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.
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.
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.
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.
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.
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.
Our insurance experts at PolicyBazaar have come up with handy tips to smoothen your insurance buying journey.
We are not only an insurance portal and dedicated towards offering low-cost premium quotes but we also pride ourselves on offering top notch customer services. Our well-versed licensed agents will be happy to supply the information you need so that you choose the best term plan.
PolicyBazaar provides knowledge and information you need to make best financial decisions. Submit basic details like your name, annual income, coverage, etc, to compare and find lucrative plans and prepare for life’s unexpected twists.
It is our business to secure your future!
Thanks for the help that you rendered to me for buying the product appropriate for my needs. Appreciate your help.Manish Dandona
I am extremely satisfied with the overall experience on Policybazaar.It was indeed a perfect choice to go with Policybazaar in the first place for my requirement of Insurance. I would definitely be ad..Indranjan Bhanja
It has been a wonderful thing to get policies via policy bazaar as they are best priced than the local vendors. The support was really good from policy bazaar team.Nirav Vaidya
I would like to thank Policy Bazaar for providing necessary information and guidance regarding term insurance policies.Rajeev Sharma
I am very happy to have bought this policy via Policy Bazaar,With out your constant help and regular followups,I would have not been able to get my Insurance matters in order.Chandu Nannapaneni
Thanks to Policybazaar for suggesting term policy. I appreciate your great supportJiwan Singh
Keep up the good work! will surely recommend Policy Bazaar to my peers !.Raj Patel
I would like to thank PolicyBazaar for assisting me in taking a wise decisionPunit Sharma
I must say that for buying any new insurance , Policybazaar would always be my 1st choice. You guys are doing a good job.Vipin Pagey
I appreciate the service and support in helping me buy. Hoping that this service will continue in future as well for hassle free transactions.Prakash Singh
I am pleased with the services and guidance provided by policybazaar in choosing and buying the term planVivek Chauhan
I almost bought a term policy from Agent. Thanks to Policybazaar, I came to know that the premium I am paying for this policy to agent is much more higher than online policy. I would not hesitate to c..Gyan Sinha
Thanks for all your support . Policybazaar team has been pretty diligent with the follow ups and my request. Appreciate the good work.Mridul Pokhriyal
Its pleasure to have this kind of services from Policybazaar. Great services provided for my life protection policy issuance.Mihir Lad