NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Life Insurance Products
Under a standard term insurance plan with return of premium (TROP), what is paid if the life assured survives the policy term?
A term plan with return of premium refunds the premiums paid, as per policy terms, if the life assured survives the term. The sum assured is payable only on death, and the refund feature makes the premium higher than a pure term plan.
- AThe sum assured
- BNothing at all
- CThe premiums paid, as per policy termsCorrect
- DTwice the premiums paid as a bonus
Explanation
TROP plans refund the base premiums paid (generally excluding taxes and rider premiums) on survival to maturity, which is why they cost more than pure term plans. They do not pay the sum assured on survival; that is payable only on death.
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