LIC Term Plans with Return of Premium

Considered as one of the purest forms of policy, term insurance is widely available in the insurance market these days. Term insurance, as the name suggests, is for a defined tenure. Traditionally, term insurance plans, or let’s say, regular term insurance plans, offer benefits to the nominee of the policyholder in case of the policyholder's untimely demise during the policy tenure. In case the policyholder outlives the policy tenure, no benefits as such are offered to him/her or his/her nominee.

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Looking at the popularity of the term insurance policies and the termination of the policy after the policy tenure, many insurance companies, including the Life Insurance Corporation of India (LIC) have come up with an advanced version, that is, Term Return of Premium Insurance plan (TROP). 

Let us evaluate in detail the Term Return of Premium Insurance plan (TROP), plans under Return of Term Premium that LIC offers, and other details related to them.

What is Return of Premium Term Plan?

Regular term plan provides coverage to the family of the policyholder in case of his/her untimely demise, only during the policy term. Term Return of Premium Insurance plan, on the other hand, offers benefits, if the policyholder outlives the policy term.

Let us look at an example for a better understanding.

Mehul lived a happy life with his parents. They were living a healthy and financially stable life. Both his parents had a term insurance policy in their names and the nominee was Mehul. His parents were satisfied that even if one of them is not there tomorrow, he will be secured financially.

However, since both of them had a healthy lifestyle, they planned to discontinue their Regular Term Plan and get their refunds instead. To their surprise, they got to know that there is no refund of the premiums paid to date under the Regular Term Insurance Policy.

After a lot of confusion, they came to know about the Term Return of Premium Insurance Policy (TROP), which is an advanced version of the Regular Term Insurance Policy.

The major difference between the Regular term plan and the Return of Premium term plan is that the Regular term plan, on one hand, pays a lump sum amount to the nominee in case of the demise of the insured during the plan term. On the other hand, the Term Return of Premium Insurance plan (TROP) offers survival benefits after the maturity of the term insurance policy.

Term Return of Premium Insurance Plan, apart from survival benefits, also comes with additional benefits in rider’s form.

How Does Term Insurance with Return of Premium Work?

It is important to understand the objectives of insurance before buying any kind of policy. Understanding the process of TROP will help you have a better knowledge of investment. Let us look at an example:

Mr. X purchased a policy of Rs.20 lakh coverage for a tenure of 10 years. He is in good health and a non-smoker, so his premium paying amount comes out to be Rs.2,000. If he dies tomorrow, his nominee will receive Rs.20 lakh as the sum assured on his term insurance. However, if Mr. X survives the complete 10 years of the policy term, then his entire premium amount paid, that is, Rs.2,000 x 10 years = Rs.20,000 will be returned to him.

In this scenario, he is left in a no-profit no-loss situation if he survives the policy term. However, in case of his unfortunate demise, his nominee will be eligible for 20 lakhs, making this TROP investment a success.

Who Can Buy a Term Return of Premium (TROP) Insurance?

Generally, the minimum entry age to buy a term return of premium insurance plan is 21 years whereas the maximum can turn out to be 55 years. The premium payment amount depends on a lot of other factors as well apart from age such as income, lifestyle, medical condition, etc.

Mainly, individuals who fall under the following category can go for a term return of premium insurance plan:

  1. Unmarried

    An unmarried person does not have a spouse but can have dependent parents to look upon. In case of the demise of the policyholder, it becomes a nightmare for the dependents to move forward in life especially on a monetary level. TROP insurance plan gives you and your dependents a safe and secure future.

  2. Married without an offspring

    A married person without any offspring also requires future planning. In case the spouse is dependent on the policyholder solely, it is extremely necessary to secure his/her future so that he/she can plan his/her next level in life.

  3. Married with an offspring

    Being a parent is altogether a different world. From managing your child to managing his/her future, all big responsibilities fall on you at the same time. To avoid such pressure, the term return of a premium insurance plan is one of the best ways to support your future planning.

Term Return of Premium (TROP) Plan Benefits

  1. ROP Benefit

    Return of the premium is a great benefit that is not offered under a Regular term insurance plan. Survival benefit or maturity benefit has become a common term which an individual looks for while buying any policy these days. The term return of premium helps an individual to stay assured of a no-profit no-loss situation in case of survival.

  2. Death Benefit

    The primary focus while purchasing a term plan is life coverage. Under term return of premium (TROP) insurance plan, the focus is on expense coverage by the family of the policyholder during the time of crisis.

  3. Tax Benefit

    Tax benefits are available under the Term return of premium insurance plan as per the prevailing tax laws under Section 80C and 10(10D).

Term Return of Premium (TROP) Plan Features

Here are some important features of the Term Return of Premium (TROP) plan:

  • Affordability
  • Multiple premium payment options
  • Surrender value
  • Rider options are available

Difference Between Regular Term Plan and Term Return of Premium Plan

Regular Term Plan

Term Plan with Return of Premium

Pure Term Insurance Plan

Term Plan with Return of Premium (TROP)

A regular term insurance plan is the simplest form of life insurance product.

TROP is one of the variants of a term insurance plan

Insurance coverage is offered in the form of a death benefit during the policy tenure only.

TROP along with death benefit comes with other benefits such as survival benefit, premium return benefit, etc.

A regular term insurance plan is simple and affordable as compared to any other plan in the insurance market.

