Term insurance plans are becoming popular amongst investors to invest and secure one's future financially. But before we go ahead and discuss about term plan further, it would help to explain the definition of a term plan with return of premium. A term plan is an agreement between the investor and the insurance company. If there is a mishap wherein the life assured meets an untimely death, their family will receive a certain amount of money from the insurance company.
Benefits of a Term Insurance Plan
- Death Coverage: There is no doubt that accidents and mishaps don't knock before coming. They can happen anytime and anywhere. Term Insurance covers death of the insured as a means of compensation or sum assured for income loss to the family.
- Tax Benefits: According to current tax laws, the premium paid by the investor for the term insurance plan is eligible for tax benefits. However, these laws are subject to change from time to time.
- Lumpsum Assured Amount with Low-Cost Premium: Term insurance policy offers a substantial, assured amount of money with a relatively low-cost premium to the investors compared to other life insurance policies.
What is a Term Plan with Return of Premium (TROP)?
A term plan with return of premium (TROP) is an alteration of the term insurance plan. Just like a term insurance plan, it provides financial security for investors. One additional feature of the term plan with return of premium is that it allows for the facility of return of premium in case the investor survives the policy's tenure. However, please note that premiums are generally higher in TROP as compared to a term plan without return of premium.
Let us understand how the term plan with return of premium works with an example.
Suppose you invest in term plan with return of premium with a cover of Rs. 50 lakhs for 20 years, and the yearly premium paid by you is Rs. 5000. If the investor dies during the policy tenure, then his family will be paid a sum of Rs. 50 lakhs by the insurance company. The total amount of premium paid by the investor will be Rs. 5000 multiplied by 20 years, i.e., Rs. 1,00,000. In case the investor survives the tenure of the term plan with return of premium, the insurance company will return the total premium amount of Rs. 1,00,000 to the investor.
Let us know why getting a term plan with return of premium is a great choice in India.
Benefits of Investing in Term Plan with Return of Premium
A term plan with return of premium is an ideal insurance plan for all those who wish to provide financial security to their family members with the additional benefit of getting the premium amount returned if the investor survives the tenure of the policy. Below are a few of the benefits of investing in a term plan with a return of premium.
- Return Of Premium Amount on the Maturity: Term plan with return of premium offers the facility where the insurance company would return the amount of premium invested by the policyholder, in case they survive the policy's tenure period.
- Investors Can be Worry-Free: The investor doesn't have to worry about losing their hard-earned money in case they survive the policy tenure. If they survive the maturity period of the policy, the insurance company will return the premium amount paid by the investor.
- Tax Benefits: Term plan with return of premium offers tax benefits to the investor. The premium paid by the insurer is eligible for tax benefits as per current tax laws. However, these tax laws are subject to change from time to time.
- Rider Benefits: Term plan with return of premium additionally offers rider benefits to the investors. This further enhances the coverage of the policy for the investor. Please note that riders are not mandatory come at additional cost and might increase the overall premium cost.
Smart Financial Planning: Make informed decisions with our Term Insurance Calculator. Determine the right term insurance coverage to ensure your family's well-being.
Wrapping Up
A term plan with return of premium plan is an ideal policy for investors looking to secure their family financially and avail the facility of getting the premiums paid back to them if they survive till maturity.
Disclaimer:
*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.