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Term Insurance with Return of Premium (TROP) is a variant of a term insurance plan in which the entire premium paid towards the plan is returned back to the policyholder at the end of the policy term. Under this plan, the policyholder gets the survival benefits and receives back the premium (minus GST) paid to the insurance company.
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TROP (Term plan with return of premium) works in the same way as a term plan, providing a life cover to the life assured and their family members. However, the main difference between the best term insurance with return of premium and a standard term insurance plan is the maturity payout offered by TROP.
Under a term plan with return of premium option, the policyholder will be eligible for a return of the premium amounts at the end of the policy tenure, if he/she survives that term. TROP also offers death benefits to the policyholder’s nominee/beneficiary in case of death. This means a term insurance plan with return of premium provides dual benefits under a single-term plan. This plan is suitable for policy buyers:
Who are looking for medium of savings along with the life cover
Who is in need of life cover that provides financial support to their loved ones in case of their absence
Based on your financial needs, you can choose the best term insurance with return of premium for your family.
Term Plans
Below mentioned are the best term insurance with return of premium:
| Term Insurance with Return of Premium | Entry Age | Maturity Age | Sum Assured | |
| ICICI iProtect Return of Premium | 18 to 60 years | 85 years | 25 Lakhs to 10 Crores | |
| HDFC Click 2 Protect Super | 18 to 65 years | 85 years - entry age | 50 Lakhs to 20 Crores | |
| Max Life Return of Premium | 18 to 65 years | 82 years | 25 Lakhs to 10 Crores | |
| TATA AIA SRS Vitality Protect | 18 to 60 years | 85 years | 50 Lakhs to 2 Crores | |
| Bajaj Allianz Life eTouch | 18 to 55 years | 99 years | 50 Lakhs to 10 Crores | |
| PNB MetLife Mera Term Plan Plus | 18 to 50 years | 80 years | 50 Lakhs to 10 Crores | |
| Canara HSBC Young Term Plan Life Secure TROP | 18 to 45 years | 99 years | 25 Lakhs to 20 Crores | |
| Aditya Birla Capital DigiShield Plan | 18 to 65 years | 85 years | 50 Lakhs to No Limit | |
| SBI Life Smart Swadhan Plus | 18 to 65 years | 70 years | 20 Lakhs to 10 Crores |
* You can use a term insurance premium calculator to check the estimate of the premiums you would need to pay on a regular basis for the desired life cover.
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Let’s understand how a term plan with return of premium works:
Mr. Vishal is a 30-year-old man looking for a plan to secure life cover for himself. He is healthy and active without any history of medical problems or smoking habits. He buys term insurance with return of premium and chooses a sum assured amount of Rs. 1 Crore.
The annual premium that is payable for the plan is Rs. 16,977 for a policy term of 30 years (till the policy’s maturity). If Mr. Vishal passes away within the policy term, the individual assigned as the beneficiary/nominee will receive the sum assured amount of Rs. 1 Crore.
But if he survives or outlives the policy tenure, he will be eligible for a maturity payout under the term plan with return of premium. He will get all the premiums that he paid for 40 years upon maturity of the plan i.e., 16,977 X 30 = 5,09,310.
When it comes to essential financial decisions like buying term plan with return of premium (TROP), individual objectives can vary. This majorly depends on various factors, including age, income source, lifestyle, and health conditions. Evaluating your financial situation based on these criteria is crucial for selecting the most suitable policy.
Hence, if you're considering a term plan with return of premium, it's essential to assess the advantages offered by this plan. TROP can be considered as a preferable choice for people who fall under the below categories:
Unmarried: If you are not married, you may have certain financial responsibilities for your parents, mainly if they are retired. If you have a Term plan with return of premiumTROP, the maturity benefit makes sure they get a large sum of money.
In the event of your unfortunate passing, the death benefit will cover their expenses, assuring you they will maintain financial independence in your absence. If you outlive the policy, you can have the comfort of receiving a refund of the premiums you paid during the tenure of Term return of premium.
If you are married and have no children: If you’re married, you can also consider a term plan with return of premium. If your partner solely dependsis solely dependent on your income source, term insurance with return of premium (TROP) may be the ideal solution for you. This plan provides financial support for your family’s future against any uncertainties. The maturity payout provided at the last of the policy term will be an addition.
If you are married and have children: It is the main responsibility of a person to protect the future of their children. The TROP ensures that your loved ones and kids are financially protected in case of any eventualities in the future.
There are several benefits of term insurance that an individual should take into consideration, and a term insurance with return of premium plan has all those benefits with an additional one, i.e. return of all premiums upon maturity of plan. Let’s understand some of these benefits below:
Return of Premium Benefit
Term insurance with return of premium offers a premium refund on the maturity of the policy. In case the life assured survives the entire tenure of the policy, then they are eligible to receive the total amount of premium invested towards the plan on completion of the policy term. This makes the plan ideal for investors who want to have insurance coverage along with the benefit of a premium refund on maturity. This option allows policyholders to remain reassured.
