Term Insurance with Return of Premium

Term insurance with return of premium gives you life cover and returns all paid premiums on survival. Know the benefits, tips for choosing, and how it works.
Check Term Insurance Policies
3 min
02 Sep 2024

Term insurance ensures that the life goals of policyholders do not derail, and the family is financially secure in their absence. It guarantees a pre-determined payout in case of a policy buyer’s death. However, if policy buyers survive the policy, they will not receive any financial protection, and the insurance plan will simply cease to exist.

In this regard, term insurance is a life cover with zero loss--get return on premium option in term insurance that ensures financial protection and refunds your premiums. Check Plans! And, keep reading to understand what precisely this insurance plan is and the benefits of opting for it.

What is a term insurance plan with return of premium (TROP) plan?

Unlike a regular term plan, term insurance with a return of premium comes with an added benefit. It extends survival benefits to the policy buyers. So, if the insured survives the policy term, insurer will return the premium paid towards the policy. You will get the premium after a few necessary deductions of charges and taxes as per the terms and conditions under the policy. Even in case of the insured’s demise, his or her family will receive the sum insured.

What are the benefits of term insurance with returns of premium?

A term insurance plan with a return of premium is an apt choice to secure your family and get premium returned. Though it comes against a higher premium than a regular plan, it offers the following benefits:

  1. Guaranteed returns Unlike other life insurance plans whose returns depend on the market conditions, term insurance with return of premium offers assured returns. However, policyholders may receive any profit from the insurer through their investment.
  2. Death covers This insurance cover comes with a payback of the investment. This makes an ideal option for individuals who want to get a refund of premium at maturity, in both cases of survival or death. With a term plan with returns of premium, one can be rest assured of complete financial protection for one’s family.
  3. Affordable option If you require a term plan that guarantees financial coverage in your absence, term insurance with return of premium is an affordable option. Moreover, it is probably among the more cost-effective options for extending survival and death benefits.
  4. Additional rider options One of the biggest benefits of a term plan is if you can opt for an array of specific riders. Modify your term plan as per your requirements and exclusive to your policy. Moreover, reputed insurance companies provide add-on covers such as critical illness rider, personal accident, or disability riders. With these options, you can affirm complete financial coverage against illnesses.
  5. Tax benefits A term plan is beneficial as it ensures tax benefits under Section 80C of the Income Tax Act. You are eligible to receive a tax-deductible of up to Rs. 1.5 lakh against the premiums paid towards the policy. Furthermore, under Section 10 (10D) of the Income Tax Act, you will receive tax benefits on the payout from the insurance company.

Comprehensive coverage, affordable premiums, and tax savings—term insurance gives you more than just security. Compare plans now!

Key features of term insurance plan with return on premium options

Here’s why many consider return of premiums life insurance worthwhile:

  • Dual benefits: Life cover protection and guaranteed return of premiums.

  • Maturity benefit: Returns your premiums (excluding charges/taxes) at the end of the term if you survive.

  • Financial protection: Ensures your family receives the sum assured if something happens to you.

  • Savings component: Works as a backup plan, returning your money at maturity.

  • Tax benefits: Premiums qualify under Section 80C; maturity benefits often tax-free under Section 10(10D).

  • Surrender value: Offers value if you discontinue after a certain period.

  • Flexible premiums: Pay regularly, in limited term, or single premium as suits you.

  • Return guarantee: Assured payout of premiums brings peace of mind.

How does a term insurance with return of premium work?

Here is an example below to understand how it works to maximise financial coverage:

Suppose you have opted for a term plan of Rs. 30 lakh against tenure of 10 years. Your annual premium amount will be Rs. 3,000.

  • Now, in case of unfortunate death, your family will get the entire amount of Rs. 30 lakh.
  • In case of a return of premium plan, there is a benefit if you survive the entire policy term. In the example discussed above, as a survival benefit, you will receive a premium of Rs. 3,000 X 10 years.

This makes it a non-participating insurance plan. It extends either survival or death benefits to the insured or his or her family.

Term Insurance—big coverage, affordable premiums! Secure your family’s future with affordable protection. Click now to get insured!

Who can buy a Term Plan with Return of Premium (TROP)?

Who should consider TROP?

Here’s who might find return of premiums life insurance useful:

  • Anyone who wants guaranteed returns along with life cover protection.

  • People who prefer not to lose the premiums they pay if they survive the term.

  • Those looking for both insurance protection and a savings component.

  • First-time insurance buyers who want security and maturity benefits.

  • Individuals seeking tax benefits while protecting their loved ones.

  • Those who value peace of mind knowing their investment will return to them if they outlive the policy.

