Term Insurance with Return of Premium (TROP) is similar to a standard term insurance policy, with one key difference: it offers the added benefit of returning the premiums paid. In simple terms, a TROP provides financial protection to your family in the event of your untimely death, just like a regular term insurance plan. However, if you survive the policy term, you get a refund of all the premiums you paid over the policy duration (policy term/tenure).
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TROP (Term Insurance with Return of Premium) is a plan designed for those who want financial protection plus guaranteed returns of all the premiums paid. The policy term for TROP typically ranges from 5 to 30 years, and the premium is payable throughout the term.
As mentioned earlier, TROP is quite similar to a standard term insurance plan. In fact, it is a type of term insurance that offers life coverage for the insured’s beneficiaries and also provides a payout upon maturity.
This simply means that with a standard term life insurance policy, the beneficiaries receive a death benefit if the insured passes away during the policy term, but there is no payout if the insured survives the term. However, with TROP, the insured is entitled to receive a refund of the premiums paid at the end of the term, provided they survive the policy tenure.
Here’s how best term insurance with return of premium functions.
For example, Radhika, a 30-year-old IT professional and the breadwinner for her family, chooses the best term insurance plan with return of premium, so that, if anything goes wrong, her husband and two young children are financially protected. She selects coverage of ₹1 crore for 30 years; the annual premium is ₹27,000. This plan ensures that death benefits are guaranteed.
Result: Her family will receive the full sum assured of ₹1 crore as the death benefit.
Family is financially protected with ₹1 crore.
Result: She will receive a refund of all premiums paid over the past 30 years.
In this case: ₹27,000 × 30 years = ₹8,10,000
No loss of premium, and financial discipline is rewarded.
A Term Plan with Return of Premium (TROP) is especially suitable for:
Term Insurance with Return of Premium (TROP) offers several benefits to policyholders. Some of its key benefits are as follows.
TROP offers life coverage to ensure your family is financially secure in case you’re not around. The sum assured can go a long way in helping with financial commitments, giving you peace of mind that your loved ones are well cared for. Choosing the best Term Plan with a Return of Premium adds an advantage for the policyholder, as it offers the potential for a refund of premiums if the policy term is completed without a claim.
Besides, life coverage with TROP entitles a policyholder to a refund. The return is generally the premiums paid, without interest or bonuses, unless specified in certain plans.
Term Insurance policies, including TROP, have some of the lowest premiums compared to other types of life insurance, such as whole life insurance and endowment plans. This makes them an affordable option for those with limited budgets and incomes.
The TROP plan encompasses a savings feature. . If the policyholder survives the Life Insurance Policy, then he or she will get his or her premiums back. This makes it suitable for people who want insurance coverage against their lives and save money in the long run.
TROP provides tax deductions under Section 80C, and the maturity benefit under Section 10(10D) is tax-free if premiums do not exceed 10% of the sum assured. This makes it one of the best policies for tax savings, and in terms of returns, it stands out as the best Term Plan with return.
Please Note: Tax benefits on life insurance are available under the old tax regime for premiums paid, but if you opt for the new tax regime, you will not be able to claim these deductions (e.g., under Section 80C).
However, death benefits (sum assured) are tax-free under Section 10(10D) of the Income Tax Act, provided the premium paid is not more than 10% of the sum assured for policies issued after April 1, 2012. If you invest in a TROP plan and survive the policy term, you will receive a premium refund with no TDS. However, if you make a claim during the policy term (in case of death), TDS might apply, depending on the policy’s terms.
The following are some drawbacks of TROP (Term Plan with Return of Premium) policies:
The ACKO Life Flexi Term Plan provides your loved ones with a financially stable future, with the amount of money you choose for them. With an easy claim process and swift payouts, your loved ones can get the financial support they require without hassle during crucial times. The unique features of this term plan:
When you first buy the ACKO Life Flexi Term Plan, the premium rates for different coverage amounts are fixed based on your age at the time you start the policy.
