What is Better Money-Back Plans or TROP?
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What is a Money-Back Plan?
Money back plans are a unique kind of life insurance plan that provides life cover and provides guaranteed payouts at regular intervals during the policy term. The guaranteed payouts are survival benefits which are provided at different life stages of the life assured, at a fixed percentage of the sum assured. This plan also offers a maturity benefit which is provided at the end of the policy term after deducting the periodic payouts made throughout the policy term.
Under the money-back plan, a death benefit is provided in case of an untimely death of the life assured during the policy term, the death benefit is provided irrespective of payouts made throughout the policy term.
What is a Term Plan with Return of Premium (TROP)?
Term plan with Return of Premium works just like a traditional term insurance plan but with a slight difference. TROP plan provides maturity benefit at the end of the policy term, in case the life assured survives the entire policy term. Maturity benefit under TROP is equal to repayment of all the premiums paid.
TROP also provides death benefits in case of an unforeseen demise of the life assured during the policy term.
Difference Between Money-back and TROP
Following is the difference between Money Back plan and Term Plan with Return of Premium:
Difference Between Money-back and TROP
| Parameters | Money-Back Plan | TROP |
| Death Benefits | Under money-back a death benefit is provided to the nominee, in case of an untimely demise of the life assured during the policy term. The death benefit is equal to sum assured irrespective of regular payouts made during the policy term. | Under term plan with return of premium, a death benefit is provided to the nominee in case of an untimely demise of the life assured during the policy term. |
| Maturity Benefit | Money-back plan provides maturity benefit in case the life assured survives the entire policy term, it is provided at the end of the policy term after deducting the regular payouts made during the policy term. | Term plan with return of premium provides a maturity in case the life assured survives the entire policy tenure. The maturity benefit under TROP is considered return of premium paid. |
| Survival Benefit | Survival benefits are guaranteed payouts made during the policy term at regular intervals, the survival benefits are equal to a fixed percentage of the sum assured. | No survival benefits are provided under term plan with return of premiums. |
| Bonus | Money-back plans are participating in nature and bonuses are declared upon the policy according to the performance of the insurance provider. | No bonuses are declared on the term plan with return of premium. |
What is Better Money-Back or TROP?
Money-back plans provide life cover and provide guaranteed payouts during the policy term that help you fulfil your financial goals at different stages of life. Money-back also provides maturity benefit after deciding the regular payouts made during the policy term, this plan also allows participation in profits. On the other hand TROP provides life cover, TROP also provides maturity benefit in case the life assured survives the entire policy term.
By now you may understand the difference between the two insurance plans, now you can make an informed purchasing decision. If you are looking for a plan that will provide you income during different stages of life along with life cover then you must opt for money-back plans.
Also Read: Who Should Buy A Money Back Policy?
Benefits of Money Back Insurance Plans
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.
