What is a term plan with return of premium?
When you invest in a term plan with return of premium, you will get back the entire premium paid during the policy term or more (up to 115%) after the end of the policy term, excluding taxes.
For example, if you are paying a yearly premium of Rs. 10,000 for a term insurance policy for 20 years, you will get the premium money back (20 x 10,000 = Rs. 2,00,000) after deducting applicable taxes. Term insurance returns varies from 100% to 115% depending on the insurance company.
A plan that offers term insurance returns ensures that the capital you have spent on premium is restored if you have survived the policy term. Below are some features of a TROP that you should know before buying the policy.
Higher premiums: In a pure term insurance plan the cost of the premium is calculated based on the expected value of the claim. But in a term insurance plan with maturity benefit, the death benefit and maturity benefit are fixed, which leads to an increase in the premium cost. To save on costs, you can buy a TROP online because they are cheaper than those that are bought offline. Go for a higher sum assured amount as they may be eligible for discount offers.
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