TROP refers to Term plan with Return of Premium option (available on payment of additional premium). This plan is same as any other standard term insurance plan with one difference of return of premiums option available i.e. survival benefit at the end of the policy term.
The primary objective of any life insurance policy is to provide financial protection to your family in case of any unfortunate event in your life. Life insurance plans usually fall into two categories:
1. First in which you can possibly grow your money along with a life cover, and
2. Second, which is meant to provide only financial protection to your family called term insurance plans.
In the case of term insurance plans, there will not be any return on investment (ROI). However, the premiums are also nominal. Term insurance plans primarily to fulfil our life insurance needs only by providing a significant amount of money to the nominee in case of the insured’s unfortunate demise.
Most, term insurance plans do not offer any survival or maturity benefit for the policyholder. However, a term insurance plan with return of premium assures the return of the premiums paid for the life cover if you survive the policy term**.
For instance, Mr. Gupta bought a term insurance plan with a return of premium option for a Sum Assured of Rs 1 crore at a premium of Rs 25,000 per annum* with a policy term of 30 years. In the case of his demise within 30 years of buying the policy (i.e., the policy period), his nominee would receive the Sum Assured of Rs 1 crore.
However, if Mr. Gupta survives the policy term of 30 years; he will receive Rs. 750,000* i.e. (25000 x 30).
Nowadays, most people look for insurance plans that can provide a higher life cover at the lowest possible cost of the premium. Term plans fulfil this criterion. However, given the fact that there are no maturity benefits on the policy, many are discouraged from purchasing a term insurance plan.
This made life insurance companies introduce term insurance plans with return of premium (or ROP) additional benefits in them. In other words, a ROP (term insurance with return of premium optional benefit) is a variant of term insurance plans that provides both a death benefit (in case of an eventuality) and a maturity benefit by returning the premium paid**
Being the purest form of life insurance, term insurance plans do not require you to pay a high premium. As a result, you do not receive any returns on the completion of the policy tenure. When you choose the TROP variant of term insurance; you are entitled to receive the amount of premium invested towards the plan on the completion of the policy tenure. In other words, if you survive the policy term, the insurance company will refund the amount of premiums* that you have had paid during the policy term**.
Here it is important to note that insurance companies charge a premium as per the value of claims. Therefore, the higher the expectation, the more is the premium. This is the reason why the amount of premium payable increases with an individual’s age and other associated risk factors. In the case of term plan with ROP optional benefit, given the fact that the insurer will pay back the premium after policy completion, the rate of the premium goes on the higher side.
The minimum entry age to purchase a term plan with return of premium optional benefit (i.e., ROP) is 21 years, while the maximum age of buying this variant is 55 years. You can purchase the term plan with return of premium (for a policy term of either 20, 25, or 30 years while paying a premium for 11 years only (with Max Life Smart Term Plan).
While the premium payable under the plan varies by age, the insurance companies offer a lower premium rate to female buyers than male buyers. Overall, you can purchase term insurance with return of premium optional benefit, if you are -
If you are single – You have your parents who may depend on you for financial support, especially after their retirement. With a term plan with ROP benefit; therefore, you can help take care of their lifestyle expenses, while you get premium back on your term plan upon surviving the policy tenure.
If you are married with no kids – Your spouse may have no one else to look up to for financial support, but you. Therefore, it becomes crucial that you create a financial backup plan to help secure their future in your absence. Even in case nothing happens to you, you will receive the premium back paid under the term plan with return of premium.
If you are married and have kids – Being a parent, you have the responsibility to take care of your kids’ education and marriage expenses. You are also responsible for your spouse’s financial well-being. A term plan with return of premium optional benefit will help you support your family in maintaining their current lifestyle while offering you a maturity benefit on surviving the policy tenure.
All of us want to live a long and eventful life in the presence of our family and friends. To prolong our lifespan and live a healthy life, we make healthier lifestyle choices such as exercising daily and following a wholesome diet plan. We also invest in financial instruments that provide us both income security and wealth creation opportunities, so that we have enough money throughout our lifetime.
Thus, there is ample possibility that if we stay happy, positive, healthy, and away from stress, we can outlive our life insurance plan. So, term insurance with ROP optional benefit comes as an advantage, as it offers to return the premiums to you on your successful survival against the uncertainties of life.
Term insurance with ROP feature (available on payment of additional premium) also offers benefits such as waiver of premium benefit, accidental death benefit, disability benefit, and protection against critical illnesses.
At Max Life Insurance, we strongly believe in the idea that all our customers should stay happy and healthy and live longer. With our TROP variant of life insurance; therefore, we help ensure that you and your family have peace of mind and financial security in all walks of life.
