What is a Term Insurance with a Return of Premium (TROP)?
A Term Insurance with Return of Premium (TROP) is a term insurance plan that returns all premiums, excluding GST, if the policyholder survives the policy tenure. This return of premium feature distinguishes it from a basic term plan. While a pure term plan only offers death benefits, a TROP provides both death benefits and maturity benefits. This is why many people prefer a Term Insurance Plan with Return of Premium in India to enjoy both protection and savings.
The premiums for a Term Plan with Return of Premium are higher than a pure term plan because your premiums are returned at the end of the policy tenure. Additional benefits associated with TROP can include partial or full disability benefits, accidental death benefits, and guaranteed protection against critical illnesses. TROP offers a sense of overall protection with dual benefits under a single term plan.
How Does a Term Insurance Plan with Return of Premium Work?
It's important to understand how a Term Plan with Return of Premium works so you can make the right financial decision. If the policyholder dies during the policy tenure, their family will receive the death benefits. However, if they survive the policy tenure, all premiums paid are returned as maturity benefits.
Let's understand how a Term Plan with Return of Premium works with a simple illustration:
- Bhanu, a 25-year-old man with no alcohol or pre-existing medical problems, wants to secure his life with a term plan and receive all his premiums back if he survives the policy tenure.
- He buys a Return of Premium term plan with a sum assured of Rs. 40 lakhs.
- The yearly premium for his plan is Rs. 14,000 for a policy tenure of 50 years.
- If Bhanu passes away during the policy term, the nominee will get the Rs. 40 lakhs sum assured.
- If Bhanu survives the policy tenure, he will receive all his premiums back (Rs. 14,000 x 50 = Rs. 7,00,000) on the maturity date.
Best Term Plan with Return of Premium in 2025
Here is a list of the best Term Insurance Plans with Return of Premium for 2025. You can consider these plans for purchase.
| Name of the Plan | Entry Age | Maturity Age | Unique Features |
| ICICI Pru iProtect Return of Premium | 18 to 65 years | 85 years | Return of premium with Life Stage Cover, Online discount, Flexible premium payment methods |
| Axis Max Life Smart Secure Plus Plan | 18 to 65 years | 85 years | Premium break option, Special exit value, Terminal illness cover |
| Bajaj Allianz Life eTouch Online Term Plan | 18 to 65 years | 75 years | Premium holiday option, Extra payout in case of death due to accident, Choose how your family receives death benefits |
| PNB MetLife Mera Term Plan Plus | 18 to 65 years | 99 years | Spouse cover protection, Choice of plan option, Options to enhance cover with riders |
| Canara HSBC iSelect Smart360 Term Plan | 18 to 65 years | 81 years | Child care benefit, Life stage benefit, Spouse cover |
| ABSLI DigiShield Plan | 18 to 65 years | 55 years | Flexible premium payment term, Rider options to choose from, Inbuilt terminal illness cover |
What are the Features of a Term Insurance with Return of Premium?
Here are some features of a Term Plan with Return of Premium option:
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Death Benefits
In case of the policyholder’s uncertain demise during the policy tenure, death benefits are paid to the policyholder’s family to fulfill their financial goals.
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Multiple Premium Payment Options
Term insurance with return of premiums offers multiple premium payment options including regular pay (premium payment till policy tenure), limited pay (premium payment for limited tenure), or one-time pay (entire premium is paid in one shot).
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Maturity Benefits
If the policyholder survives the policy tenure, maturity benefits or total premiums paid are returned at the maturity date.
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Level Premiums
Your premiums under the TROP plan remain the same throughout the policy tenure. It helps you pre-plan your finances as per your life goals.
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Surrender Value
Term Life Insurance with Return of Premium provides you an option to surrender your policy and avail a surrender value if you are not satisfied with the same. The surrender value paid is higher than the guaranteed surrender value or special surrender value.
Expert Insights
People often wonder how insurance companies profit from Term Insurance with Return of Premium plans. They have to return all the premiums if the policyholder survives the policy tenure. The amount returned by insurance companies to policyholders is not adjusted for inflation. Insurance companies earn money by investing premiums received in various assets. It is crucial to choose the right term insurance plan after carefully considering the pros and cons.
Benefits of Term Insurance with Return of Premium
Term insurance with a return of premium offers multiple benefits to policyholders. You must consider this while making a buying decision.
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Return of Premium Paid
Return of Premium Term Life Insurance pays back all your premiums if you survive the policy tenure.
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Tax Benefits
The premiums paid for a Return of Premium Term Life Insurance are eligible for tax exemption up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961. Moreover, the death benefits received are completely tax-free under Section 10(10D).
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Additional Rider Benefits
To enhance your coverage, you can choose additional rider benefits with your Term Plan with Return of Premium, such as an accidental disability rider or a critical illness rider.
Who Should Buy Term Plans with Return of Premium?
The following individuals should consider buying a Term Insurance Plan with Return of Premium:
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Unmarried individuals
Unmarried individuals with no dependents should consider buying a TROP plan, as it offers maturity benefits similar to an investment.
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Individuals with no long-term responsibilities
Individuals who anticipate having no major financial responsibilities in old age, such as loans or children's education/wedding expenses, may opt for a Term Insurance with Return of Premium plan.
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Married with kids
Married individuals with children and significant long-term responsibilities may find a TROP plan beneficial. The maturity benefit received after 40-50 years can provide financial support during crucial later stages of life.
Pure Term Insurance vs. Term Plan with Return of Premium (TROP)
Pure Term Insurance and Term Plan with Return of Premium are two distinct variants of term insurance, each with unique benefits and limitations. To help you decide which is right for you, we've simplified the comparison between Pure Term Insurance and TROP.
| Parameters | Pure Term Insurance Plan | Term Plan with Return of Premium (TROP) |
| Definition | A pure term insurance plan offers death benefits in case of the policyholder’s uncertain death during the policy tenure. No maturity benefits are paid if the policyholder survives the policy tenure. | It is a variant of term insurance where the policyholder receives life coverage for a specific term. Under this plan, the insured receives death and maturity benefits, whichever occurs earlier. |
| Surrender | If a policyholder surrenders their policy before the tenure, their life cover will end, and they will receive nothing. | If a policyholder surrenders their policy before the tenure, their life cover will end, but they will receive a small amount of the premium paid as surrender value. |
| Tax Benefits | The premiums paid for term insurance are eligible for tax exemption up to Rs. 1.5 lakhs under Section 80C, and the death benefits received are tax-free under Section 10(10D) of the Income Tax Act, 1961. | The premiums paid are eligible for tax exemption up to Rs. 1.5 lakhs under Section 80C. Death benefits and maturity benefits are tax-free under Section 10(10D). |
| Cons | No maturity benefits will be paid if the policyholder survives the policy tenure. | The premiums are expensive compared to a basic term plan. However, you’ll receive a refund of premiums paid if you outlive the policy tenure. |
| Why should you buy it? | To financially protect your family in case of your demise, ensuring your loved ones can manage their finances in your absence. | If you lead a healthy lifestyle with no significant medical history or harmful addictions, a Term Insurance Plan with Return of Premium could be a suitable option. |
Conclusion
Term Insurance with Return of Premium is an excellent option for those seeking financial safety combined with a return on their investment. This plan offers a win-win situation for policyholders, as they will surely receive either death benefits or maturity benefits. We have also provided a list of the best Term Insurance Plans with Return of Premium for your consideration.
If you are still unsure whether TROP is right for you, contact us at PolicyX.com. Our insurance experts will help you choose a plan that best suits your needs.
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