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Embedded with all the benefits of simple term plan, TROP offers income replacement and premium refund at maturity. Compare these cost effective plans at PolicyBazaar before zeroing in on one plan.
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, the 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 the 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 an assured premium return, which means total premiums paid during the tenure of the policy are paid back to the policyholder.
Term insurance return of payment policies, also called TROP plans, are different from term plans as they provide maturity or survival benefits in addition to the death benefits. Let us look at these features a bit more in detail so you can make a proper decision when you are looking for an insurance cover for yourself.
Sum Assured
The sum assured in TROP plans refers to the life insurance cover that the insured person receives when signing up for the plan. The sum assured under these plans is generally higher than what is available for the same amount of premium under the traditional endowment policies. This is because endowment policies provide returns that are higher than the term plans and may also provide the payout over a considerably longer period. TROP policies, on the other hand, just return the premium paid by the insured person over the tenure of the plan.
Survival Benefits or Maturity Benefits
The survival or maturity benefits for a TROP plan is what makes it different from a traditional term policy. Under a term plan, the insured person does not receive any survival or maturity benefits. However, under a simple TROP plan, the insured gets back all the money they had invested as the premium for the plan less any taxes. In addition, in some cases, the insurance company may pay more than the premium paid provided certain conditions are met. For instance, Aviva Life Insurance Company offers a return of 110% or 10% return on the premiums paid in its Aviva i-Shield TROP plan. That means, assuming the person paid a premium of Rs. 39,000 per annum for 20 years, then he would get back Rs. 8,58,000 (Rs. 39,000 x 20 years x 110%) at the end of the 20 years.
Death Benefits
The term insurance return of payment policies offer the nominees the sum assured if the unfortunate comes to pass and the policyholder does not survive the tenure of the policy. Various insurance companies also offer a higher sum that may be calculated as the higher of the sum assured, the maturity benefit, or a certain percentage of the premium paid so far. The companies may offer more benefits depending on the plan or mode of premium payment or the type of cover opted. For instance, policies with regular premium payment options may also have the option to receive a death benefit that is certain times the annualised premium. Moreover, policies with optional riders may have certain additional benefits.
Payment Options
The insurance companies have launched various term insurance return of payment plans that offer flexible payment options. In most cases, the insured person can choose the payment option that suits them best. The standard payment periods are on a monthly basis, quarterly (i.e. every 3 months or 4 quarters in a year), half-yearly and yearly. Some insurers also provide a single premium payment option as well as giving the insured the choice to pay for only a few years (say 10 years) and get cover for a larger number of years (say 30 years). Each payment option has its own benefits. For instance, the monthly payments are smaller in size while the annual ones are obviously higher. The single premium or premium for only a part of the policy tenure are higher sums than the yearly payments but provide the assurance that once they are taken care of, the insured person will not have to worry again about the premium for the Term insurance return of payment plan.
Surrender Value
The surrender value of the TROP plans generally varies depending on the payment option. As a rule, the surrender value is generally more for single premium plans where the entire premium for the policy is paid at the beginning of the policy period. Insurers will have different ways of calculating the surrender value and people who are looking at TROP plans should make sure they know what they are getting as the amount they may receive will probably not be what they assume they will receive.
Paid Up Value
This is a benefit that may be provided under a TROP plan. Under this, as mentioned earlier, the plan continues if the policyholder is unable to pay the premium, though with a lower cover. Most companies require the policyholder to pay the premium for a minimum number of years before they offer this benefit.
Riders
Insurance companies offer various riders in addition to the principal cover. These generally include:
The entry and maturity age varies according to the policies that insurers provide. People looking to invest in a TROP plan should make sure that they get the cover the need up to the age they need. For instance, opting for a 20-year TROP policy at 50 years of age when the maximum maturity age is 65 years does not make sense. The person should opt for 15-year tenure if they want the TROP policy.
Tenure of Policy
Unlike traditional insurance plans that may provide a cover that last for the lifetime, a TROP plan lasts for only a certain period such as 10, 15, 20, 25 or 30 years. Most of these plans have a maximum maturity age below 70 years though some insurers provide cover even beyond 70 years.
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How does health condition affect premium rates?
Premium rates are hugely affected by health conditions. The chances of a healthy person to be hospitalized are very low. In the same manner , a person having some pre-existing condition may have to be hospitalized more than once for which he would have to pay higher premium rates or the disease may also be excluded from the policy coverage.
What do I need to do to surrender my policy?
Either visit the Insurance Company office in person or submit the request online. You can also surrender your policy simply by not paying your premiums.
Can I change the frequency of payment for my policy?
Yes, you can, but only in case of your policy renewals. If you were paying your premium annually (low frequency) you can change your frequency to pay half-yearly or quarterly (high frequency) or vice versa.
How can I change my policy details?
In order to change your policy detail you have to submit a written request either online or by visiting the insurance company office in person.
In case I lose my policy document, how do I obtain a duplicate policy?
ou have to apply for a duplicate copy of your policy from the insurance company. You will also have to pay the necessary fees and execute the indemnity bond in order to get the duplicate policy.
