Difference between TROP, Money-back, and Endowment Plans

Money-back is a life insurance and also a saving instrument. The benefits it offers like the survival benefit, the maturity benefit, the tax benefits make it a saving instrument along with a life insurance plan. The life assured is paid regular payouts after a certain amount of time from the beginning of the plan. It also provides additional bonuses to cover the parts of their life that are not financially covered through the policy.

A life insurance policy where the life assured's life is covered and where they are helped to save money for various events in life over a certain time is called an endowment plan.
The life assured does not have to pay during the policy term. Apart from providing life insurance, the policy also helps the life assured to save some money for the future over a certain period of time.

A TROP refers to a Term Plan with a Return of Premium. It is a term insurance plan with one additional benefit, being it provides survival benefit whereas, in a standard term insurance plan, the policyholder does not receive a survival benefit on surviving the whole duration of the policy tenure.

Difference between Money-Back, TROP, and Endowment Plan

The differences between money-back, TROP, and Endowment plan are -

1. Term and Maturity Benefit

• In an endowment plan, the life assured receives the sum assured if they survive the term of insurance. 
• In money-back, the life assured receives a portion of the sum assured at regular intervals of time during the term of the plan. If the life assured survives the term, the remaining sum assured with bonuses is paid to the life assured. 
• In a TROP, the insurer pays all the premiums paid in the policy by the insured so far to the policyholder once the plan reaches the maturity age.

2. Tenure

• The tenure of the Endowment policy is 10 to 15 years.
• Money-back policies generally have a tenure of 20 to 25 years.
• The general policy tenure is 20 years.

3. Loan Facility

• Since the sum assured is paid as payment only at the time of maturity, an endowment policy is generally used as a security to get a loan.
• As some of the sum assured is consistently deduced during the term of the policy, you can not avail of a loan against a money-back plan. plan.
• You can avail of a loan against the policy terms.

4. Death Benefit

• In a money-back plan, if the life assured dies suddenly, the dependent or the nominee will receive the entire sum irrespective of the premium installments paid.
• An endowment plan offers a guaranteed death benefit to the nominee to cover the immediate expenses.
• The nominee will receive the sum assured in case the policyholder dies in a TROP.

Payout Interval of Different Benefits

• In an endowment plan, if the life assured survives the term, the sum assured and the applicable bonuses will be paid to the life assured. The life assured receives the payment at the end of the term.
• In case of the death of the policyholder, the sum assured is paid to the nominee and bonuses will be paid right away.
• In a money-back plan, the life assured is paid a fixed portion of the sum assured after a period of time at regular intervals as survival benefits. In case of the sudden death of the life assured, during the policy term, the nominee will receive the sum assured and bonuses.
• Being a return of premium plan, the entire premiums paid are returned back to the policyholder on the maturity of the plan.

Conclusion

There are different insurance and saving instruments you can choose from to save and grow your money. Endowment, money-back, and TROP are widely suggested for this purpose.

Must Read: Common Features of Money-Back Plans

How Can a Money-Back Plan Help You in Different Stages Of Life?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.