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Term Plan with Return on Premium

Term Plan with Return of Premium (TROP) is a type of term insurance plan that operates in the same way as a term plan does. It provides financial safety and assurance to the family if anything were to happen to the insurer. However, it is different from a traditional term plan in one way. The difference lies in how the premium, for the amount chosen as the sum assured, is paid. Premium is usually paid for anywhere between 5 years to up to 25 years. In a term plan with a return on premium, the entire premium amount is paid back to the policyholder at maturity. In a general term plan, money is given out only in the event of death, etc., occurring to the insurance holder.

To understand the policy scheme better, an example can be taken. Mr. X has taken out a term plan with a return of premium (TROP) for a sum assured of INR 1 crore. The premium to be paid is INR 25,000 per annum for 30 years. If Mr. X dies before 30 years, the family members will receive the entire sum assured, but if Mr. X were to survive the 30 years, the TROP would pay INR 7,50,000 (INR 25,000x30) back on maturity.

Why Should You Buy Term Insurance with Return on Premium?

  • The top reason to buy a Term Plan with Return of Premium is the return of premium amount upon maturity. If the insured survives the insurance period, they receive the entire premium amount
  • One is assured that in case of any unfortunate event, the family of the insured will be covered by the sum assured. If death occurs to the TROP holder before the policy tenure is up, the family receives the entire sum assured amount
  • Most insurance providers have added benefits to the main policy scheme. These benefits, ranging from personal accidents, physical disabilities, etc. make the coverage of the plan wider. The cost to add the benefits is low when compared to the benefit of having them added on to the plan
  • If there is a lapse in the premium payments, in most traditional insurance plans, the coverage stops. However, with a TROP, the plan is modified to reduce the death benefits to suit the premiums already being paid, better
  • There are also various tax benefits of buying a TROP that make them attractive. Such benefits can be availed under section 80C of the IT Act

Features and Benefits of Term Insurance with Return on Premium

It is essential to make a policy comparison to fully understand which policy offers which features. However, for most policies, the general characteristics are listed below.

Type of Plan Protection Plan
Policy Duration 5 to 35 years
Entry Age Entry age will depend on the maturity age and term of the policy. In most plans, it is 18 years.
Age at Maturity Up to 75 years
Payment of Premiums Lump-sum, annually, half-yearly, quarterly and monthly
Nomination TROP offers a nomination facility.
Free-look period The free-look period is usually 15 days from the day documents are submitted.
Grace period The standard grace period is 30 days for payment of premium from the due date. It can be shorter if the premium is paid monthly.
Sum assured The sum assured limit is different from provider to provider and is also subject to the approval of the company.

Best Term Insurance Plans with Return on Premium

There are several insurance providers that have a Term Plan with Return of Premium. Some of the best in the market, along with their features, have been listed below to make it easy to compare policies

Features Max Life Insurance Premium Return Protection Plan Aviva i-Shield Return of Premium Aegon Life iReturn Metlife Suraksha TROP
Entry Age 21 to 55 years. Maturity age is 75 years 18 to 55 years. The maturity age is 65 years. 18 to 65 years. The maturity age is 75 years. 18 to 50 years. Maturity age is 65 years
Policy Term 20 to 30 years 10 to 25 years 5 to 20 years 5 to 20 years
Sum Assured INR 5 lakh to INR 1 crores INR 15 lakh to INR 6 crores INR 3 lakh to INR 4 crores INR 2,00,000 to unlimited

Disclaimer: *All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Types of Term Insurance Plans

The list of the different types of term plans described below will be appropriate for policy comparison, at the time of purchase of a policy.

  • Level Term Plan

    This is the primary type of term plan where the sum assured is fixed, and the benefits of the plan are paid at the death of the insured, to the nominee

  • Term Plan with Return of Premium

    This is the type of term plan where the total premium amount is paid out if the insured survives the policy tenure

  • Increasing Term Plan

    An Increasing Term Plan, as the name says, is a type of plan where there is the option to increase the sum assured, annually. The increase is done over the tenure of the policy, and the premium remains unchanged. The premium for this type of plan is on the higher side

  • Decreasing Term Plan

    This type of term plan is the complete opposite of an Increasing Term Plan. The sum assured of the plan keeps on decreasing over the tenure of the policy. A Decreasing Term Plan is particularly useful when the insured has taken out a big loan like a house loan or is paying EMIs

  • Convertible Term Plan

    A Convertible Term Plan can be converted to a different kind of plan. For example, a basic term plan can be changed into an endowment plan after 20 years

  • Term Plans with Riders

    A term plan with rider options like accidental death cover, critical illness cover, etc. is called a term plan with riders

What is Not Covered in a Term Plan with Return of Premium?

An essential term plan makes sure that the sum assured is paid to the nominee of the insured, in case of death. However, there are inevitable deaths, which are excluded from policy schemes. It should be noted that the below-stated deaths are not the same for all plan options, and one should make a proper policy comparison before deciding on one.