Death Benefits
The term insurance with return of premium offers death benefit as the total sum assured amount to the nominee in case the life assured dies due to any eventuality. Different insurance companies offer the sum assured amount depending on the plan or mode of premium payment or the type of cover opted for. The death payout offered with TROP helps the family of life assured to manage their expenses during a financial crunch.
Rider Benefit
Insurance companies offer various riders in addition to the base cover. An additional amount on top of the base sum assured will be paid to the life assured under the term insurance with return of premium plan:
Critical Illness Rider
This rider covers certain illnesses such as heart attacks, stroke, cancer, certain cardiovascular surgeries, and so on. The number of illnesses covered by different companies varies, and people should ensure they take note of the ones the rider covers before they opt for it.
Waiver of Premium Rider
The Waiver of premium rider waives future premium payments under specific conditions in life insurance.
Accidental Death Benefit Rider
The Accidental Death Benefit (ADB) Rider is an optional addition to the base life insurance plan that policyholders can choose for increased coverage at affordable premiums.
Accidental Total and Permanent Disability Rider
The Accidental Total and Permanent Disability (ATPD) Rider provides financial protection for policyholders in case of a permanent disability caused by an accident during the policy term.
Tax Benefits
Buying term insurance with return of premium makes an individual eligible for the tax savings benefit. You can get term insurance tax benefits as per the prevailing laws of the Income Tax Act, of 1961. The premium amount paid towards the term insurance plan and the benefit payout is free of taxes under sections 80C and 10(10D).
Below are some of the reasons why you should opt for a term plan with return of premium:
Building Wealth: With the increasing living costs, liabilities in life, and illnesses, every one of us is checking out for ways to manage the amount efficiently. Term plan with return of premium (TROP) can be an ideal solution that offers an opportunity to build wealth and get financial protection.
Financial Support to Self and Loved Ones: A Term plan with return of premium (TROP) is specifically designed for customers who want to provide financial security to their loved ones along with the benefit of returns.
Added Benefits: Various insurers offer TROP plans with additional benefits like disability benefits, accidental death benefits, waiver of premiums, and protection against critical illnesses. With the availability of a number of insurance plans, a policy buyer may find it difficult to choose one right plan. Selecting a plan on the basis of one parameter whether it is price or policy term is not an ideal solution. So, always ensure to consider the benefits of TROP.
A term plan with return of premium, also known as TROP, is different from a term plan as it provides a maturity benefit as a premium return in addition to the death benefit.
Here we have discussed in detail the features of the Term plan return of premium.
In TROP, the premium amounts paid are returned as maturity benefit and they are exempted from taxation. You can easily get your premium amounts paid back at no additional cost.
You can select the suitable sum assured amount under term plan with return of premium. Moreover, you can also choose the right premium payment option from:
One-time payment: In this, the entire premium is paid as a lump sum amount in one time.
Regular Pay: Under this option for ROP, you pay premium amounts at fixed intervals throughout the policy term. You can select to pay them on a yearly, half-yearly, quarterly, or monthly basis.
Pay till 60: This option under TROP helps you to pay off the premium amounts till 60 years of age, while the policy extends till 85 years.
Limited Pay: You can pay the premium amount for a fixed installment under the limited pay for TROP.
With a term plan with return of premium, the policyholders don’t have to panic about the return of their paid amount, as it is assured under the plan. This plan offers guaranteed returns on the total premium paid, excluding the extra premium amount paid for the riders and add-ons (if any).
In TROP, the refund of the premium amount is offered at maturity, if the life assured survives the policy term. This, in turn, the life assured does not lose the premium amount paid over the years.
If you want to discontinue the payments of premium or surrender the term plan after buying the term plan with return of premium (TROP), you will get a surrender amount. The surrender value of the TROP generally varies depending on the payment option.
For single premium type: The surrender amount is valid after the single premium payment
For limited pay and regular pay type: It is applicable on premium payment for 2 complete years.
This is a benefit for individuals who are not earning and have no fixed income and are provided under a term plan with return of premium. Under this, as mentioned earlier, the plan continues if the policyholder is unable to pay the premium, though with a lower cover. Most companies require the policyholder to pay the premium for a minimum number of years before they offer this benefit.
Insurance companies offer various riders in addition to the principal cover. These generally include:
Critical Illness Rider
This rider covers certain illnesses such as heart attacks, stroke, cancer, and certain cardiovascular surgeries, and so on. The number of illnesses covered by different companies varies and people should ensure they take note of the ones the rider covers before they opt for it.
