As you grow older, financial security becomes more important than ever before. It is no longer a goal but a necessity. Not just this, people also often look for life insurance coverage so that even in their absence, the family behind them doesn’t have to struggle financially. A one-stop solution to this can be the term plan with return of premium.
Also known as TROP, the plan can offer significant financial security to both the life assured and the beneficiary. It may sound like a win-win situation, but there remains a concern about the premium expense. The term plan with return of premium (TROP) may have a higher premium than simple term insurance plans. This guide will help you understand all about term insurance for parents and whether the policy is worth it or not!
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What is a Term Plan with Return of Premium?
Commonly known as TROP, a term return of premium policy is a type of term insurance plan. In this policy, the death benefit is offered to the nominee in the event of the demise of the life assured. However, if the life assured outlives the tenure of the policy, they receive a maturity benefit.
The element of maturity benefit is what separates TROP from a simple term insurance plan. The premium paid throughout the tenure is returned to the life assured as a maturity benefit. However, since the policy also offers a maturity benefit feature, the premium is usually higher than that of a regular term insurance plan.
Difference Between TROP and Term Insurance Policy
The table below contains the striking difference between the term return on premium policy and the term insurance policy:
| Term Return on Premium Policy | Term Insurance Policy |
| The plan offers dual benefits: a Death benefit (upon the death of the life assured during policy tenure) and a maturity benefit (if the life assured survives the policy tenure) | This policy only offers a death benefit if the life assured dies during the policy tenure. There is no maturity benefit |
| The premium may be slightly higher than the regular term plan premium | The premium is more affordable as it is a pure life insurance cover |
| This policy may have a paid-up value. So, even after you discontinue paying the premium after a few years of complete premium payment, the value of the policy will reduce, but continue to be active | Term insurance has no paid-up value. So, if you stop paying the premium, the policy gets terminated |
| The policy may offer surrender value. This means if you choose to exit the policy, you get a surrender value. However, it is only applicable if you have paid the premium for a specific number of years | Term insurance has no surrender value |
Is TROP Good for Senior Citizens?
Having the shield of life insurance in your golden years can be a huge relief. You may choose from various TROP options for senior citizens. Depending on your preferences and capability, you may choose the most suitable one. However, it is important to understand that the premium may be slightly higher than that of a regular term insurance policy.
There are certain factors that you should evaluate when deciding whether or not a term plan with return of premium is good for you. These are:
- Your financial goals
- Your ongoing expenses
- The premium amount that you can afford
- The coverage you are looking for
Depending on these elements, it becomes easier to make a decision. While a term plan is a pure life cover only, term insurance for parents that has maturity benefits has the dual element of life cover and return of premium upon maturity.
To Wind Up
In a nutshell, a term plan with return of premium is quite a comprehensive policy. It secures you from both ends. In case of the demise of the life assured, the family gets the death benefit, which can be used to meet the essential financial requirements. If the life assured survives the policy tenure, they are rewarded with a maturity benefit. Again, the amount can be utilised for various purposes.
If you are planning to purchase a TROP, your age is no longer a barrier. Get the most suitable policy without any hassle. Not only senior citizens but also children can purchase term insurance for parents!