Among all the available life insurance options, term insurance plans provide the higher life cover at the lowest possible cost of the premium. You pay a premium for an amount you choose as the Sum Assured. You can either pay the premium in one go (Single Pay), throughout the policy tenure (Regular Pay option) or for a fixed duration (Limited Pay option). The same premium payment options are available under the term plan with ROP feature as well. However, you may have to pay a slightly higher premium under term plan with ROP option than a normal term insurance plan.
For instance, a healthy, 30-year old male can purchase a term insurance plan from Max Life for a Sum Assured of Rs 1 crore and a policy term of 40 years for approximately Rs. 13,688^^, payable annually for 30 years (Pay till 60).
On the other hand, buying a term plan with ROP benefit for the same Sum Assured and policy term may cost up to Rs. 11,600^^.
However, unlike a normal or basic term plan, the ROP variant of term insurance provides the premium** paid by the policyholder at the time of maturity. Also, the premium paid towards the plan coverage is exempt from taxation under Section 80C under Income tax act of 1961.
The ROP variant of term insurance is available under Max Life Smart Term (Non-Linked Non Participating Life Insurance Plan, on payment of additional premium (UIN - 104N113V01))
Finding the right term insurance plan with ROP benefit is an easy task if you keep the following factors in mind:
Buying term insurance with ROP benefit from Max Life insurance company is quick and hassle-free. You can opt for the term plan with ROP variant while purchasing the Smart Term Plan. Here are a few hallmarks of our life insurance plans:
Here is the breakdown of our buying process:
Step 1: Select your policy term, and the sum assured
The first step is to use the online life insurance calculator to calculate the premium for the desired sum assured and tenure of the term plan.
Note: The ideal benefit amount for your life insurance plan should be 10 to 15 times your annual take-away income.
Step 2: Choose Riders
The next step will be to choose add-on benefits, in the form of riders over and above the base cover. These additional benefits enhance your financial protection in case of unfortunate events such as a disability or being diagnosed with a life-threatening health condition. These optional benefits are available on payment of additional premium.
You can choose from the following rider options:
* Critical illness cover that offers to cover up to 40 illnesses
* Accidental death and disability benefit
* Premium waiver benefit, applicable in case of diagnosis of critical health condition or disability
Step 3: Payment of Premium
After selecting the plan and its benefits, you can proceed to complete filing of personal information and pay the premium. You will need to fill out the following information and make the payment:
* Income, education, and profession details
* Nominee details
* Present Address (where the medical test will take place)
You have the option to pay the premium online using net banking, debit or credit card
Step 4: Fill out the Proposal Form
Essentially, the proposal form is a detailed version of your application form, which focuses on the information related to your life such as your lifestyle habits (such as smoking and drinking) and medical history (including that of your parents)
Step 5: Medical Tests
In some cases, based on individual life-risk, a medical test may be proposed. Any such medical evaluation will be conducted after the successful completion of the proposal form and document submission.
Term insurance plan with ROP variant offers tax benefits as per the prevailing tax laws. Thus, the premium paid towards the policy and the benefit amount drawn is tax-free under Section 80C and 10(10D) respectively of the Income Tax Act, 1961.
Therefore, you can avail a tax deduction up to Rs. 1.5 lakh on the premium paid in the term plan with return of premium variant. Overall, if you are conservative policyholder, you can use the premium paid towards the term plan to reduce your tax liability considerably.
Max Life Insurance offers several premia paying tenures under its Term Insurance Plan with ROP benefit. Under the Max Life Smart Term Plan; you can choose from the following premium payment tenures:
According to the Section 6 of the Married Women's Property Act (or MWPA), 1874, if a married person purchases any insurance policy, on his own life and endorses it under MWPA (in favour of his spouse and children), no other person (insured’s parents, friends or relatives) will have any right to the insurance plan benefits.
When you purchase a term plan with return of premium option and decide to discontinue paying the premium under the plan or surrenders the policy, you will receive a Surrender Value of the policy.