Waiver of Premium Rider
The Waiver of premium rider waives future premium payments under specific conditions in life insurance.
Accidental Death Benefit Rider
The Accidental Death Benefit (ADB) Rider is an optional addition to the base life insurance plan that policyholders can choose for increased coverage at affordable premiums.
Accidental Total and Permanent Disability Rider
The Accidental Total and Permanent Disability (ATPD) Rider provides financial protection for policyholders in case of a permanent disability caused by an accident during the policy term.
Term Insurance Plans generally come in 2 variants: Pure term insurance plan and Term Plan with Return of Premium i.e., TROP. Both insurance products are ideal and have different goals. The one that you opt for would depend on your specific requirement. In some cases, people think that they will receive returns by investing in any financial products. However, that is not the case for all term plans. Let’s discuss the difference between term insurance vs return of premium in detail:
| Pure Term Insurance Plan | Term Plan with Return of Premium (TROP) |
| Known as a pure protection plan, it is the simplest and most affordable form of life insurance product. | Term insurance with return of premium is a variant of term insurance plan |
| In a pure term insurance plan, the insurance coverage is offered only as a death benefit. | Term plan with return of premium offers insurance coverage as a death benefit along with the benefit of the return of premium in case the policyholder survives the entire policy term. |
| In a pure term insurance plan, the sum assured amount offered to the policyholder is 10 times the annual premium paid. | On the other hand, a term plan with return of premium offers a comparatively lower sum assured amount to the policyholder. |
| The premium rate of a traditional term insurance plan is very affordable. | The premium charged by term insurance with return of premium is considerably higher. |
| Offers the benefit of tax exemption under section 80C of the Income Tax Act. | Term plan with return of premium also offers the benefit of tax exemption under section 80C of the Income Tax Act. |
| A term plan is best suited for an individual who wants to provide financial protection to their family. | Term insurance with return of premium is best suited for individuals who don’t mind gaining some returns along with the benefit of insurance coverage. |
In order to find the best term insurance plan with return of premium, it is always important to check a few points. Following are some points that you should consider before choosing a term plan with return of premium:
Before buying TROP, always assess the coverage amount as per your requirements in case of your unforeseen death
Ensure that the premium you have to pay fits into your budget so that you don’t skip any premium payments or compromise on other expenses.
Check if the claim settlement ratio of your insurance company is high. High CSR indicates the fast settlement of claims.
Check for an insurance company that has a good solvency ratio.
The TROP plan you choose should provide yearly, half-yearly, quarterly, or monthly premium payment options.
Step 1: Visit the Term Insurance with Return of premium Form
Step 2: Fill in the basic details like name, age, and contact number, and then click on ‘View Plans’.
Step 3: Answer the questions about chewing or smoking habits, annual income, type of occupation, and language.
Step 4: After submitting all the details, a list of all available term insurance plans will be displayed.
Step 5: Filter out the return of premium plans
Step 6: Choose the term plan that suits you the best and proceed to pay
Overview
Term insurance is one of the most preferred plans due to its affordability. However, the fact that regular term insurance plans do not provide maturity benefits may discourage customers from purchasing them. The term insurance with return of premium benefit allows customers to receive the entire premium paid at the end of the policy as a maturity benefit. Therefore, unlike regular term plans, TROP plans provide both death and maturity benefits within the same plan.
Tax Benefits
Term insurance with return of premium plans offers tax benefits as per the prevailing tax laws under sections 80C and 10(10D) of the Income Tax Act, 1961. This means you can avail tax benefits on the premiums paid and the benefits received.
Premium Rates
The premium rates for term insurance with return of premium plans are slightly higher than regular term plans. However, they return the entire premiums paid towards keeping the policy active at the end of the policy term on survival. Thus, in case of untimely death, your nominee will be financially secured, and in case you outlive the policy term, you will receive the premiums paid, which can help you take care of your post-retirement life.
Factors to Consider
While looking for the best term insurance with return of premium option, keep the following factors in mind:
Life cover should be enough to cover your family’s financial needs in your absence
The premium rates should be affordable enough to fit your budget
Buy term insurance with return of premium from an insurer with good CSR (over 95%)
Select the most suitable premium payment option (single, monthly, quarterly, bi-annually, or yearly)
ROP under MWP Act
The term insurance with return of premium plans are available under MWP (Marriage Women’s Property) Act. This ensures that only the wife or kids of the policyholder will be eligible to receive the death benefit in case of an eventuality. Not only that, on survival of the policy, the return of premiums can only be claimed by the wife and children.
Ans. You can buy the best term insurance with return of premium online by following the below steps:
Ans. The best term insurance with return of premium will offer a variety of death benefit options like:
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