Who can buy a Term Plan with Return of Premium (TROP)?

Following are the common eligibility criteria for getting a term plan with return of premium:

  • Individuals aged 18 to 65 are generally eligible for a term insurance with return of premium.
  • The applicant must meet the insurer’s health and income criteria.
  • Non-smokers and those with a healthy lifestyle may receive better premium rates.
  • Policyholders can choose a coverage period, typically ranging from 10 to 30 years.

Pro Tip

Secure your family’s future against life’s uncertainties with our reliable term plans starting at just Rs. 15/day* for a life cover of Rs. 1 crore.

Tips for choosing the most suitable term insurance with return of premium

Following are the tips to help you choose the most suitable term plan with return of premium to secure your financial future:

  • Evaluate your financial goals and select a term insurance plan with return of premium that aligns with them.
  • Compare premium costs across different insurers for the same coverage.
  • Check the insurer's claim settlement ratio for reliability.
  • Consider additional riders for enhanced coverage, such as critical illness or accidental death benefits.

As term insurance involves cash-value policies, one needs to look for the best-suited features and benefits at their convenience. Therefore, individuals must thoroughly compare the options available, ensuring impressive returns and multiple riders against cost-effective premiums.

Get term insurance for all-round protection—financial security, tax benefits, and peace of mind. Compare and Get Quote!

Why is the term plan with return of premium right for you?

A term insurance plan with return of premium is ideal for those who want to secure their family’s future while ensuring their hard-earned money doesn’t go to waste. Unlike pure term plans, it returns your premiums if you outlive the policy term, giving you both protection and savings in one simple plan.

How to buy term insurance with return of premium plan?

Buying term insurance with return of premium is simple and hassle-free. Start by comparing plans online based on benefits and premium costs. Use online calculators to find the right sum assured and term. Next, fill out the application form accurately, submit required documents, and undergo medical tests if necessary. Once approved, pay your premium to activate coverage and enjoy peace of mind knowing you’re protected. This entire process usually takes only a few days.

What are the available term plan with return of premium riders?

Rider

Description

Accidental Death

Extra payout in case of accidental death, ensuring additional financial security for your family.

Critical Illness

Lump sum payout upon diagnosis of specified critical illnesses, helping cover treatment costs.

Waiver of Premium

Future premiums waived if you face disability or critical illness, keeping your policy active.

Income Benefit

Provides regular monthly income to your nominee along with sum assured payout, offering continued support.

 

Difference between term insurance and term insurance with return of premium?

Feature

Term Insurance

Term Insurance with Return of Premium

Maturity Benefit

No payout on survival; policy ends if you survive the term.

Premiums returned at maturity, ensuring you get back what you paid.

Premiums

Lower because there's no maturity payout.

Slightly higher due to guaranteed return of premiums.

Savings Component

None; pure protection only.

Yes; combines protection with a savings element.

Death Benefit

Pays sum assured to nominee on death.

Pays sum assured on death as well.

Suitable For

Those wanting affordable pure protection.

Those wanting protection plus guaranteed return of premiums paid.

 

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Frequently asked questions

What does term insurance with a return of premium mean?

Term insurance with a return of premium is a policy where, if the insured survives the term, all paid premiums are refunded, providing both coverage and a savings component.

What kind of term coverage do return of premium plans offer?

Return of premium plans offer standard term insurance coverage, providing a death cover to beneficiaries during the policy term, with the added feature of returning all premiums paid if the policyholder outlives the term.

What are return of premium charges?

These are additional costs included in the premium to fund the refund benefit.

Is purchasing a term plan with a return of premium a good decision?

Opting for a term plan with a return of premium is suitable if you seek both life coverage and guaranteed maturity benefits. It ensures financial protection while also refunding your investment.

How does term insurance differ from term insurance with a return of premium?

Standard term insurance offers only a death cover, whereas a term plan with a return of premium refunds the total premium paid if the policyholder outlives the policy term.

What payout options are available under term insurance with a return of premium?

The payout options may include a lump sum payment, monthly instalments, or a combination of both, depending on the insurer’s terms and the policyholder’s preference.

How is the premium calculated in return of premium term plans?

The premium is calculated based on factors like your age, health, policy term, sum assured, and additional riders. It is generally higher than pure term plans because of the maturity benefit component.

Can riders be added to term insurance with return of premium?

Yes, most insurers allow you to add riders such as accidental death, critical illness, waiver of premium, and income benefit riders to enhance your policy coverage.

What is the ideal policy term for a return of premium plan?

It depends on your financial goals, but many people opt for terms of 20-30 years to maximize protection and maturity benefits.

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