Market Comparison
In the last 4 years, term insurance premiums have increased by more than 40% on average. ACKO's Life Flexi Term Plan can potentially help you save up to 40% on premiums in the long run, assuming these historical price trends continue. Most market plans do not offer a similar lock-in mechanism for future premium hikes related to sum assured increases.
ACKO Life Flexi Term Plan is known for its flexibility in meeting individuals' varying needs. Refer to the table below to find out which plan best suits you.
| Basis of Comparison | TROP (Term Return of Premium Plan) | ACKO Life Flexi Term Plan |
| Coverage Duration | Fixed coverage for a specific term (e.g., 10, 15, 20 years). The policy expires at the end of the chosen term. | Flexible coverage duration that allows policyholders to choose the length of the term. The term can be adjusted based on changing needs. |
| Premiums | Premiums are generally higher than standard term plans because if the policyholder outlives the term, the premiums are repaid at the end of the term. | Premiums are affordable and give comprehensive coverage throughout the selected term. |
| Flexibility | Offers flexibility in terms of coverage amount and premium payment frequency, but the term duration is fixed and cannot be changed once chosen. | Highly flexible in modifying coverage amounts, premium payments, and even the payout options during the policy term. Policyholders have more control over adapting to changing needs. |
| Costs | Premiums are generally greater than regular term life insurance policies because of the return of premiums benefit. | Less expensive premiums than TROP, emphasising affordability without sacrificing flexible protection throughout the chosen term. |
| Payout | Upon survival of the term, a refund of all premiums is paid to the policyholder. In the event of death before the end of the term, a lump sum death benefit is issued to beneficiaries. | Provides a lump sum payout to beneficiaries if the policyholder passes away during the term. |
| Good For Individuals | Those who prefer life coverage also wish for the return of premiums if they survive the policy. It's a mix of term and savings elements. | Especially suitable for those in need of affordable term insurance, with the options to increase coverage and term durations based on changing needs. |
| Tax Benefits | Premiums paid are eligible for tax deductions under Section 80C of the Income Tax Act. The death benefit is tax-free under Section 10(10D). | The premium payments made are deductible for tax under Section 80C, and the death benefit is also exempt from tax under Section 10(10D). |
Here are the eligibility criteria for TROP:
You can buy a TROP at the age of 18 years and above.
The maximum age to buy a Term Insurance policy is 70 years.
The maximum amount insured under this plan is ₹10 lakhs (1 million rupees).
The claim process for TROP is generally the same as for traditional TLI policies. Here are the general steps involved.
In the event of the policyholder's death, the beneficiary or legal representative must notify the insurance company as soon as possible. The insurance company may require documents such as a death certificate to process the claim.
Once the insurance company receives notification, it will furnish a claim form. The beneficiary needs to fill this up and, according to what caused the death, attach pertinent documents such as medical reports or police statements. It then ensures that the claims are processed accurately and efficiently.
The insurance company will review the claim form and supporting documents to determine if the claim is valid and covered under the policy. This may involve an investigation or review of the policyholder's medical history.
In detail, after examining the claim, if accepted, the insurer pays the death benefit to the beneficiary. The return of Premium Term Life Insurance would refund tax-free all premiums paid, provided the policyholder survives the term. This would result in the best-term insurance plan with a return of premium, as it guarantees protection of finance both before and after the term period of insurance.
Remember that the claim process may vary with insurers. It is always a good idea to check the terms of your policy and contact your insurance company to get precise information about the procedure for claims.
Also Read: Life Insurance Claim Process and Required Documents
Term insurance policies provide pure risk coverage, ensuring that in the event of the policyholder's demise during the policy term, the beneficiaries receive the sum assured. It is wise to compare various plans, assess the claim settlement ratio of the insurance company, and read the policy documents to ensure that a particular term insurance plan suits your needs.
While considering your life insurance plans in India, consider your objectives and the goals of your family. A term insurance calculator will give you the appropriate premium for your age, income, and other liabilities. Hence, if you seek a huge sum, the best term insurance of 1 crore will provide more than enough of a safety umbrella for your dependents.
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Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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