Term Insurance with Return of Premium

What Is A Term Insurance With Return Of Premium (TROP) Plan?

TROP (Term return of premium) works like a standard term plan. This plan provides life cover (death benefit) to the policy nominees/beneficiaries. However, the main difference between the best term insurance with return of premium and a standard term insurance plan is the maturity benefit offered by Term insurance with return of premium (TROP).

Policyholders can benefit from a TROP (term plan with return of premium plan) by paying an extra premium amount. You can choose the needed sum assured and policy tenure and then pay the premium.

This plan is suitable for:

• People looking for a medium of savings along with a life cover

• People who need life cover that provides financial support to their family in case of their absence

Based on your financial needs, you can choose the best term insurance with return of premium for your family.

Best Term Insurance with Return of Premium Plans 2024

Below mentioned are the best term insurance with return of premium plans:

*You can use a term insurance premium calculator to check the estimate of the premiums you need to pay regularly for the desired life cover. You can also use the HLV Calculator to know the ideal life cover.

How Does Term Plan with Return of Premium Work?

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

Mr Sharma is a 25-year-old male, earning 9 LPA, looking to buy a plan for himself. He is a healthy man with no smoking habits or history of health problems. He buys a term plan with return of premium and chooses a life cover of Rs. 1 Crore.

The yearly premium payable for the term plan is Rs. 13,273 per annum for a policy term of 30 years, i.e. until the policy maturity. If Mr. Sharma dies within the policy term, the individual appointed as the nominee will get the sum assured of Rs. 1 Crore.

But Mr. Patel outlives the policy tenure and will be eligible for a maturity payout under term plan with return of premium plan. He will get Rs 5,23,410 (17,447 X 30) upon policy maturity.

Who Can Buy Term Insurance With Return Of Premium (TROP)?

When it comes to fulfilling financial commitments like buying term plan with return of premium (TROP), every individual may have different goals. Selecting this plan depends on age, income, lifestyle, and health conditions. Evaluating your financial situation based on these criteria is crucial for choosing the right plan. TROP Plans can be a good choice for people falling under these categories if you are planning to buy these plans. 

Unmarried: If unmarried, you may have specific financial responsibilities for your parents, especially if they are aged. Hence, in the event of your unfortunate demise, the death benefit will secure them financially. And, if you outlive the policy, you will receive all your premiums paid during the policy term.

If you are married and have no children: If you’re married and your partner solely depends on your income source, term insurance with return of premium (TROP) may be the ideal solution for you. TROP plan provides financial support for your spouse against life’s uncertainties.

If you are married and have children, it is your main responsibility to protect your: children's future. TROP ensures that your loved ones and kids are financially protected in case of any eventualities in the future, thereby ensuring that your children’s education and career are not hampered.

What Are The Benefits Of Term Insurance with Return Of Premium?

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 (ROP) Benefit

Term Return of Premium (TROP) plan refunds all the premiums paid if the policyholder survives the entire policy term. This feature provides financial security by offering a return on investment, unlike traditional term policies where premiums are not refunded.

Protect Family Against Risks

TROP plans offer life insurance coverage to ensure the policyholder's family is financially protected in the event of their death during the policy term. The sum assured helps beneficiaries manage expenses and secure their future against unforeseen risks.

Death Benefit to Nominees

TROP plans provide lump sum payout to the designated beneficiaries of the policyholder upon their untimely death, also called the death benefit. This is the life cover amount chosen by the policyholder and this amount ensures that loved ones receive financial support and coverage as intended by the policy.

Additional Rider Benefit

TROP plans allow the addition of riders such as critical illness cover, accidental death benefit, and waiver of premium. These riders enhance the policy by providing customized and comprehensive protection against various uncertainties.

Save Tax Every Year With 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).

Why Is Term Insurance with Return of Premium (TROP) Right For You?

In the face of rising living costs and increased life responsibilities, individuals are actively seeking effective money management strategies. Opting for financial instruments that not only facilitate wealth creation but also provide life security can be a prudent choice.

A Term Plan with a return of premium (TROP) option provides additional benefits like accidental death benefit, waiver of premium, and protection against critical illnesses and disability.

With the availability of a comprehensive range of insurance products, selecting the right one can be challenging for a policy buyer. Choosing plans based on factors like cost or policy duration might not be optimal. It's crucial to weigh the comprehensive benefits of term plan with return of premium to ensure satisfaction with the investment decision.

Quick Guide to Term Insurance with Return of Premium Plans

How does a Term Insurance with Return of Premium (TROP) plan differ from a regular term insurance plan?
The main difference between a Term Insurance with Return of Premium (TROP) plan and a regular term insurance plan is that TROP offers a return of all premiums paid at the end of the policy term if the policyholder survives. Whereas, regular term insurance does not provide any return of premiums and only pays out the sum assured upon the policyholder's death during the policy term.

Are there any tax benefits associated with Term Insurance with Return of Premium (TROP) plans?
Yes, TROP plans offer tax benefits under Section 80C of the Income Tax Act, where premiums paid up to ₹1.5 lakh per annum can be deducted from taxable income. Additionally, the maturity benefit received at the end of the policy term is tax-free under Section 10(10D), subject to certain conditions.

What are the key factors to consider when choosing a Term Insurance with Return of Premium (TROP) plan?
When choosing a Term Insurance with Return of Premium (TROP) plan, consider factors such as the premium amount, the policy term, the sum assured, the insurer’s claim settlement ratio, and any additional benefits or riders offered. It's important to assess your financial goals and compare different plans to find one that best suits your needs and budget.

What Is Term Return Of Premium Calculator?

A Term Return Of Premium Calculator is an online tool that helps you determine the maturity amount that you can receive based on the various options that you select. The Term Return Of Premium Calculator is simple to use and you just need to enter a few necessary details to use it, such as:

• Gender

• Tobacco Consumption

• Age

• Required Life Cover

• Age Until Which You’re Covered

Why Should You Choose Term Plan with Return of Premium Option?

Below are some of the reasons why you should opt for a term plan with return of premium: 

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

A term plan with return of premium, also known as TROP, is different from a term plan as it provides a survival benefit as a premium return in addition to the death benefit.

Here is a list of all the features of the Term plan return of premium:

Why Should You Choose Policybazaar?

• Dedicated claim support for family FREE

• Discounts upto 10% for buying online

• 100% calls recorded to ensure no mis-spelling

• Advisors available in your city

• Refund at the click of a button

What is the Difference Between Term Insurance and Term Insurance with Return Premium?

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:

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

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 your budget so that you don’t skip any premium payments or compromise on other expenses.

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

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

• Your TROP plan should provide yearly, half-yearly, quarterly, or monthly premium payment options.

How do you buy best term insurance with a 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

Key Takeaways

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.

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