Regular Term Plan vs Term Insurance with Return of Premium

What Is a Regular Term Insurance Plan?

What Is Term Insurance With Return of Premium?

What is the Difference Between Term Insurance and Term Insurance With Return of Premium?

Following table showcases the comparison of the term plan with return of premium (TROP) with the regular term plan:

Regular Term Insurance Plan

Term Insurance Plan With Return of Premium (TROP)

Regular term insurance plan does not offer any survival benefit. You can secure only the death cover. As a result, the liability is less for your insurance company since there is only one type of pay-out option involved in it.

TROPs offer a dual advantage to customers. They get the survival benefit as well as life cover. Therefore, the liabilities of insurance companies are more in TROPs.

Regular term insurance comes with a much more affordable premium amount. At a low price, you will be able to secure a comparatively high sum assured.

In comparison to the term insurance premium, the payables of TROP are higher.

Generally, you can get term insurance coverage till you are 99 years old. However, this period may vary from one insurer to another.

You can generally get yourself covered for up to the age of 70 years with this TROP policy.

In this regular term insurance plan, you have the option to increase the sum assured amount at particular life stages. To increase this amount, you will have to apply to your insurance company.

You cannot increase your sum assured in the middle of your policy term. You need to opt for the right amount of death benefits while purchasing the plan so that you do not face the necessity to increase it.

The term insurance policy can lapse if you avoid paying a premium within the grace period. Nevertheless, you get a chance to reinstate your policy up to a certain number of days after the grace period is over. You will also have to pay the penalty for this reinstatement.

Contrary to a term insurance policy, a TROP plan continues and does not lapse if you fail to pay the premium. However, in such a scenario, the policy benefit amounts will decrease.

This regular term insurance plan does not let you claim any surrender value in case you decide to terminate the coverage.

If you decide to discontinue your policy after a certain period, you can apply for a surrender value in TROP. The insurer will give you the amount they keep aside for maturity benefit. However, you will also have to pay a certain surrender charge in this scenario.

What are the Similarities Between a Regular Term Plan and Term Insurance With Return of Premium?

FAQs About the Term Insurance Plan and Term Insurance With Return of Premium

When can a term plan lapse?

Your term plans may lapse if you fail to pay your pending premium within the given grace period. In this condition, you will not be able to enjoy your life. However, you can still reinstate your term insurance coverage by paying a revival charge. Further, you can do it only within a stipulated time frame.

Which shortcoming of term insurance plan does the TROP address?

A term plan comes with only the death benefit. Policyholders will not get any maturity benefit. However, a TROP helps them get back their premium if they survive their policy term in addition to the death benefit.

Is the term insurance with return of premium worth buying?

You get a life cover under term insurance with return of premium or TROP like the regular term insurance plan. So, in case of your death, your family’s financial  interest stays protected. In case you survive, you will get all the amount you have paid as premium. You can see the maturity amount as your corpus for the future and utilise it to address your future expenses.

Is TROP more costly than the regular term insurance plan?

The premium amount for TROP is higher than the regular term insurance plan. This is mainly because TROP lets you get extra benefit and is less risky compared to the regular term insurance plan.