Who needs TROP ?
Who needs TROP ? The TROP plans are suitable for those people who look out for a high cover at a lower cost. A TROP plan is pretty much like a regular term plan where the life of the policyholder is covered for a specific term. There is no investment associated with a term plan. However in a TROP plan, the amount of money you pay as your premium is paid back to you at the end of the policy period if the death claim is not made. In other words, if the policyholder survives the policy period, he will get the exact amount of money he paid as the premiums throughout the years of the policy (barring any interest on premium, extra premium and rider premium that may have been paid). If the policyholder dies within the tenure of the policy, the sum assured is paid to the nominee.
I do not have any other form of life insurance. Do I need a TROP?
Since the TROP plans are effective life insurance products, it makes a lot of sense to buy such a plan as a primary life protection tool. It is very suitable for a person who does not have any other kind of life cover. This is because not only do you get a good coverage, you also end up getting your money back if you outlive the policy period. And since you do not have to shell out any extra money for any other insurance product, you surely won’t mind paying the extra premium for a TROP plan.
I already have other investments, a child plan and a retirement plan. Do I need a TROP?
If you already have other investments and insurance plans to protect your future, then you may not want to opt for a TROP plan. In such a case it would make more sense for you to opt for a simple term plan that would just cover your life at a much lower cost. Since you have investments and the future of your child and yourself is already secured, you do not need to pay more now and wait for a substantial number of years to get the money back.
I am looking to save tax. Should I buy a TROP plan?
Though insurance should never be seen solely as a tax saving tool, a TROP plan does prove to be helpful for those people who are looking for tax effective insurance options. The premium you pay is tax free under Section 80C of the Indian Income Tax Act of 1961. Apart from this, the amount of money you receive at the end of the policy term (the return of premium) is also tax free under Section 10 (10D).