TROP, on the other hand, is more expensive in terms of premium payment over the regular term insurance plan.

The premium rate of a regular term insurance plan is very affordable.

The premium charged by Term Return of Premium (TROP) is considerably higher.

Offers the benefit of tax exemption under section 80C of the Income Tax Act.

Offers the benefit of tax exemption under section 80C of the Income Tax Act.

A regular term plan is best suited for individuals who want to support their family financially even after their demise.

Term insurance return of premium plan is best suited for individuals who, along with family protection want good returns along with extra benefits.

LIC Return of Premium Plan Options

LIC Jeevan Mangal Plan

LIC Jeevan Mangal offers the benefit of return of premium at the time of maturity. It is a pure protection plan with TROP benefit. In case of LIC Jeevan Mangal plan, the policyholder can either pay the premium amount in lump sum or at regular mode. Regular mode includes yearly, half-yearly, quarterly, or monthly premium payments as per the suitability of the policyholder. As soon as the premium payment term ends, so will the coverage offered under the policy.

Benefits Under LIC Jeevan Mangal Plan

  1. Maturity Benefit

    If the policyholder outlives the policy tenure, then they are eligible for maturity benefits. Under the benefit, sum assured on maturity is payable.

    Sum assured on maturity is equal to total premiums paid till date.

  2. Death Benefit

    Death benefit is paid to the nominee of the policyholder only if the policy is still in force.

    1. Death Due to Reason Other Than an Accident

      For regular premium policies:

      Sum assured on death is

      • 7 X annualized premium or
      • 105% of the total premiums paid till date or
      • Sum assured

      Whichever is higher

      For single premium policies:

      Sum assured on death is

      • 125 % of single premium or
      • Sum assured

      Whichever is higher

    2. Death Due to Accident

      An addition of sum equal to the sum assured shall be payable, provided the policy is in force

Eligibility Conditions and Other Restrictions

Entry Age (Minimum)

 18 years (completed)

Entry Age (Maximum) 

 55 years

Maximum maturity age

 65 years

Policy Tenure

For regular premium - 10 to 15 years

For a single premium - 5 to 10 years

Minimum Installment Premium

For monthly mode, it is Rs. 100/-

No other mode has any pre-defined minimum installment period.

Sum Assured (Minimum)

Rs. 10,000/-

Sum Assured (Maximum)

Rs. 50,000/-

(Sum Assured shall be in multiples of Rs. 1,000/-)

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

LIC Jeevan Umang

LIC Jeevan Umang is a whole life assurance, non-linked plan which comes with a dual benefit of income and protection for you and your family. Jeevan Umang offers survival benefits once the premium paying tenure is completed and maturity benefit if the policyholder outlives the policy tenure. A lump sum amount is paid to the nominee of the policy in the event of the unfortunate demise of the insured during the policy tenure.

Liquidity needs are taken care of through loan facility under the LIC Jeevan Umang plan.

Benefits Under Jeevan Umang

LIC Jeevan Umang Plan offers the below mentioned benefits:

  1. Death Benefit

    If the policyholder dies during the plan term, all premiums to be paid as mentioned below

    1. Death Before the Commencement of Risk

      Premium amount paid till the demise of the policyholder is offered to the nominee of the policy. Interest rate is not applicable under death before commencement of risk.

    2. Death After the Commencement of Risk

      Sum assured + additional bonus (if any) + vested simple reversionary bonus is paid to the nominee of the policy

      The sum assured is

      • Basic sum assured or 
      • 7 X of the annualized premium

      Whichever is higher

      The death benefit has to be at least 105% of total premiums paid till death of the policyholder. 

  2. Survival Benefit

    If the policyholder survives to complete policy tenure, then 8% of the Basic sum assured is to be paid each year. Payment number 1 is made at the end of the premium payment term and the rest are paid after the completion of each year till the policyholder survives.

  3. Maturity Benefit

    To calculate maturity benefit, a simple formula is used.

    Sum Assured on Maturity + Additional Bonus (if any) + Simple Reversionary Bonuses

    Basic sum assured and sum assured on maturity are equal here.

  4. Loan Benefit

    Loan by the policyholder can be taken up to 90% of the surrender value. It can be taken only after the completion of 3 years of the policy, keeping in mind that all the premiums have been paid to date.

  5. Riders Benefit

    Following 5 rider benefit options are available under the LIC Jeevan Umang plan.

    • LIC's Accidental Death and Disability Benefit Rider
    • LIC's Accident Benefit Rider
    • LIC’s New Term Assurance Rider
    • LIC’s New Critical Illness Rider
    • LIC’s Premium Waiver Benefit

    Although, only one option can be selected from Accidental Death and Disability Benefit Rider and Accident Benefit Rider.

Eligibility Conditions and Other Restrictions

Basic Sum Assured (Minimum)

 Rs. 2,00,000

Basic Sum Assured (Maximum)

(The Basic Sum Assured (SA) has to be in multiples of Rupees 25,000/-)

 No limit

Tenure of Premium Payment 

 15, 20, 25, and 30 years

Policy Term 

Subtracting 100 from the age of entry is the policy term 

Entry age (Minimum)

 90 days (completed)

Entry age (Maximum)

 55 years

Age at the end of premium paying tenure (Minimum)

 30 years

Age at the end of premium paying tenure (Maximum)

 70 years

Maturity age

 100 years

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

Written By: PolicyBazaar - Updated: 30 September 2021
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