TROP is among India’s most well-liked life insurance products. What, however, is the TROP plan? It is a term insurance plan that offers maturity benefits along with life insurance coverage.
Top insurers in India currently provide a wide variety of life plans so that everyone can choose a life insurance policy that precisely fits their needs. TROP is presently one of the popular types among them. These term insurance plans combine the advantages of a term plan with the capacity to accumulate your money and return it to you during maturity.
What is TROP?
Plans featuring term insurance coverage with return of premium option are known as TROP plans. It is a specific kind of term insurance plan, but it differs significantly from conventional term policies in one crucial way. In the case of typical term insurance, the policyholder does not receive any financial benefit if they outlive the policy’s term.
However, with TROP, if the policyholder survives the policy’s duration, the insurer will refund the premiums the policyholder has paid over the years. For those seeking a low-cost life insurance option that also enables them to get a benefit upon maturity, TROP insurance is the best option.
Example:
Let’s say you buy a TROP insurance policy with a Rs. 1 crore life insurance limit and a Rs. 30,000 yearly premiums. The procedure has been in effect for 20 years. Therefore, if one passes away within the 20-year insurance term, the nominee will receive a death benefit of Rs. 1 crore.
However, you will receive Rs. 6,00,000 if you make it through the term (the total premium you have paid for the policy over 20 years). It is convenient to find the amount and premium rates as per feasibility by checking the same using a term insurance premium calculator.
Who can purchase the return of premium term insurance (TROP)?
Each person may have various goals when making significant financial commitments, such as purchasing term insurance with a return of premium (TROP) plan. This heavily depends on different individual characteristics, including your age, source of income, way of living, and health. Finding the best policy can be aided by analysing your financial situation using these crucial factors.
So, if you want to buy a term plan with a return of premium, you need to weigh the benefits against these considerations.
Benefits of buying TROP –
- Premium refund:
Of course, the most significant benefit of buying a term plan with a money-back feature is that if you survive the policy tenure, you may receive a full refund of the premiums you paid. Standard term insurance policies do not offer this feature.
- Cost-effective
TROP plans are less expensive than whole life insurance, endowment plans, and unit-linked insurance plans (ULIPs), while they are typically cost more than regular term plans. It’s an ideal option for someone who is just starting their profession and cannot afford high life insurance premiums.
Using a term insurance premium calculator online can help find estimates that can be affordable and beneficial.
- Supplemental riders:
Additionally, you can add alternative riders or add-ons to your TROP policy to increase its coverage. You can obtain coverage for things that TROP plans often do not cover with add-ons. However, the extra premium paid for these riders will only be reimbursed to the policyholder upon maturity.
Additional riders offered by term plans with return of premium options include premium waivers, benefits for accidental casualties and disabilities, and protection from serious illnesses. For policyholders, opting for TROP might increase their sense of overall protection.
- Tax advantage:
TROP is a form of life insurance coverage which makes the policyholder eligible for tax deductions. Premiums paid for a term plan with return of premium plan up to Rs 1.5 lakh in a year is eligible for tax deductions under Section 80C of the IT Act for policyholders who have opted for the old tax regime.
People who want to receive a maturity benefit from the term insurance plans should choose a term plan with a return of premium feature. TROP effectively renders the procedure free of charge because you receive the compensation paid.
You can speak with a reputable insurer to learn more about TROP and determine whether it meets your insurance needs.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
