Why TROP ?
Why TROP ? Term insurance with return of premium is a very effective tool for those people who like getting their investment back if the risk cover is not utilized. As a result, people opt for the TROP plans to get their money back and not ‘lose’ anything in return.
TROP v/s Regular Term Plans
Ever since the TROP plans were launched, there has been a debate about which kind of term insurance is better – TROP or simple term plans. While both have similar features, a TROP plan has the added benefit of premium return. A simple term plan however is cheaper. So while both have their advantages, it is seen that people who do not want to lose any money in their insurance investment, opt for the TROP plans. The TROP plans prove to be beneficial only if the policyholder outlives the policy period. If the policyholder dies within the tenure of the policy, then the nominees would receive the sum assured in both the cases.
Can I add a rider to a TROP?
Yes, you can add one or more rider to your TROP plan. Adding riders makes the TROP plan more useful and you can cover many of your life insurance needs in one plan itself. The riders would require additional premiums but these won’t be returned at the end of the policy. So please keep in the mind that a TROP plan only returns the premium of the base policy, not of the riders.
Should I buy a TROP plan?
First of all, you must understand that a TROP plan would cost you more. So see if you can afford to (and more importantly if you want to) pay the extra premium every year. Then, the money you pay as premiums would only be returned to you if you outlive the policy tenure which can even be as long as 10 or 20 years (some plans do however pay a part of the premium back at the completion of 50% of the policy term). You cannot take any money out of the plan or borrow it till the policy matures or you decide to surrender the policy. If however, you are willing to wait and you do not mind paying the extra premium, you should definitely opt for a term insurance with return of premium plan. A TROP plan is cheaper than a whole life plan and is more flexible as well since you buy the policy only for a specific number of years.