A pure term plan, on the other hand, does not provide a survival benefit if the insured survives beyond the plan’s term. A term plan with a return on premium (TROP) is a form of term plan that pays the insured a survival benefit. It offers all of the advantages of a term plan with the added bonus of a premium refund at maturity.
What is a Premium Return Term Plan?
A pure term plan with a guaranteed return of premium as a maturity benefit is known as a return of premium term plan. Because of the assured return, it has a higher term insurance premium. Premium waiver, critical illness protection, disability benefit, and accidental death benefit are among the supplementary benefits. It has the advantage of
The Benefits of a Term Plan with Premium Refund
Lower Sum Assured Value:
Because the premium you pay is reimbursed at maturity, the value of the sum assured or life insurance cover in a return of premium term plan is reduced.
Benefit in Case of Death:
If the insured dies within the policy term, the complete sum promised is paid to the nominee as a death benefit. Various insurers have different sums assured. It varies depending on the level of coverage chosen.
Survival Benefit or Maturity:
This is where it differs from a conventional term plan. It pays out a maturity or survival benefit at the end of the policy’s term if the insured lives longer than the policy’s term. As a maturity benefit, the insured receives a refund of all premiums paid.
Benefit of Paid-Up Value:
Under the term plan with a return of premium, an additional benefit known as paid-up value benefit is offered. If a policyholder is unable to pay the premium, the plan will continue to provide him with lower coverage. Only if the insured has paid the premium for a set minimum period as determined by the insurer is the paid-up value benefit available.
Value of Surrender:
The plan’s surrender value is determined by the payment option chosen by the policyholder. This value is higher for a single premium plan because the insurance premium is paid only once at the start of the policy. The surrender value is calculated in a variety of methods by different insurers.
In addition to the main protection, the return of the premium term plan comes with a slew of rider benefits. Critical illness coverage, hospital cash coverage, and accident or disability coverage are among the advantages available.
Benefits of a Term Insurance Plan with a Refund of Premiums
The following are some of the benefits of a return of premium term plan:
- In the event that the policyholder survives the policy term, the premiums paid over the years are not forfeited. As a maturity bonus, he receives his term insurance premium returned. It combines the advantages of a life insurance policy with the ability to save money.
- It offers guaranteed returns on the complete amount of premium paid, excluding any additional premiums paid by riders.
- It offers policyholders a number of premium payment options, including monthly, annual, and one-time payments.
- Individuals who do not have a fixed income or are not earning can participate in this plan because it is paid-up.
It provides tax benefits in accordance with tax legislation.
It’s a non-participating plan that offers death benefits in the form of a lump sum payment or a monthly payment.
The return of premium term plan not only ensures your family’s financial security in the future, but it also provides long-term maturity advantages if the insured lives to the end of the policy’s term. Before you invest in a term insurance plan with a return of premium, read the policy thoroughly and determine whether it meets your long-term needs.