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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Life Insurance Products

Which feature distinguishes a return of premium (ROP) term plan from a pure term plan?

A return of premium term plan refunds the premiums paid, generally excluding taxes and loadings, if the life assured survives the policy term. Because of this survival benefit, its premium is higher than a pure term plan with the same sum assured.

  1. AROP plans pay the sum assured on survival to the end of the term
  2. BROP plans refund the premiums paid, usually excluding taxes, if the life assured survives the term, at a higher premium than pure termCorrect
  3. CROP plans charge lower premiums than pure term plans for the same cover
  4. DROP plans give a death benefit equal to the premiums paid only

Explanation

A ROP term plan returns the premiums paid (generally excluding taxes and extra loadings) on survival, and the cost of this feature makes premiums higher than pure term. It still pays the sum assured on death during the term.

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