Term insurance is the simplest and most basic life insurance plan. It focuses on offering the nominee the sum assured in case of the policyholder’s death. To be eligible for the death benefits offered under the plan, the policyholder has to pay the premiums on time. 

The working of a term plan is simple. If the policyholder meets with an untimely death during the policy period, the nominee(s) receives the death benefits offered under the plan. However, if the policyholder survives the policy period, there are no other maturity benefits. The one big advantage of term plans is that it provides more coverage for a lesser premium.

However even then, when the time comes to buy a term insurance policy, we often become skeptical about it. The main reason behind the hesitation could be that it does not provide any maturity benefit. So the obvious calculation will be that if we survive the policy then the entire money will go off for nothing. That's where term insurance with return of premium paid also known as TROP comes into the picture. 

It has all the characteristics of a term insurance policy but with an added advantage of maturity benefit at the end of the policy period.

In this article, we help you understand how potentially similar yet different term insurance with return of premium is from term insurance and traditional insurance policies. We hope this article will guide you readers make wise decisions in regards to policy purchase.

First, let’s understand what term insurance with a return of premium is.

What is Return of Premium Term (TROP) Insurance policy? 

Term insurance plan with return of premium paid is just like a regular term plan keeping its primary focus on offering the dependants the sum assured on the death of the policyholder during the tenure of the policy. However the twist here is when the policyholder survives the term period then he is entitled to receive the maturity benefits if he has paid all his premiums on time. 

Key Features of TROP:

• The receivable maturity benefit is the sum total of the paid premium during the policy.
• The payable interest won’t be included in the maturity benefit.
• Any amount paid for the opted rider shall be deductible from the maturity amount.

Comparison of term plans, other insurance plans and term insurance with return of premium (TROP)

Now that we have understood what term insurance with return of premium is, let’s  compare regular term plans, traditional plans and term insurance with return of premium to understand how similar yet how different they are from each other. 

Additional Reading: What Is The Best Age To Buy A Term Insurance

Now, let’s address the question running on your mind, 

Should I buy term insurance with a return of premium?

It is advised to not get the plan blindly just because you receive the premiums paid at the end of the policy term. Instead evaluate the amount of coverage the policy would provide your family in case of your absence. 

When we talk about coverage a typical TROP works the same as a regular term plan but the main objective is to provide financial protection to your family in your absence. The amount is much less than the traditional policies which comes with a saving component because the return amount does not come with any interest rate. The maturity benefit is like the icing on the cake. So consider buying TROP only if you are not sure of a term plan just because it does not have any maturity benefits in case you survive the policy period.

Final Thoughts

A term insurance plan is a pure life cover. It’s a must-have for every earning member of a family. That is why it is totally up to you on what to choose, be it a regular term plan or a term insurance with return on premium paid. It is more about which one provides you a psychological comfort than the benefits. So consider buying TROP only if you are not sure of a term plan just because it does not have any maturity benefits in case you survive the policy period.