What is the benefit of opting for riders / add-ons?
The main benefit of riders/add-ons is that it provides additional insurance coverage on your existing insurance policy. You can get riders/ add-ons by paying some extra amount on your basic policy premium.
What is the difference between nomination and assignment?
Nomination means the right of the policyholder to appoint another person who will receive the policy money in case of death or unavailability of the policy holder. On the other hand, Assignment is an act of legally transferring the rights of the policy holder (assignor) to another person (assignee).
What details am I to provide about the nominee/s?
While appointing a nominee you have to provide the details including his/her full name, address, age, and your relationship with your nominee. Make sure that the information you provide are correct to avoid any future complications.
Can I change my nominee?
Yes you can change your nominee just by filling up the nomination form and submitting it to the insurance company anytime before the maturity date of your policy.
What is nomination? Who is a nominee?
Nomination is the act of authorizing another person the right to receive the policy money in case of death of the policy holder.
Nominee is the person who, chosen by the policy holder, will receive the policy money in case of the policy holder’s death.
How much premium will be raised in case there are issues with my medical condition?
In case there are issues with your medical condition, your premium will increase. However, there is no fixed percentage of increase in premium. It is completely depended on the insurer’s decision as well as on the policy holder’s actual medical condition. Even you can reject the offer if you do not want the raise in your premium.
Why should you split your desired sum assured between multiple policies?
There are numerous benefits of splitting your money among multiple policies instead of sticking to only one policy. For example, instead of buying a 20/25years long plan you can buy multiple policies with different maturity dates. This will help you manage your finances better through different stages of your life. Moreover, when you have multiple policies, the rejection of claim from one insurer will not matter most as long as you have other back up policies to file your claim. On the other hand if you have only one policy and your claim gets rejected, the entire money would be lost. So it is always better to buy multiple policies instead of one.
Should I pay my premiums through the agent?
You can pay through the agent only if you are sure that he is IRDA authorized and provides you the receipt after your payment of the premium. But it is always better and reliable to pay your premiums directly to the insurance company itself.
What are IRDA guidelines pertaining to claim processing?
According to IRDA guidelines, the company has to process a claim within 30 days. If the claim needs further verification, it should not take more than 6 months to settle. In case the company fails complete the whole procedure within 6 months the company will have to pay interest on the claim amount.
What is IRDA?
Insurance Regulatory Development Authority or IRDA in short is the apex body that oversees the insurance industry in India. Apart from protecting the interests of the policy holders, it promotes , regulates and makes sure that the development of the insurance industry in India is in order.
What are reasons for the rejection of a claim?
Here are a few main reasons for which a claim may get rejected:
• Lapsed policy: Once your policy is lapsed there is no chance that your claim will be paid any more.
• Avoiding Compulsory medical tests: Some insurance plan ask for some mandatory medical tests. If you avoid those tests your claim may get rejected.
• Mandatory exclusion plans: Some policies are pre conditioned to exclude some particular events or loss. If you ask for coverage on such events your claim may get rejected.
• Inadequate or untrue information: If you have not provided some important information (e.g. some pre existing condition) in the proposal form, your claim may get rejected. Similarly If you have provided some false information, your claim will be rejected.
What will happen if my claim is rejected and my nominees wishes to re-apply for it?
If your claim gets rejected your nominee can re-apply for it. For that, he will have to submit a written application to challenge the insurer’s decision of repudiation of your claim. If the nominee is not entertained by the insurance company he can approach the local insurance ombudsman (for claims up to Rs. 20lakhs). He can even move to consumer court and claim for above Rs. 20lakhs. Both the ombudsman and the consumer court have the power to compel the insurer to reconsider his decision.
Who is entitled to receive claim benefit?
The nominee last recorded under the policy is entitled to receive the claim benefits in case of death of the policy holder.
What will happen if death occurs within a year of policy purchase? Will claims be settled?
If death occurs within a year of policy purchase, the insurance company will do a thorough investigation on the matter to strike out any chance of fraudulency or criminal intent. The nominee will get the entire amount of the assured money and the claim will settle within 180 days of submitting all the relevant and necessary documents of the early death claim to the insurance company.
What documents are required for claim settlement?
Following are the documents required for claim settlement:
• Mandatory documents: In case of death claims the mandatory documents include
Original Policy bond
1.Copy of death certificate and self attested by the nominee.
2. Copy of photo identity proof
3.Copy of residential proof
4.Copy of bank passbook of the nominee along with cancelled cheque.
• Additional documents:
In case the policy holder is murdered or killed in an accident, the following documents are required along with the mandatory ones:
1.Copy of FIR
2.Copy of Post Mortem report
In case of non-accidental death of the policy holder, the following documents are required along with the mandatory ones:
1. Copy of medical and legal cause of death
2.Copy of medical reports
3.The certificate issued by the attending physician
4.certificate issued by family doctor (optional)
What's the big deal behind taking a life insurance policy?
