The chances of you not having heard of a term life insurance are slim. And there is a reason for the same. Over the last few years, insurers have done a rather good job at promoting their term plans and being aggressive about it. The aggressive pitching and increased discussions in general, mean that more people are aware of the plan now that ever.
This begs a very simple question, should you buy one? Just because something is being discussed everywhere and you see ads every now and then, doesn’t necessarily make it a compelling product. However, it is the actual content of the plan which makes it a great product to invest your hard-earned money in.
A term life insurance plan online is one of the simplest insurance plans that you will ever come across. A policy holder pays a certain premium to the insurer, who in turn offers cover for the life of the policy holder. This means that should anything unexpected happen to the policy holder during the term of the policy, the insurer is liable to pay the sum assured as per the policy.
Since a term life insurance doesn’t have savings or investment components like other insurance policies, their premiums are lower as well. And because the policy concentrates on only one aspect, the sum assured is high as well. In fact, a term life insurance offers one of the highest sum assured covers amongst life insurance plan.
You can think of a term life insurance as a one to one correlation. Where, if the policy holder loses his/her life, the insurer is liable to pay the sum assured to the nominees of the policy. However, in the event that nothing happens to the policy holder or they outlive the policy, there are no financial gains to have.
And this is something that a quite a few of potential policy buyers have concerns with. In the fortunate event that a policy holder outlives the policy, there will be no financial gains. Which means that all the premiums that you have paid till date would go waste.
It is for this very reason that some potential buyers back off from buying a term life insurance. Fortunately, there is a way out. Seeing the growing demand from policy buyers and potential buyers alike, insurers are now offering something called as Term Return of Premium or TROP.
How Does a TROP Work in Term Life Insurance?
A TROP or Term Life with Return of Premium is a type of term life insurance. The only difference between a standard term plan and a TROP is that at the end of a TROP, you will get your premiums back. A term life insurance usually does not have any maturity benefits. With a TROP you can avail those.
At the end of the term, if the policy holder is still alive, they stand to receive all the premiums that they have paid over the years. Which essentially means, that a policy holder will end up not paying anything during the entire period.
If you were one of those people who felt a term plan doesn’t have any maturity benefits or doesn’t reward someone who outlives the term, this might be ideal for you.
For an example, Rahul choses a term insurance plan with a cover of INR 50 Lakhs and ends up paying a premium of INR 8000 for the next 15 years. At the end of the policy term, he would have paid INR 1, 20,000 as policy premiums.
Had he chosen a standard term life insurance, he would have received nothing if he was alive at the end of the term. However, with a TROP, the insurer would pay him back INR 1, 20,000 at the end of the policy term.
If anything had happened to him during these 15 years, the insurer would have paid INR 50 Lakhs to the nominees mentioned in Rahul’s policy. In the event that he had opted for any riders, depending on the type, those would be applicable as well.
Benefits of TROP in Term Life Insurance
While a TROP is a variation of a term life insurance, there aren’t too many differences when it comes to the features and benefits. You still get a very high sum assured by paying affordable premiums although it is slightly more expensive than regular term insurance plans.
This secures the finances of the family in the unfortunate event of policy holder losing his/her life. You can also add riders to your policy to increase their effectiveness and still have access to tax benefits in form of Section 80C for the premiums and Section 10(10D) for payouts.
A term insurance though does not give any returns, but is a plan to secure the future of your family. You can check all benefits when you compare the same on Coverfox.com.
However, with a TROP option, you can expect a payout at the end of the policy which ensures that all money is not wasted if the policy holder lives through the term of the policy.