What is Term Plan with Return of Premium (TROP)? Should you Buy it?

The world around is full of uncertainty and chaos. So, it is your primary responsibility to protect you families financially and emotionally. A good financial plan is necessary to do so. It acts as an emergency fund and plays a vital role in protecting your family in case of uncertainty.Term insurance with return of premium is one of the best plans in this regard. It is the purest insurance policy which provides coverage for emergencies.

Term insurance with return of premium

In this plan the premiums paid are returned at the term end. The remaining features are same as traditional term insurance.

How does a term insurance with return of premium plan work?

Everyone can avail this feature from the standard term insurance policy. The policy usually lasts for 10, 20, 30 or longer years of term. Here is how the policy works:

• One pays premium periodically which helps to keep the policy in force.
• When the policyholder survives throughout the term all the premiums they paid get refunded at the end.
• But if the policy is cancelled policy holder may not receive the premiums back. This completely depends on the insurance company and the terms of the policy.

What is the average cost of term insurance with return of premium?

Since this policy provides premium back, the average cost is normally more than a basic term insurance policy.

Advantages of best term life insurance with return of premium

• The policy provides a money back guarantee.
• This refund premium amounts are also not taxable, as per current tax laws (which are subject to change).
• This acts as a savings vehicle since the premiums are returned.
• The policy offers a guaranteed amount (provided all due premiums have been paid and policy is in force) and is good for your family.

Differences between term insurance and term insurance with return of premium

Survival Benefits

Traditional term insurance plan doesn't provide any survival benefits to the policy holder. However, TROP returns the premiums once the policy holder outlives the term given in the policy. This can be pretty helpful since this amount can be used for the retirement.

Returnable

When a person stops paying premium, protection is no longer available under the traditional term insurance plan. But in case of Term Plan with return option, policy holders get an option to discontinue the payment (however, this is not offered in all TROP policies). You can also select to get all the premiums paid till the date with the deductions mentioned. So, it is crucial for the policy holder to discuss about these deductions before signing for the policy.

Continuous Protection

In traditional term insurance policy, the policy lapses as soon as the person discontinues the payment. This states that nominees will not be eligible to receive any benefits. All the other benefits such as regular income to the family also lapses along with the policy. But in case of a term plan with return of premium the policy continues to stay in effect even if the premium payment is missed. But the policy benefits may get decreased.

It is very important to secure your family financially. Whether you choose a traditional term insurance policy or Term plan with return of premium they provide basic coverage with lump sum pay in case of uncertainty. This amount can help the family to meet their expenses as a regular income. There are several additional Riders available which help to increase the weightage of the policy for increase in the premium amount. When a person starts early, they get different options at pocket friendly premium rates. So, starting early is the key.