Term plans with return of premium (TROP) are a variant of term/ pure protection plans with most of the features being common between the two plans. TROP plans come with an added advantage of income replacement along with the benefit of refund of entire premium amount at maturity if the policyholder survives the policy term. It is different to traditional term plans, where insurers pay only when the insured dies.
Consider a policy with Rs 20 lakh cover for 10 years for which the yearly premium is Rs 2000. If the insured dies, the family will be paid Rs 20 lakh (sum assured). However, if the insured survives the term, insurer will return the entire premium amount i.e, Rs 20,000 (Rs 2000x10).
Technically, a term plan with return of premium is a non participating term assurance plan. When compared with a term plan following features are notable:
There is a one segment of customers who expect to get returns from an insurance policy. To cater to this section, companies have launched TROP plans. This type of term plan provides dual benefit. Firstly, they give you peace of mind by providing financial security to the family in case something unfortunate happens. Secondly, the plan offers premium return, which means total premiums paid during the tenure of the policy are paid back to the policyholder.
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What is Term Return of Premium Insurance Plan?
Term Return of Premium Insurance Plan is like Term Plan but with the added advantage of Premium Refund at the end of the plan if the Risk Cover has not been paid during the tenure of the plan. Since TROP Plans have Premium Refund feature, they will have slightly higher premiums when compared to Term Plans.
Why Term Return of Premium (TROP) Insurance Plans?
Though the adequate insurance cover need varies from one person to another; as a thumb rule your TROP insurance cover should be at least 15 to 20 times of your gross annual income. Depending upon your age, the multiplier will decrease as you grow older.
How much life cover would you like?
Though the need varies from one person to other, as a rule of the thumb, your term insurance cover should have at least 20 times of your gross annual income. Depending upon your age, the multiplier will decrease as you grow older.
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