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Term Plan with Return of Premium in India : A Complete Guide
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A detailed guide on Term Plan with Return of Premium

A term plan is one of the most appreciated and lucrative insurance products that gained a lot of attention from policy buyers. This straightforward insurance platform gives your family the utmost protection against unanticipated situations in your absence. A term plan with a return of premium is a variant of a term insurance plan that offers additional benefits to policyholders. Like other term products, term insurance with a return of premium protects your family under any unfavorable situation.

What is term life insurance with a return of premium?

A term plan with return of premium acts as a life cover and offers a death benefit to the nominees of the policy.

By paying additional premium amounts, all policyholders can enjoy the benefits of a term insurance plan with return of premium. You are free to choose the sum assured amount and the policy tenure period. Now, you can pay the premiums at your convenience. Once your policy is matured, the insurer will refund all the paid premiums to the policyholder.

Two types of buyers are interested in purchasing the best term life insurance with return of premium.

  • Buyers who want medium of savings along with life coverage
  • Policy buyers who want life cover to offer additional financial support to their families in the case of their sudden demise

As per your financial needs and requirements, you can choose the best term plan with return of premium that will meet your family’s requirements.

How does the best term insurance plan with return of premium work?

Before investing in term insurance with return of premium plan, you should identify your objective and financial goals. In addition, you should have adequate knowledge regarding how a term plan with a return of premium works. Thus, you will get a deeper vision of your financial strategies.

Let’s explain it with the case of Mr Rupesh, a 28-year-old man who lives with his family in Ahmedabad. Rupesh is planning to expand his family, and that’s why he wants to secure coverage for himself. He is a fit and healthy person without any smoking or drinking habits. Moreover, he doesn’t have any history of medical problems. He wants to purchase the best term insurance with return of premium and selected a sum assured amount of Rs 50 lakh.

If the policy tenure period is 40 years, then the annual premium amount would be Rs. 12,718 for this plan. If Rupesh expires in an unfortunate event within this tenure period, his beneficiary will get the sum assured of Rs. 50 lakhs.

But, if Rupesh survives the policy term, he will get the maturity benefit under the term insurance with the return of the premium plan. He will receive Rs. 508,720 (12718 x 40) once the policy matures.

Who can purchase term insurance with return of premium (TROP)?

Before purchasing the best term insurance with return of premium plan, you need to consider certain parameters like your age, lifestyle, income, and medical conditions.

  • Unmarried:Though you are unmarried, still, you have some responsibilities and commitments towards your parents, especially if they are retired. If you opt for a term plan with a return of premium, the maturity benefit will help your parents to get a humongous amount either way. In case of your sudden demise, the death benefit cover will bear their expenses. You don’t need to worry about their financial status. If you survive during the policy tenure, you will get back all your premium amounts.
  • Married with no children: If you are married and your spouse is financially dependent on you, TROP could be the best choice. To improve the financial security of your spouse, you should opt for this term plan with return of premium. The maturity benefit at the end of the policy tenure period will be an added advantage.
  • Married with children: If you are the sole earner of your family, then you need to manage everything like your children’s education, their higher studies, marriage plan, and many more. It would be very difficult for you to manage everything from your pocket. Thus, you should purchase a term life insurance with return of premium because the maturity benefits will certainly be helpful for you.

Benefits of Term Plan with Return of Premium

Let’s discuss why a term plan with return of premium is beneficial for you.

  • ROP Benefit 

Very often, customers are not inclined to purchase a term plan because there is no maturity benefit. But some term plans offer return of premium (ROP) benefits to attract customers. The ROP allows customers to stay reassured with their purchase decisions.

  • Death Benefit

The prime objective of purchasing a term insurance plan with a return of premium is life cover. This plan offers an added layer of protection to your family members in your absence. In addition, your family members can manage their financial expenses with the help of the death benefit of TROP during a crisis.

  •  Tax Benefits

You will get tax benefits if you purchase a term plan with return of premium. You can avail of the benefits as per the Income Tax law (Section 80C and 10 (10D)). The premium amounts paid towards the term plan are tax-free. With a term insurance return of premium plan, you can get a tax deduction of up to Rs. 1.5 lakh on the premium.

The term insurance plan with return of premium is a little bit costlier as compared to normal term plans. But you can get a chunk of options (regular pay, one-time pay, and limited pay) to pay your premiums. Term plan with return of premium option also offers a plethora of additional benefits including, waiver of premium, accidental death benefit, disability benefit, and critical illness protection. The markets are crammed with various term plans with return of premium options. Hence it’s difficult for them to choose the right insurance products that will resonate with their needs. You should handpick the best option for your requirements by comparing various term plans with return of premium options. You may visit iiflinsurance.com to have a detailed view on the same and also buying the right term plan with return of premium.

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