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Term Insurance

What is Term Plan with Return of Premium?

Undeniably, Term insurance is the most sought-after choice among insurance seekers. This easy-to-understand insurance plan presents financial coverage for a fixed period. A fundamental term insurance plan can indeed be highly advantageous for most people; a term insurance with a return of premium plan can offer some additional benefits. A term plan with a return of premium is almost similar to the standard term plan. 

Nonetheless, the one element that makes it different from traditional term insurance plans is the survival benefit. Insured individuals can enjoy survival benefits and get back their paid premiums. Some other add-on benefits that come with this plan are disability benefits, accidental death benefits, and protection against critical illness. Return of Premium is basically a feature that is commonly available as an option.

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Distinctive Features of Term Plan with Return of Premium

Policychayan Feature

A term plan with a return of premium may indeed be a bit more expensive than a standard term plan. Nonetheless, the premiums paid for TROP are returned as maturity benefits and are excluded from taxation.

Policychayan Feature
Premium Payment Options

An insured individual gets the liberty to choose the suitable sum assured under a term plan with a return of premium. Moreover, you can also choose the best-suited premium payment option.

Policychayan Feature
Surrender Value

If a policyholder discontinues making premium payments or surrenders the plan, he/she will acquire a surrender value. The surrender value is the higher Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).

Policychayan Feature
Guaranteed Premium Return

If you’ve chosen a term plan with a return of premium, the insured folk doesn’t have to fret about the return of their paid premiums as it is guaranteed under the plan. As its name suggests, it offers guaranteed returns under the plan.

Policychayan Feature
Maturity benefit as refund amount

When it comes to TROP, an insured person gets the refund amount during maturity only if the life assured survives the policy tenure. It implies that life assured does not lose the premium amount remunerated over the years.

Policychayan Feature
Paid-up option for non-earning folks

For those who are not earning and have not stable income, then this feature is a blessing for them. It doesn’t let your policy take a halt even if an insured individual with a lower cover is unable to pay a premium.

Term Insurance

Benefits of Investing in a Term Plan with Return of Premium

Death benefits

Term Insurance Plan with Return of Premium provides a death benefit as a total sum assured to the beneficiary if the assured individual’s death is caused by an eventuality. Different insurers offer distinctive sum assured.

Tax benefits

Under sections 80C and 10D of the Income Tax Act, the premium paid towards the insurance policy and the benefit payout is free of taxes. Buying this insurance plan will help you relish tax savings benefit that eventually leads to money savings.

Return of Premium Benefit

Term Insurance Plan with Return of Premium provides a return of premiums deposited over the years at the time of maturity. It makes a perfect choice for those who want to get insurance coverage along with a premium refund on maturity.

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Frequently Asked Questions

A term insurance plan with ROP delivers both a death benefit (in case of a mishap) and a maturity benefit by returning the premium you have invested.

Under Section 80C and 10(10D) of the Income Tax Act, 1961, a term insurance plan with ROP delivers tax benefits. Therefore, the premium paid towards the policy and the benefit amount drawn is exempted from taxation.

Normally, the grace period for a term plan is 30 days, but if the premiums are being paid monthly, then it is 15 days.

Term insurance plans are known to provide higher life cover at the lowest feasible cost of the premium.

Almost all the Life insurance companies in India provide term insurance plans with return of premium benefits.

The premium rates may differ for a smoker and a non-smoker since the insurer is delivering risk coverage. A person with smoking habits falls under the high-risk classification.

Yes, term insurance plans with a return of premium offer maturity benefits. A policyholder will get the full amount of annualized premiums paid after surviving the policy term.