Term Insurance with Return of Premium

Term insurance Return of Premium (TROP) is a variant of a term insurance plan in which the entire premium paid towards the plan is paid back to the policyholder at the end of the policy term. Under this plan, the policyholder receives back all the premiums paid (minus GST) in case he/she survives the entire policy term, provided all the premiums of the plan are duly paid. 

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What is a Term Plan with Return of Premium or TROP?

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 Term 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.

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Best Term Insurance with Return of Premium Plans 2023

TROP Plans Maximum Cover Age Annual premium (in Rs.)
ICICI iProtect Return of Premium 60 years 29205
HDFC Click 2 Protect Super 60 years 42245
Max Life Smart Secure Plus 70 years 21743
Bajaj eTouch 60 years 14372
PNB Mera Term Plan Plus 60 years 17870
Exide life smart term edge classic 50 years 27092
Canara HSBC iSelect Smart 360 99 years 26708
Tata AIA Sampoorna Raksha Supreme 80 years 28424
Aditya Birla DigiShield 75 years 28090

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How Does Term Plan with Return of Premium Work?

Let’s understand how a term plan with return of premium works:

Mr. Raman is a 30-year-old man looking out for a plan to secure himself. Raman 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. 50 Lakhs.

The monthly premium that is payable for the plan is Rs. 2000 for a tenure of 10 years. If Mr. Raman passes away within the policy term, the individual assigned as the beneficiary/nominee will receive the sum assured amount of Rs. 20 Lakhs.

But if Mr, Raman survives the policy tenure, he will be eligible for a maturity payout under the term insurance plan with return of premium. He will get (Rs. 24000 X 10) i.e., 240000 upon maturity of the plan.

Now, let’s take a look at some of the benefits of term insurance with the return of premium as compared to the pure term insurance plan.

  • A term plan offers only death benefits whereas a term insurance return of premium plan offers the benefit of the return of premium as a maturity benefit after the completion of the policy tenure.

  • Because of this guaranteed “all premiums back” feature, the premium rate of the TROP plan is higher than a pure-term insurance plan.

Why Should You Opt for a Term Insurance Plan with Return of Premium Option?

With the increasing living costs, liabilities in life, and illnesses, every one of us is checking out for ways to manage the amount in an efficient way. Term plan with return of premium (TROP) can be an ideal solution that offers an opportunity to build wealth and get financial protection.

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. Also, 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.

What are the Benefits of Term Plan with Return of Premium?

  1. Return of Premium Benefit

    Term insurance with a return of premium offers a premium refund on the maturity of the policy. In case the 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.

  2. Death Benefits

    The term plan 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.

  3. Tax Benefits

    Buying term insurance with return of premium makes an individual eligible for the tax savings benefit. You can get 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).

Kal Kisi Ne Nahi Dekha Kal Kisi Ne Nahi Dekha

What are the Features of Term Plan with Return of Premium?

A term plan with a return of premium, also known as TROP, is different from a term plan as they provide 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.

  1. Affordable

    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.

  2. Premium Payment Options

    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.

  3. Guaranteed Premium Return

    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).

  4. Maturity Benefits as Refund amount

    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.

  5. Surrender Value

    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.

  6. Paid-Up option for non-earning individual

    This is a benefit for individuals who are not earning and have no fixed income and are provided under a term plan with a 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.

  7. Riders

    Insurance companies offer various riders in addition to the principal cover. These generally include:

    Personal Accident or Disability Rider

    This provides a certain benefit if the insured is involved in an accident that may cause injuries, disabilities, or even death

    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.

    Hospital Cash

    This rider provides certain cash benefits in case of hospitalization due to certain pre-defined reasons.

Who can Avail Term Plan with Return of Premium?