Here the Guaranteed Surrender Value is calculated by the following formula:
|
GSV factor x (Total premiums paid for base policy including extra premium (if any) but excluding modal extra and any applicable taxes, cesses or levies) |
�Total premiums paid for base policy� refers to the total annualized premium paid under the policy including premiums for Life Stage Add on Sum Assured (if any)
The GSV Factors are as follows:
Policy Year |
% of Total Annualised Premiums Paid |
|
Single Pay variant |
Limited and Regular Pay variant |
|
1 |
70% |
NIL |
2 |
70% |
For Premium Payment Term less than 10 years: 30% For Premium Payment Term of 10 years or more: NIL |
3 |
70% |
30% |
4 |
90% |
50% |
5 |
90% |
52% |
6 |
90% |
54% |
7 |
90% |
56% |
8 + |
90% |
Graduating linearly from 56% to 90% during the last two policy years Minimum (56% + [(34% x (N-7)) /(Policy Term - 8)], 90%) N : Year of Surrender |
Applicable for all variants
When it comes to insurance and investment, all of us are on the lookout for instruments that can provide a significant life cover and return on investment (ROI). There is nothing wrong in doing so because all we want to secure financial future along with maximizing our savings and productively use them to create wealth.
Nevertheless, we must understand that ROI should not be the only criteria to look for a sound investment tool. When it comes to life insurance; therefore, ROI does hold importance, but not always.
Therefore, to stay protected both physically and financially, you need to take appropriate steps early on in your lives. Exercise daily, eat healthier meals, spend time with your family, and keep your mind stress-free. On the financial front, you may choose to explore a term insurance plan with ROP optional benefit (on payment of additional payment), which will help you make sure that your family’s dreams and aspirations are protected financially against any eventualities.
**Total premiums paid inclusive of any extra premium but exclusive of all applicable taxes, cesses or levies and modal extra
* Assumed annual premium and rounded off; exclusive of taxes, modal extra and premium paid towards additional/optional or rider benefits
^ Tax applicable as per the taxation laws of the current financial year
^^the sample amount has been taken from the Smart Term Plan product brochure for Life Cover Variant available on www.maxlifeinsurance.com
IRDAI clarifies to public that:
� IRDAI is not involved in activities like selling insurance policies, announcing bonus or investment of premiums.
� Public receiving such phone calls are requested to lodge a police complaint.
IRDAI - Registration No. 104. ARN/Web/01. Category: Life. Validity: Valid.
Corporate Identity Number (CIN):U74899PB2000PLC045626.
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Copyright @2016 Max Life insurance Co. Ltd. All Rights Reserved. An ISO 9001:2008 Certified Company.
Max Life Insurance Co. Ltd. is a Joint Venture between Max Financial Services Ltd. and Mitsui Sumitomo Insurance Co. Ltd. Registered Office: 419, Bhai Mohan Singh Nagar, Railmajra, Tehsil Balachaur, District Nawanshahr, Punjab -144 533. Corporate Office: Max Life Insurance Co. Ltd., 3rd, 11th and 12th Floor, DLF Square Building, Jacaranda Marg, DLF City Phase II, Gurugram (Haryana) - 122002. Operation Center: Max Life Insurance Co. Ltd, Plot No. 90-A Udyog Vihar, Sector 18, Gurugram (Haryana) - 122015.
Helpline: 1860 120 5577 (9:00 A.M to 6:00 P.M Monday to Saturday) * Call charges apply. Online Term Plan Helpline: 1800 200 3383. Fax Number:0124-4159397.
Email ids: service.helpdesk@maxlifeinsurance.com; online@maxlifeinsurance.com
Life Insurance Coverage is available in this Product
Unit Linked Insurance Products (ULIPs) are different from the traditional insurance products and are subject to the risk factors. The premium paid in the Unit Linked Life Insurance Policies is subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Max Life Insurance is only the name of the insurance company and Online Savings Plan is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these funds, their future prospects or returns.
Some benefits are guaranteed and some benefits are variable with returns based on the future performance of your Insurer carrying on life insurance business.
Assumed rates of return (4% and 8%) are not guaranteed and they are not the upper or lower limits of what you might get back, as the value of your policy is dependent on a number of factors including future investment performance. The guaranteed and non-guaranteed benefits are applicable only if all due premiums are paid.
THE LINKED INSURANCE PRODUCTS DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICYHOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF FIFTH YEAR.
Insurance is the subject matter of solicitation. For more details on the risk factors, Terms and Conditions, please read the sales and rider prospectus carefully before concluding a sale. Tax benefits are eligible for tax exemption on fulfilling conditions mentioned under Section 10(10D) of income tax act 1961. Tax exemptions are as per our understanding of law and as per prevailing provisions of income tax at 1961 . Policy holders are advised to consult tax expert for better clarification /interpretation. Please note that all the tax benefits are subject to tax laws at the time of payment of premium or receipt of policy benefits by you. Tax benefits are subject to changes in tax laws. The monthly Income Benefit and Terminal Benefit may be taxable subject to extra premium being loaded at underwriting stage.