Janet Mason 
As life has become uncertain, securing your family’s financial future should be your priority. Investing in a life insurance plan is an ideal way to provide much-needed monetary stability to your family members. Term insurance is one of the most sought-after life insurance products offered by insurers. It has a variety of plus points. So, let us first understand what term insurance is before speaking about its return of premium functionality. A term plan is an income replacement tool for your family when you are no longer around. This type of life insurance policy offers a high sum assured at an economical premium to help your loved ones maintain their lifestyle and live stress-free in your absence.
Investing in a term insurance plan can be one of the best financial decisions of your life. However, many people refrain from buying it. They think they will waste their premium if they outlive the policy’s maturity date. For such people, insurers have a specially designed policy known as term insurance with return of premium (TROP). Such plans are just like pure-term plans, but they offer maturity benefits if the policyholder survives the policy period. In such a case, the policyholder returns the premium the insured paid throughout the policy tenure. However, as TROP offers a maturity benefit, its tip is more than a regular term plan’s cost. Let us explain the working of this plan with an example.
Amar has purchased a TROP with a sum assured of INR 1 crore for 25 years. He has to pay an annual premium of INR 9,000. If Amar survives the policy term, the insurer must return the total compensation he paid to date. However, if Amar dies during the plan’s period, the insurer must pay his family INR 1 crore. However, if Amar dies during the plan’s period, the insurer must pay his family INR 1 crore. So, the insurer must return INR 2.25 lakh (25 years X 9000) to Amar.
Now that you know about this term insurance plan in India, read on to learn about its advantages:
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Survival benefit
Traditional term plans do not offer any survival benefit to the policyholder. You will not get any maturity value if you survive the policy tenure. Conversely, TROP offers survival benefits. Here, you do not lose the premium you pay towards your policy if you outlive its duration.
Assured returns
Investing in a TROP means you need not worry about not getting any maturity amount on survival. If you live through the term, you will receive the aggregate premium paid until the policy duration.
Tax exemptions
Apart from ensuring the monetary well-being of your loved ones, a TROP helps you greatly decrease your tax liability. The premium you pay towards your term insurance policy is tax-exempt under Section 80C of the Income Tax Act, 1961. Here, the maximum permissible limit to claim a deduction is INR 1.5 lakh annually. Besides this, the total premium paid to date you will receive from the insurer on survival is tax-free under Section 10(10D) of the Act.
A term insurance policy is indispensable. It can be a savior for your family members if you are not there to fulfill their requirements. It can help them in managing all their expenses and fulfilling their aspirations. They will not have to struggle or take obligations from others to meet their needs and achieve their goals. Moreover, if you outlive the tenure, you get a tax-exempt monetary return on your TROP investment. So, without further delay, invest in a suitable policy right now!
