cost. But the added Return of Premium feature is an extra benefit you can opt for, since it will ensure you get your premiums back at the time of maturity. And these payouts can be used to fund your children’s higher education or pay for their wedding.
The Return of Premium in term life insurance is a particularly useful feature in this day and age. The average life expectancy is increasing due to technological and scientific advancements. So, as more people live past the age of 60 or 65, it is a sensible choice to opt for the ROP feature.
If you too want to ensure that you receive some payouts when you survive the policy term of your term plan, you can buy a TROP. And you can find the best term life insurance with return of premium add-on at Finserv MARKETS. Visit the website to compare the term insurance plans available and secure your family’s future in time.
The Return of Premium feature is an extra benefit that is not available in regular term plans. You can get this advantage in return for a nominal additional premium.
The premiums returned at the end of the policy tenure are exempt from tax, as per the provisions of Section 10(10D) of the Income Tax Act, 1961.
Yes. Term plans with the ROP feature offer tax benefits under section 80C. The premiums that you pay over the years are deductible from your total taxable income, up to Rs. 1.5 Lakhs each year.
No. If you want to enjoy the ROP feature, you need to opt for it at the time of purchasing your term insurance plan itself. You cannot opt for it at a later date.
Yes. TROP policies offer various add-on riders like the critical illness rider, accidental disability rider and more. The exact list of riders offered depends on the insurance provider.