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Term Return Of Premium Plan (TROP): Does It Make Sense To Opt For It?
[Posted by: InsuringIndia Blog on 30-Mar-2016]
In today’s time it has become paramount for everyone to ensure the financial stability for not only their own future but also their kin. With the insurance sector throwing up so many policies, how do you know what’s your best bet? What if there’s something that gives you the dual advantage of being a security cover as well as a beneficial investment? This is where a Term Return of Premium Plan (TROP) comes in. 
Usually, term life insurance does not offer any financial benefit if the policy holder survives the term period. However, some insurance companies offer TROPs which also have a return of premium option.  This means that not only you have peace of mind that your immediate family/nominee is taken care of financially after your death, but it also means that you can reap benefits if you survive the term period.
How do these plans work?
Term life insurance plan is an inexpensive option. But some companies extend an additional benefit of ensuring that the complete premium amount is returned to the policy holder if he survives the term. But it’s important to note that the policy premium is definitely higher.
Let’s take a look at how much you stand to gain.
The most obvious and advantageous gain for a policy holder is tax saving. The money that you save here can be used as an investment or a corpus for any future milestone.
It’s good as a short-term investment for 10-15 years.
Yet another big gain in your kitty is that this policy is an investment as well as a financial safeguard for your family. The net result, therefore, is a win-win situation for you.
Peace of mind is guaranteed.
As opposed to a term plan which gives a death benefit, this type of policy gives you a maturity benefit too.
If you buy this type of policy as a young professional then there are greater chances that you strike gold.
You can also add on riders to ensure you reap greater benefits and have a more comprehensive cover.
These plans also provide flexible options. This means that you get to actually choose the period of protection by paying your policy premiums for a fixed period. So now you can pay your premiums on a monthly or yearly basis.
Some companies also offer an inbuilt clause of an accidental death benefit which again, can be advantageous for the policy holder.
TROPs are costlier than conventional life insurance policies.
It is very unlikely that you are granted a refund by the insurance company if you cancel your policy before the expiry of the stipulated term.
The most important fact to note here is that the premium paid will be returned at maturity, therefore the nominee will get a reduced sum assured in the event of the insured person’s death. 
There are several things that must be taken into consideration while going for this type of policy. To begin with, always choose the one with a higher premium because it is most likely to offer extra sops that can work in your favour. Also a policy with a longer term cover is a good choice. Lastly, instead of approaching an insurance agent, opt for an online aggregator as it will be a more transparent, efficient, cost effective option as it will throw open a variety of choices for you. Choose wisely.

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*This is based on the difference between the highest and lowest premium's for a single person, age 25, looking for an individual health policy with the sum insured of Rs. 5 lakhs.
**This is based on the difference between the highest and lowest premium's for a single person, age 25, looking for a term plan, with the sum insured of Rs. 30 lakhs, and the premium paying term of 30 years.
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