4 Advantages of Investing in Term Plan With Return Of Premium (TROP)

It is not uncommon for people to expect something in return when they survive the tenure of their life insurance policy. If a term plan is what you are looking for and you’d like to receive something at the end of the policy tenure, you can consider Return of Premium (ROP) plans .Take a look at what they are, how they work, and whether or not they are a viable option for you-

Also known as TROP ( Term Plan with Return of Premium ), the ROP plans are exactly what their name suggests. They are a type of term insurance policy where your nominee receives the death benefit on your demise. In addition, they also reward you by repaying all the premiums you have paid over the years if you survive the policy tenure.This makes ROP a highly cost-efficient life insurance product for every individual who wants to receive something in return from the insurer on maturity. Example Let us try to understand ROP with the help of an example-Mr Kishor, aged 30, purchased an ROP plan with a life cover of Rs. 50 lakhs and an annual premium of Rs. 20,000 for a tenure of 20 years. In the case of Mr Kishor's unfortunate demise within the policy tenure, his beneficiary will receive Rs. 50 lakhs as the death benefit.But if Mr Kishor survives the tenure of 20 years, he will receive Rs. 400,000 (total premium paid over 20 years) from the insurer. Also Read: Different Types of Life Insurance Policy

Here are some of the top reasons why you should consider purchasing an ROP plan-

• Affordable Insurance As ROP plans are a type of term plan , they are highly affordable. Their premiums are generally lower than other types of life insurance products like whole life policy, endowment plans, ULIPs, and money-back plans. This makes them an excellent choice for anyone looking for a budget-friendly life insurance plan .
• Return of Premium Needless to say, one of the top benefits of purchasing an ROP plan is their return of premium feature. If you survive the policy tenure, you will receive the entire premiums that you have paid for the policy throughout the policy tenure. Technically, this means that your life would be protected for the policy tenure for free if you survive the period.
• Optional Riders You also have the option to increase the coverage of your ROP plan by investing in optional add-ons or riders such as accidental death and critical illness. This will help you get coverage for things that are generally not covered under a standard ROP plan. But do note that the additional premium paid for such add-ons would not be returned on maturity.
• Tax Benefits ROP is also a type of life insurance policy and comes with the same tax benefits that you get with other life insurance products. Under Section 80C of the IT Act, annual premiums of up to Rs. 1.5 lakhs paid towards an ROP term life insurance can be deducted from your taxable income. Even the maturity benefit is tax-exempt under Section 10(10D) .

If you want your life insurance policy to give you something in return on maturity, ROP can definitely be an excellent choice for you. ROP plans are highly cost-efficient and come with a host of benefits, as discussed above.Look for a top insurer to know more about ROP plans and purchase one that best meets your insurance requirements.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.