Term Plans with Return of Premium in India: A Complete Guide

10-June-2021 |

Term insurance is a popular insurance product among policy buyers. It is a great tool that can help cover future eventualities and secure your family. Let’s explore how it works.

 

What is a Term Plan with Return of Premium?

 

A term plan with a return of premium, abbreviated as TROP, is a variant of term insurance that caters to the needs of insurance seekers that look for maturity benefits with their plans. Like any other term insurance plan, it guarantees1 financial protection to the family against any casualties. However, TROP differs from a standard term plan as it offers the benefit of the return of premium as a survival benefit to the insured if he/she survives the term of the policy.

 

How does a Term Plan with Return of Premium work?

 

Consider a policy with ₹20 lakh cover for ten years with a yearly premium of ₹2000. If the insured dies, the family will receive a sum of ₹20 lakh. But if the insured survives the policy term, the insurer will return t he entire premium amount paid, i.e., ₹20,000 (2000 x 10).

 

What are the benefits of a Term Plan with Return of Premium?

 

We can compare the benefits of TROP over a standard term plan.

 

  • While a term plan offers just death benefits, TROP provides the benefit of the return of premium as a maturity benefit after the policy term.

 
  • As the policyholder is guaranteed1 to get back the entire premium amount, the premium rate in TROP is higher than a pure term insurance policy.

 

Why invest in a Term Plan with Return of Premium?

 

A term plan with a return of premium offers the combined benefit of premium return and insurance coverage. Let us discuss the top reasons to buy such a policy.

 

  • Return on the end of the policy term: If the insured person survives the term, TROP offers a premium refund at maturity. The policyholder is eligible to receive the total amount of premium on completion of the tenure if he/she survives the entire term. It makes TROP ideal for insurance seekers who want the dual benefits of insurance cover and refund of premium on maturity.

 

  • Assured Returns on Premiums: With a return of premium plan, the policyholder gets assured returns on the total amount of premium paid. That means the insured person is guaranteed1 to get the money back. He/she does not have to worry about the money not being returned to them.

 

  • Option of Rider# Benefit: To enhance policy coverage, TROP offers the option of rider# benefit. Insurance companies provide a range of optional riders# that a buyer can choose. The benefit can be taken up when signing the policy or added later on, as per convenience. It is better to add riders# such as personal accident, physical disability, critical illness, etc., at the time of purchasing the policy. They provide a comprehensive cover from the time of signing the term insurance policy with a return of premium plan at little additional cost.

 

  • Paid-up option for the non-earning investors: A return of premium plan offers a ‘paid-up option’ for those who do not have a fixed source of income. This feature helps the policyholder during those times when he/she is unable to pay the premium amount. The plan continues even if the policyholder defaults on premium payment, though with a lower cover. However, most insurance companies require the holder to pay the premium for a minimum number of years before offering this benefit.

 

  • Premium payment options: TROPs provide a variety of premium payment options - monthly, yearly, and many more. The buyer can select the option that is best suited for him/her. For instance, if a person has just started his/her career, then he/she can choose the single payment option as the requirements.

 

Who can readily avail of a Term Plan with Return of Premium?

 

For this term policy, the minimum age limit for entry is 18 years, and the maximum limit can go upto 65 years. The age of the buyer and various other factors determine the premium rate. Anybody can purchase the plan. It does not matter whether they are single, married, or married and have children. A person can easily buy an online term plan after comparing it with other plans of interest.

 

 

What is the tenure of a Term Plan with Return of Premium?

 

A term policy like this offers cover only for specific periods - 10, 15, 20, 25, or 30 years TROPs can offer a maximum maturity age upto 100 years.

 
Tata AIA Life Term Insurance Plans

 

The Tata AIA Life Insurance Term Plan is an affordable, customizable and feature-packed life insurance plan. With our term insurance plans, we provide accelerated payouts in case of diagnosis of a terminal illness. You will also get discounted rates for a higher sum payout. Certain term plans offered by Tata AIA also guarantees1 the return of the payment after the end of the policy term.

 

To sum up

 

Term insurance plans can provide attractive life cover at the lowest premium amounts. But having a return of premium plan can guarantee1 the insured to get back the premiums too. So why are you waiting? Get insured right away!

 

L&C/Advt/2021/Jun/0836

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Disclaimer
 
  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan and it will be subject to Company’s underwriting and acceptance.

  • This document is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. This document is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this document is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • For more details on risk factors, terms, and conditions, please read the Sales Brochure carefully before concluding a sale.

  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch.

  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry.