What is TROP or Term Plan with Return of Premium?
A term plan with a return of premium works the same way as a term insurance plan, offering a risk cover to the policyholder and their family. However, the main distinction between a term plan and a term plan with a return of premium is the maturity benefit offered by the latter.
Under a term plan with return of premium (TROP), you will be eligible for a return of the premiums at the end of the policy term, if you survive that period. Like a pure term plan, a TROP also offers death benefits to the policyholder’s family in the event of death. Hence, a term plan with a return of premiums offers dual benefits under a single insurance plan.
While pure risk term insurance plans are meant for those seeking to protect their loved ones’ financial future, term plans with return of premium also serve the same purpose but with the added benefit of receiving the sum of all the paid premiums on maturity, subject to the policyholder surviving the policy term.
However, it is important to know that the premiums you pay towards a TROP policy will be slightly higher than that of a pure term insurance plan. This is why it is advisable to choose a TROP that enables you to pay reasonably priced premiums and enjoy the coverage of the policy. And like a term plan, the TROP should also offer sufficient coverage to your family so that their financial future can be well-protected.
How does a Term Plan with Return of Premium Work?
Term insurance with return of premiums offers additional benefits over a pure risk term plan cover and the flexibility of paying the premiums. Here, the policyholder can choose to pay the premiums as per a premium payment frequency of their choice. Tata AIA Life Insurance Sampoorna Raksha Supreme plan allows you to pay your renewal premium in Annual, Quarterly, Half-yearly, Monthly and Single payment option.
In a pure term plan with the If the policyholder passes away during the policy term, the family will receive the sum assured as a death benefit.
However, if the policyholder survives the policy term, they are entitled to a refund of the premium amount paid. For the maturity benefit in the term plan with returns, the policyholder can choose to receive the return of premiums payout as a lump sum or as an income option or a combination of both payout options, as they prefer.