Term insurance offers a pre-decided sum assured in the case of an unfortunate demise of the insured during the policy term. It can protect your loved ones and offer them a life of dignity and financial independence. However, it lacks a cash value component. When the plan matures and the policyholder outlives the term, there are no maturity benefits.

A Term Plan with a Return of Premium (TROP) helps address this problem. Let’s find out more about this plan and why you should consider buying it for your life insurance needs.

What is Term Insurance with a Return of Premium (TROP)?

A term plan with a return of premium is a type of life insurance that provides financial security to your loved ones in your absence. In case of an unfortunate event during the policy term, the plan pays a fixed sum assured to the nominee. However, if the policyholder outlives the term and no claim has been made, the plan returns a percentage of the premiums back to the policyholder.

This helps the policyholder cover the cost of insurance and helps them cater to their long-term financial needs.

5 Reasons to consider a TROP

Below are five reasons to purchase a term plan with a return of premium:

Financial protection for your loved ones

A term plan with a return of premium ensures that your loved ones are financially safeguarded after you with an assured life cover^`. If your plan is active and all premium payments have been made on time, your nominee will receive a death benefit in case of an unfortunate incident. This can help them cover their necessities and cater to future financial goals.

Return of premiums

Apart from financial protection, a term plan with a return of premium also offers additional financial benefits. The policyholder receives the maturity benefit on outliving the policy term. The plan returns all the premiums paid at the end of the policy term. This is like receiving a refund that can help you cover your financial needs in the future.

Option to enhance coverage at different life stages

A term plan with a return of premium is a flexible term insurance plan that allows you to customise the plan according to your financial needs and changing circumstances. For example, you can adjust the coverage if you get married. You can also enhance your coverage when you have up to two biological children or if you adopt up to two children.

The plan ensures that you are able to accommodate your increasing financial needs as you get older and your family grows. This ensures complete financial protection for your entire family without any hiccups.

Protection against illnesses

Another lesser-known benefit of the term plan with a return of premium is that it can provide financial protection against healthcare costs. A term plan with a return of premium offers additional riders that can be added to the base plan to enhance its coverage. This rider offers financial security against several major and minor illnesses.

The rider can be bought at an additional premium and ensures that you have the necessary funds to cover the costs of treatment of life-threatening illnesses, such as cancer, heart ailments, kidney issues and more.

Advantages of choosing a term plan under MWPA

A term plan with a return of premium is protected under the Married Women’s Property Act (MWPA). This can offer significant benefits to the family. For instance, the act ensures that the death benefit received by the nominee is protected from creditors and solely available for use by the designated nominee. It also helps protect the rights of women nominees, ensuring other family members do not claim a stake in the benefit in case of the husband’s absence.

Benefits of Term Plan with Return of Premium

Below are some benefits of purchasing a term plan with a return of premium:

A financial safeguard

A term plan with a return of premium acts as a financial safeguard for your family and protects their future. It can help them live with dignity and pursue their financial goals.

Flexibility in choosing a plan

A term plan with a return of premium offers flexible features, such as the option to enhance coverage, opt for regular or lump sum payouts and more. The plan can be customised to suit your requirements easily.

Flexible Premium Payment Choices

You can select a monthly, quarterly, semi-annual or annual premium payment frequency. Additionally, you can choose from premium payment options, such as single-pay, limited-pay and regular-pay.

Tax benefits

A term plan with a return of premium qualifies for tax benefits. You can claim a deduction of up to ₹ 1.5 lakh for the premiums paid for your term plan subject to conditions prescribed under Section 80C^* and the payout received by the nominee is exempt subject to conditions prescribed under Section 10(10D)^* of The Income Tax Act, 1961.

Additional Benefits

A term plan with a return of premium also offers additional benefits like affordability, peace of mind, transparency and ease of structure to ensure optimum convenience.

Conclusion

A term plan with a return of premium offers the best of both worlds - financial protection for your loved ones and return of your premiums if you outlive the policy term. This unique combination makes it a great choice. Moreover, with flexible options, tax^* benefits, affordability and additional riders for enhanced coverage, the plan can be ideal for all ages, incomes and interest groups.