Insurance is a very essential and important part of everyone’s life. It plays a very important role in a person’s life as it will support his/her family in his/her absence and even for the time of his/her emergence. So it is important to know more about the insurance policies before buying it.
Dear friends today I have come up with the topic Term Plan with Return of Premium .
Term insurance plane is a good choice amongst all insurance buyers. It is a simple plan offers financial coverage for a certain period of time. Even though a basic term insurance plan is been highly beneficial for most the individuals or insurance buyers, a term insurance with a return of premium plan can offer more benefits beyond the basic term insurance. A term plan with a return of premium is almost similar to the basic term plan but one feature that sets it apart from the regular term insurance plans is the survival benefit. Policyholders can avail survival benefits and get back the premiums (excluding GST) paid to the insurers. Some other add-on benefits are associated with the plan include disability benefit, accidental death benefit, and protection against critical illness benefit
A term plan with return of premium is similar to a basic term plan. It works as a life cover and provides a death benefit to the beneficiaries of the policy. The key benifit that sets it apart is the maturity benefit applicable on a term plan with return of premium. Policyholders will get benefited from a term plan with return of premium by paying an additional premium.
You can choose the required sum assured and policy period and pay the premiums, accordingly. When the policy matures, the insurance provider will return the premiums paid to the policyholder.
Understanding how a term plan with return of premium works will give you a clearer vision for your financial plans.
For example of Mr. X, a 30-year-old man looking to secure coverage for himself. He is a healthy, without smoking habits or history of medical problems. He opts for a term plan with return of premium and selects a sum assured of Rs. 50 lakhs.The annual premium payable for his plan is Rs. 12,718 for a tenure of 40 years, i.e. till the maturity of the policy. If Mr. X passes away within the policy tenure, the person assigned as the nominee will receive the sum assured of Rs. 50 lakhs.But, if Mr. X survives the policy term, he will be eligible for a maturity benefit under the term plan with return of premium. He will receive Rs. 5,08,720 (12718 x 40) upon maturity of the policy.
Who Can Buy Term Insurance with Return of Premium (TROP)?
The moment it comes to financial commitments such as buying term insurance with return of premium (TROP) plan, each person can have different objectives in life. There are a number of personal factors such as your age, income source, lifestyle habits and medical conditions and so on, analysing your financial profile based on these key parameters you find the right policy.So, if you plan to purchase a term plan with return of premium, you have to examine the benefits offered against such factors.
Largely, TROP can be a preferable choice for people the following categories:
Unmarried
If you are unmarried individual, you may have the financial responsibilities towards your old parents, especially if your parents are retired. Buy a term plan with return of premium policy. In the unfortunate case of your demise, your parents expenses will be taken care of with the death benefit of the policy and you will have the peace of mind that they will be financially independent even when you are not around. In the case of your surviving throughout the total period of the policy term, you can have the satisfaction of receiving back the premiums paid throughout the TROP tenure.
Married with No Children
If you are a married person, and if you don’t have children and at the same you’re your spouse is solely depending on your source of income then you can consider a term plan with return of premium. This policy will create a financial support system for her to secure her future against any eventualities. And at the time of maturity you will be benefited from the policy is a bonus for you.
Married with Children
As a parent you will have a broad set of financial responsibilities to undertake for the well-being of your children. Saving up for your child marriage, higher education and other life goals is a crucial aspect of your investment plans. In case if you are the only earning member of the family, your spouse’s and children’s well-being is also to be considered.
It can be heavy on your pocket to manage the current expenses and put a large sum aside for the future. So Therefore, the assurance of a maturity benefit with a term plan with return of premium can be helpful.
Benefits of Term Plan with Return of Premium
Let’s take a closer look at the benefits of a term plan with return of premium:
ROP Benefit
Many policy buyers are discouraged from buying a term plan because there is no maturity benefit. Introducing a policy that offers option of a term plan with return of premium available as an alternative. The ROP (term insurance with return of premium benefit) allows policyholders to stay reassured.
Death Benefit
When a person buys term plan with return of premium, the primary purpose is life cover. They want to create a financial shield over their family against unpredictable circumstances. The death benefit offered with TROP helps the policyholder’s family to manage their expenses during a crisis.
Tax Benefits
Purchasing a term plan with return of premium means makes a person eligible for tax benefits. You can avail of the benefits as per the prevailing tax laws. Under Section 80C and 10 (10D), the premium paid towards the term plan and the benefit amount are tax-free.You can get a tax deduction of up to Rs. 1.5 lakhs on the premiums paid for a term plan with return of premium.
Why Should You Choose A Term Plan with Return Of Premium Option?
Due to the increasing cost of living and responsibilities in life, each and every one of us is looking for ways to manage money efficiently. The financial instruments that offer an opportunity to build wealth and get life security can be an excellent choice to achieve that. Term plan with return of premium option also provides additional benefits such as waiver of premium, accidental death benefit, disability benefit, and protection against critical illnesses. Investing in TROP can bring overall protection for policyholders. A policy buyer may find it difficult to choose between the several insurance products available. Choosing on the basis of one deciding factor, whether it is cost or policy period may not be favourable. Therefore, make sure to consider the benefits of a term plan with return of premium to be satisfied with the investment.
Term Plan with Return of Premium Features
1. Affordability
Term plan with return of premium may be slightly more expensive than a regular term plan. However, the premiums paid for TROP are returned as maturity benefit and are exempted from taxation.
2. Premium Payment Options
As the policyholder, you can choose the suitable sum assured under term plan with return of premium. Furthermore, you can also select the best-suited premium payment option from among these:
· One-Time Payment
The entire premium for TROP is payable as a lump sum amount in one go, instead of distributing it over extended duration.
· Regular Payment
Under this premium payment option for TROP, you pay premiums at regular intervals throughout the policy tenure. You can choose to pay them on an annual, half-yearly, quarterly or monthly basis.
· PaymentTill 60
This option under term plan with return of premium allows you to pay off the premiums till the age of 60 years, while the plan extends till 85 years of age.
· Limited Pay
You can pay the premiums for a fixed number of instalments under the limited pay option for TROP. Please read sales brochure before proceeding for purchase.
3. Surrender Value
After purchasing the term plan with return of premium, if you discontinue premium payments or surrender the plan, you will receive a surrender value. The surrender value of TROP is subject to the following conditions, depending on the premium payment option:
· For TROP with Single Premium variant, the surrender value is applicable after payment of a single premium.
· For TROP with Limited Pay variant and Regular Pay variant, it is applicable on payment of premiums for two full years.
The surrender value is the higher of Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV)
