Term Insurance with Return of Premium
Financial security is a crucial aspect of planning for the future, and insurance plays a pivotal role in ensuring peace of mind. Among various life insurance options, Term Insurance with Return of Premium (TROP) stands out as a unique product that combines financial protection with a refund of premiums paid. This blog delves into the details of TROP, its benefits, and how it works to help you make an informed decision.
What is Term Insurance with Return of Premium?
Term Insurance with Return of Premium (TROP) is a variant of traditional term insurance plan that not only provides life cover but also returns the total premium paid if the policyholder survives the policy term. Unlike standard term insurance, which only offers a death benefit, TROP ensures that policyholders receive a maturity benefit. For individual seeking term insurance with maturity benefits, TROP presents a compelling option, making it a win-win proposition for those looking for both protection and savings.
Key benefits of Aviva’s Return of Premium Plans
• Return of Premium: A term insurance plan that ensures the return of the total premium paid at the end of the policy term.
• Enriched Protection: Flexible plan options that allow policyholders to choose a proportion of term coverage along with return of premium benefits.
• Savings Booster: Get back 100% of the Premiums Paid excluding any extra Premium, any rider/add-on premium and taxes on survival till maturity
• Tax Benefits: Save up to Rs. 1.5 lakhs under Sections 80C and 10(10D) of the Income Tax Act, making it a tax-efficient investment.
How Aviva’s Return of Premium Plan works?
When purchasing a TROP policy, the insured agrees to pay premiums for a specific term. If the policyholder passes away during the term, the nominee receives the death benefit. However, if the policyholder survives the term, the insurer refunds the total premium paid, excluding taxes and rider costs. This structure ensures that policyholders do not feel their premiums are a sunk cost, unlike traditional term insurance.
Eligibility criteria for Aviva’s Return of Premium Plans
• Entry Age: The minimum and maximum age criteria vary based on the policy. Generally, individuals between 18 and 65 years are eligible.
• Policy Term: Flexible policy durations ranging from 10 to 30 years, allowing customisation based on financial goals.
• Sum Assured: Determined based on factors like the policyholder’s age, income, and financial obligations, ensuring adequate coverage.
• Premium Payment Term: Options to pay premiums for the entire term or limited years, depending on policyholder preference.
• Medical Examination: Depending on age and sum assured, a medical check-up may be required to assess health risks.
• Riders and Add-ons: Additional benefits like accidental death cover, waiver of premium, and critical illness riders can be included.
• Premium Payment Modes: Flexible payment modes such as monthly, quarterly, half-yearly, or annually, catering to diverse financial planning needs.
Comparison: Return of Premium vs. Standard Term Insurance
Feature | Term Insurance | Term Insurance with Return of Premium |
Death Benefit | Yes | Yes |
Maturity Benefit | No | Yes (Refund of Premium Paid) |
Premium Amount | Lower | Slightly Higher |
Tax Benefits | Yes | Yes |
Ideal For | Pure protection seekers | Those looking for a refund of premiums |
Conclusion
Term Insurance with Return of Premium is an excellent choice for individuals who seek the dual benefits of life cover and premium refunds. While the premiums may be slightly higher than standard term insurance, the assurance of getting the entire premium amount back at maturity makes it a prudent financial decision. By choosing a TROP plan from a trusted insurer like Aviva, policyholders can secure their family’s financial future while enjoying the advantage of receiving their money back if they outlive the policy term.
For personalised advice and to choose the best plan for your needs, consult with a financial expert today.
Frequently Asked Questions (FAQs)
How much term plan with Return of Premium should you buy?
The sum assured should be sufficient to cover future financial obligations, liabilities, and family expenses. It is recommended to opt for a cover that is at least 10-15 times your annual income.
For how long should I purchase a Term Plan with Return of Premium?
Choose a policy term that aligns with your long-term financial goals, retirement plans, and family responsibilities. Ideally, coverage should extend until major financial liabilities, such as home loans or children’s education, are settled.
How do I choose the right Term Insurance with Return of Premium Policy?
Consider factors such as premium affordability, policy tenure, insurer’s claim settlement ratio, additional rider options, and the flexibility to customise coverage.
Can I receive tax benefits from Term Insurance with premium return?
Yes, under Section 80C of the Income Tax Act, premiums paid for TROP are eligible for deductions, and the maturity benefit is tax-exempt under Section 10(10D).
Can I add riders to enhance my Return of Premium Plan coverage?
Yes, insurers offer optional riders such as accidental death benefit, critical illness cover, and waiver of premium, allowing policyholders to enhance their coverage for a more comprehensive protection plan.
AN Apr 6/25
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