Term insurance plan comes under life insurance, and it contributes to your life risk cover for some limited time. If the insured person died, it allows the insured nominee for a death benefit cover in return, issued by the policy. A regular term plan comes with life cover benefits to provide to secure and shelter to your family person with a monetary return. If applied online, then the buyer can opt for an exclusive discount on the paid premium.
However, it doesn’t matter if the breadwinner of the household has saved or invested some amount from the income over the years, but you never know, sudden probability like accident, death, or any severe illness always incline to trouble your family and loved ones. So buying the term insurance plan protects and covers your family by paying back the claimed amount of the sum assured at the time of death
The insurance industry is vast and complex. With the different coverage options and different plans offering different benefits, it gets complicated when one has to choose between them. Broadly speaking, there are two broad categories from which people choose a plan.
- Term plan
- Return of premium term plan
Here, we will talk about how regular term plans are different from the return of premium term plans.
Table Content
Basic Briefing on Difference Between Return Of Premium and Regular Term Plan
| Return of Premium | Regular Term Plan |
|---|---|
| Access to getting Maturity benefits at the end of the policy | No maturity benefit is provided at the end of the policy |
| With maturity benefits, you can get death benefits as well. | Only get access to death benefits. |
| In return for a premium, the more financial benefit to the family. | In the term plan, only get the financial benefits until the term policy is over. |
| Additional add-on and rider benefits are more on extra premium also even the policy ends. | Additional add-on provided only on the pre-decided number of years (can buy an additional cover with paying premium amount) |
| A policyholder gets accidental death benefits as well, on premium pay. | If the insured lived the term policy, he/she will not get the return of the sum of insured money |
Regular Term Plan
A normal term plan is a plan that offers coverage for a fixed period of term or pre-decided number of years. A term plan can range from 10-30 years. It provides the sum assured to the nominee if the policyholder dies within the term. There is no maturity benefit given in a normal term plan. Thus, a policyholder will not receive anything if he\she outlives the policy.
The cash value offered here is only after the death of the policyholder, which means there is no maturity benefit if the life assured outlives the policy. Term plans are known for their premiums and for being the most economical and budget-friendly. Term plans do not provide any return on investment.
A regular term plan ensures the policy benefits the insured only when the policy term plan starts and till the plan ends for a policyholder. Within this period of a regular term plan, the insured can purchase the rider benefits of the plan and opt for the supplementary coverage, accidental death benefits, disability benefits, deduction in tax income and critical illness, etc.
In a regular term plan, the add-on cover provides the safeguard and shelter to your family and insured nominee, but the rider benefits differ from company to company.
The age entry for opting for the term plan is a minimum of 18 years, and the maximum is 70, but it differs from insurer to insurer. Every company has different term insurance plans with various criteria, so it depends on the buyer which plans he/she wants to purchase and from which company.
Return of Premium Plan (TROP)
A TROP plan ensures the return of premium at maturity of the term plan. This plan also marks the concern of the insured who want benefits after the term policy. Return of premium ensures you pay back the claim amount to the family or the insured nominee in the conditions of unfortunate death of policyholder with a lump-sum amount or sum insured. So in return for the premium plan, the company offers both maturity and death benefits. Return premium plans offer maturity benefits but do not have a cash value. TROP Plan, however, is costlier compared to a regular term plan. The minimum age for purchasing the premium is 21 whereas the maximum age is 55. The premium payable is usually lower for women and it also varies with age.
It is advisable to purchase the Return of Premium Plan (TROP) option if you are:
Single child\unmarried
Your parents might usually depend on you financially, especially after their retirement. With the return of the premium plan, you can take care of the expenses while you get the premium back after your term insurance has matured.
Married
It is crucial for you to take up this plan because your spouse may not have anyone else to depend on financially. Thus, you create a financial backup to help secure the future not only in your absence but also if you survive. You will receive the payment under the term plan with a return of premium.
Also, being a parent will bring you the responsibility of taking care of your kid’s education. You become a member who is responsible for providing half of the financial support in your household. A term plan with a return of premiums option offered you financial support even after the maturity of the plan.
Why Choose a Return of Premium Plan
We all want to live a healthy and long life. We not only invest in our health but also in financial instruments that provide us stability and security. Term insurance with the return of premium (TROP Plan) option is thus beneficial. This plan also provides you with accidental death benefit, disability benefit, and critical illness protection that the policyholder can avail of by payment of an additional premium.
When it comes to investment and insurance, we should look for the most suitable one. There is nothing wrong is thoroughly researching and talking to your agent when it comes to financial decisions like these.
It should also be kept in mind that the return on investments, is not the only criterion while evaluating this. Although it does hold importance. You should explore all the plans, be it term plans or other insurance plans, to make sure that you are protecting yourself and your family and providing them with sufficient financial security.
Calculation of term plan premium is judged on a basis of different criteria, related to your current age, smoking and drinking habit, present health status, life cover, gender, and occupation.
These are the factors on which a premium term plan has opted. If anyone has a habit of smoking and drinking the premium amount would be more, so like this, it differs from