Make a Secure Choice with Return of Premium Term Life Insurance

Posted by Sonia Nagpal on March 3rd, 2016

Return of Premium term life insurance, also known as TROP, is a type of a level term insurance plan wherein you will get all your premiums refunded at the maturity of the policy term. Term plans are ideally a pure protection plans and does not offer any maturity benefit rather only death benefit is payable. But under TROP plans , all the paid premiums are returned as a maturity benefit to the policyholder in case he/she survive the term of the policy. . More and more people are opting for this type of insurance as it has the same benefits of a whole life insurance minus the commitment.

Here are some other advantages of TROP:

•             Guaranteed cash values – As long as you maintain the policy during the specified period, you will get all the money that you used to pay for the premium.

•             Level premiums – This type of term life insurance is very flexible to suit your needs. If you have a mortgage that will last ten years, for example, then you may opt for a 10-year TROP.

•             Not taxable – In certain situations, the return of premium term life insurances will not be taxable.

•             Easy conversion – If you suddenly decide that you need a whole life insurance, there are companies that allow you to transfer your TROP premiums to your new policy.

TROP is more flexible, making it an attractive choice for younger people who are not yet ready to settle down. This type of term insurance may be best for single people who have yet to start a family. If you get married and have kids or purchase a piece of property, then you can switch from TROP to something more permanent.

Of course, TROP is not a too-good-to-be-true product. There are also some disadvantages to a return of premium term life insurance. This includes:

•             Higher premiums – Every time you renew or change your term life insurance, expect for the premium to become more expensive.

•             Age limits – There is an age limit when it comes to buying TROP. Most companies do not offer this type of insurance for people who are older than 50.

•             Strict full refund policy – In the event of premature policy surrender, the funds you will get will be significantly reduced.

The best thing to do when buying a return of premium term life insurance is to contact online consultants. They will be able to compare different policies from various companies. This is better than approaching insurance sales people who will simply tell you that their product is the best compared to others. Sales people also tend to downplay the disadvantages of their insurance policies.

About the Author

Suggestinsurance.com is the online identity for IRDAI approved insurance broker – S B Insurance Brokers Pvt. Ltd. On SuggestInsurance.com, we offer quotes from leading insurance companies and let the customer explore the insurance plans, get their details, view and study brochure and other documents, compare features and benefits of these plans side by side and then take a decision.