A Term Plan with Return of Premium (TROP) is a unique life insurance policy that combines risk coverage with an investment component. Term insurance is a necessity for every portfolio, especially if you wish to safeguard the financial futures of your loved ones. However, there are pure-term plans that offer life coverage for a fixed tenure, with a lump sum payout to the policyholder’s nominees upon his/her demise within this period. There is also another option, i.e. choosing a term plan with return of premium. These plans may be helpful for you in several scenarios. Here’s taking a look at the same in this article.
Why You May Need a Term Plan with Return of Premium
A term plan with return of premium has a simple premise attached to it, i.e. the premiums that you pay till maturity (if you survive the policy duration) are paid back to you. Here are some of the reasons why these policies are worth considering on your part.
- Guaranteed premium return– You will get the guaranteed premium amount that you have paid in case you survive the tenure. However, this amount will exclude taxes, premiums for riders, or other underwriting premiums that you may have paid.
- Future financial safety– Making money from this plan is not the end goal. What it does is give you a financial safety net for your family in case of your unfortunate demise within the policy period. Alternatively, if you survive the policy period, then you can use the money to invest in your family’s financial security as well since it is an assured amount.
- Multiple premium payment choices– A term plan with return of premium comes with various payment options, including monthly, yearly, half-yearly, and quarterly payments. You can choose the one that suits your specific needs and financial circumstances.
- Tax Benefits -You can get tax deductions up to Rs. 1.5 lakh on the premiums you pay under Section 80C of the Income Tax Act. If the sum assured has to be paid to the nominees in the event of any unfortunate situation, then it is also tax-exempted under Section 10 (10D), subject to certain conditions.
- Meet Future Financial Goals– If you are healthy and are confident of surviving the plan tenure, then you can count on this money to meet future financial goals or big-ticket purchases. These plans will return your money without taxes since it is not perceived as income. Think of it like an automated plan to help you build up your savings or cash value that will come in handy at a later stage. It may also help in paying off loans or repaying liabilities.
A Term Plan with Return of Premium Could be Just What You Require
Assess your financial circumstances, age, and future goals before you purchase a term insurance plan. If you are young and are getting coverage at a relatively early age, then you may consider a term plan with return of premium for its guaranteed returns in the future. This may help you meet future financial needs or aspirations with ease.
Remember, term plan with return of premiums can be a prudent choice for those seeking both life coverage and a guarantee of premium return at maturity.
Disclaimer –
Insurance is a subject matter of solicitation. The information provided on this website cannot substitute for the advice of a licensed professional.
COPYRIGHT NOTICE –
© Dipika Singh. The unauthorized use or duplication of this material without express and written permission from this site’s author is strictly prohibited. Excerpts and links are used, provided that full and clear credit is given to Dipika Singh (Gleefulblogger). With the right and specific direction to the original content.