Term plan with return of premium can be purchased by all individuals irrespective of whether they are single, married, or married and have kids. An individual can easily buy an online term insurance plan after comparing it with other available policies of interest. TROP can be the right choice for the following people:

Unmarried: If you are not married, you may have certain financial responsibilities for your parents, mainly if they are retired. If you have a TROP, the maturity benefit makes sure they get a large sum of money.

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 is solely dependent on your income source, term 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.

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Term Plan with Return of Premium Plan Vs Pure Term Insurance

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 plan and TROP in detail:

Pure Term Insurance Plan Term Plan with Return of Premium (TROP)
Known as a pure protection plan, it is the simplest form of life insurance product. Term insurance return of premium is a variant of term insurance plan
In a pure-term 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 a 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 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 return of premium is best suited for individuals who don’t mind gaining some returns along with the benefit of insurance coverage.

How to Choose the Best Term Insurance with Return of Premium Option?

In order to find the best term insurance plan with a 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:

  1. Before buying TROP, always assess the coverage amount as per your requirements in case of your unforeseen death

  2. 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.

  3. Check if the claim settlement ratio of your insurance company is high. High CSR indicates the fast settlement of claims.

  4. Check for an insurance company that has a good solvency ratio.

  5. The TROP plan you choose should provide yearly, half-yearly, quarterly, or monthly premium payments.

How to Buy Best Term Insurance with Return of Premium Plan from Policybazaar?

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

FAQ's

  • What is the ROP i.e., return of premium amount in term life insurance plans?

    Ans: Term plan with return of premium option pays back the total annual premium paid (exclusive of all the taxes) towards the plan as maturity payout if you survive the policy term. Also, if something happens to you, the ROP plans give life cover to the family.
  • Which is the best term plan with a return of premium option?

    Ans: Policybazaar helps you find and compare the best term plan with return of premium online as per your requirements from 15+ insurance companies. Here are some of the benefits of buying plans from policy bazaar:
    • Dedicated claim assistance
    • Affordable prices
    • Unbiased and certified advisors
    • Walk-in stores
    • Insurance advisors at your doorstep
    • 10% online discount
  • What are the benefits of a term insurance plan with return of premium?

    Ans:
    • Your family receive financial support as a death benefit in case of your unforeseen death
    • In case of surviving the policy term, you receive the total premium amount back that was paid towards the term plan with the return of the premium plan.
    • You can get tax savings benefits u/s 80C and 10(10D) of the ITA, 1961.
    • You can also increase your coverage by opting for riders against critical illnesses, accidental death, etc.
  • Should you buy a Term plan with return of premium?

    Ans: Yes, you should buy TROP if you need a large amount of financial security for your family members but have a tolerance of low risk at the time of putting your amount in term plans. TROP also provides dual benefits i.e., maturity and death benefits, so that you and your family can get benefit from the plan.
  • Is it possible to get your money back from term insurance plan on maturity?

    Ans: Yes, it is possible with TROP. This plan pays back the total annual premium paid (minus taxes) when you survive the policy term.
  • Is there any grace period in TROP?

    Ans: Yes, the Term plan with return of premium offers a grace period of 30 days and it is 15 days for monthly premium payment.
  • What Should I Buy Pure Term Plan or TROP?

    Ans: It is a wise decision to buy TROP as it offers death and maturity benefits both. At last, it depends on your financial requirements, so buy smartly.
  • Does a smoking habit affect the Term insurance plan with return of premium?

    Ans: Yes, premium amounts vary for a smoker and a non-smoker. A smoker is usually under the high-risk category so the premiums are quite high in comparison to a non-smoker.
  • What is the minimum eligibility criteria for TROP?

    Ans: The minimum entry age for a TROP (Term insurance plan with return of premium) is 18 years, in general.
  • Can I add riders under TROP?

    Ans: Yes, the policyholder can increase the coverage of TROP by attaching riders of their selection. Different riders can be added based on financial needs to get complete coverage. Is it good to buy term insurance with return of premium? Yes. TROP allows the policyholder to get back all the premium amount paid over the policy term at the time of maturity.

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