  • Death due to murder: If the death has occurred due to murder of the insured, the policy provider will not pay the policy amount if the nominee is the murderer and if the killing occurred due to policyholder being involved in criminal activates. In the first case, the nominee receives the policy amount if the charges are dropped or if there is an acquittal
  • Death due to alcohol influence: If the death has occurred, to the insured, while under the influence of alcohol, the insurer will not pay out the policy scheme. Any such habits must be revealed at the time of taking out the policy
  • Smoking: If the insured has a habit of smoking, most insurers will not allow them to take out a policy as they have a higher health risk
  • Death due to suicide: Suicidal death, if committed within one year of taking out the policy, will involve non-payment of the policy benefit
  • Death, because of pre-existing health conditions: Any pre-existing conditions that the insured had, when taking out the policy, will not be approved by the insurer. However, some policies do cover pre-existing conditions, and the insured must compare policies for more information
  • Death due to indulging in hazardous activities: If the death has occurred due to dangerous adventure sports or other dangerous activities, the insurer will refuse the policy claim

Tax Benefits of Term Plan with Return of Premium

The list of the different types of term plans described below will be appropriate for policy comparison, at the time of purchase of a policy.

  • Deductions under Section 80C

    Deductions of up to INR 1.5 lakh can be availed under section 80C for the premium paid to the policy every year. Typically deductions are provided on investments like PPF, tax-saving FDs and NSC, etc

  • Benefits under Section 10 (10D)

    When an insurance policy claim is approved by the insurer, and the sum assured is paid out to the family members of the insured, the amount is exempt from tax under section 10 (10D), subject to conditions

  • Benefits under Section 80D

    Section 80D offers deductions of health insurance premiums paid of up to INR 25,000. For senior citizens above the age of 60 years of age, the deduction is INR 50,000

Steps to Buying Term Plan with Return of Premium Online

Most insurance providers allow customers to look through the plan options, compare policies, and also buy a term plan online. The step-by-step guide to doing the same as follows.

  • Navigate to and open up the insurer’s website
  • Click on the link that has 'Insurance' written on it and find out the 'Term Plan' option
  • Some websites will have a policy calculator where one can calculate the premium amount given the sum assured, policy term, etc. Enter the sum assured in the calculator
  • Enter the policy term
  • Choose the term over which the premium will be paid and click enter
  • The premium amount will be displayed. If all looks good, click on the option to pay for the policy
  • Pay for the policy and receive the transaction receipt and acknowledgment
  • Over the next couple of weeks, the insurer will contact the customer. They could ask for more details and documents to be submitted and information about if the policy has been approved or not.
  • It is approved, a soft copy and a hard copy will be sent over to the customer

How to Compare Term Plan with Return of Premium?

To get the best term plan with return on premium, one must compare all the plan options available in the market. Fortunately, with the help of premium calculators, the process of policy comparison has become easier. There are certain factors to look out for when comparing policies

  • Claim settlement ratio

    A claim settlement ratio is a ratio between the number of claims raised and the number of claims approved by the insurer. The IRDA publishes the claim settlement ratio of all major companies, every year. A good ratio is proof that the insurer is quick in claim settlement

  • Adding on terminal illness benefits

    Terminal illnesses like cancer or brain surgery is a major burden on the insurer. If the plan allows for the addition of critical illness, it is a significant advantage. Also, this cover pays out immediately post the diagnosis

  • Premium

    The premium is the first thing everyone looks into. Using the policy calculators provided by most insurance providers, comparing policies becomes easy. Choosing a policy with the most coverage at the least premium

  • Premium waiver

    The premium waiver is done if the insurance holder contracts a terminal illness. The insurance provider waives off all the future premium payments. This is a useful feature to have in policies

  • Solvency ratio

    Looking at the solvency ratio of the company will provide an idea of whether the company will be able to entertain any claims. As per IRDA guidelines, the companies must maintain a minimum solvency ratio of 1.5

  • Regular pay-out option

    Most insurance policies currently have the feature of a regular payout along with a lump-sum payment. If the option for a regular pay-out is available, it can be opted for

List of Top Companies that Provide Term Plan with Return on Premium

There are several insurance providers in the market, but there are certain that can be counted among the top ten companies providing Term Plan with Return of Premium. The list below can be used to compare policies and find the best one.

Top Ten Term Insurance Providers
Aegon Life
Aviva Life Insurance
Bajaj Allianz
HDFC Life Insurance
ICICI Prudential
LIC
Max Life
PNB Metlife
SBI Life Insurance
TATA AIA Life Insurance

Disclaimer: *All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Term Insurance Plans with Return on Premium with the Lowest Premium

Insurance Company The premium for INR 1 crore
Aegon Life INR 757 per month
AVIVA Life Insurance INR 971 per month
Bajaj Allianz INR 1,128 per month
HDFC Life INR 1,023 per month
ICICI Prudential INR 1,017 per month
IDBI INR 1,013 per month
Max Life INR 914 per month
PNB Metlife INR 955 per month
SBI Life INR 2,987per month
TATA AIA INR 1,002 per month

Disclaimer: *All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Term Plan Return of Premium - FAQs

Written By: Paisawiki - Updated: 09 September 2020
Disclaimer: Paisawiki does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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