Term Insurance Return For Premium

Secure Your Future with Guaranteed Returns
 

Planning for financial security is essential, especially when it comes to safeguarding your family’s future. While a regular term insurance plan provides only a death benefit, Term Insurance with Return of Premium (TROP) ensures that you get back the premiums paid if you survive the policy term. This makes it a risk-free option for individuals seeking both protection and savings.

What is Term Insurance with Return of Premium?

Term Insurance with Return of Premium (TROP) is a life insurance plan that provides financial coverage to the policyholder’s family in case of an untimely demise. If the insured survives the policy term, the total premiums paid are returned, making it a unique combination of protection and savings.

Importance of Term Insurance with Return of Premium

  • Financial Protection: Ensures that your family is financially secure in case of an unfortunate event.
  • Guaranteed Returns: If you outlive the policy term, you receive all premiums back.
  • Risk-Free Investment: Unlike market-linked investments, TROP offers assured benefits.
  • Tax Benefits: Premiums paid are eligible for tax deductions under Section 80C.

How Does Term Insurance with Return of Premium Work?

TROP functions similarly to a regular term plan but with an added return-of-premium feature.

  1. The policyholder selects a coverage amount and policy term.
  2. Regular premiums are paid throughout the policy term.
  3. In case of the policyholder’s demise during the term, the nominee receives the sum assured.
  4. If the policyholder survives the term, all premiums paid are refunded.

Types of Term Insurance with Return of Premium

  • Regular Premium TROP: Premiums are paid periodically (monthly, quarterly, or annually).
  • Single Premium TROP: A one-time premium payment ensures coverage for the entire term.
  • Limited Pay TROP: Premiums are paid for a limited period, but coverage continues for a longer duration.

Features of Term Insurance with Return of Premium

  • Death Benefit: Provides a lump sum payout to the nominee.
  • Maturity Benefit: Returns all premiums if the policyholder survives the term.
  • Flexible Payment Options: Choose between regular, limited, or single premium payments.
  • Tax Benefits: Premiums qualify for deductions under Section 80C, and maturity benefits are tax-free under Section 10(10D).
  • Rider Benefits: Add-ons like accidental death cover, critical illness cover, and waiver of premium enhance the policy.

Benefits of Term Insurance with Return of Premium

  • Dual Benefit: Ensures financial protection and savings.
  • Risk-Free Returns: Premiums are refunded at the end of the policy term.
  • Affordability: Premiums are slightly higher than regular term plans but provide added benefits.
  • Tax Efficiency: Offers tax savings on both premiums and maturity payouts.
  • Encourages Financial Discipline: Ensures long-term savings with guaranteed returns.

How Are Premiums Calculated?

Premiums depend on several factors, including:

  • Age of the policyholder – Younger individuals get lower premium rates.
  • Sum Assured – Higher coverage amounts lead to higher premiums.
  • Policy Term – Longer policy terms may have lower annual premiums.
  • Health Condition – Medical history and lifestyle choices impact premium amounts.
  • Riders Opted For – Additional coverage options increase the overall premium.

Top Term Insurance Plans with Return of Premium in India

InsurerPlan NameKey Features
LICJeevan AmarOffers return of premium option
HDFC LifeClick 2 Protect SuperProvides life cover with premium return
SBI LifeSmart ShieldFlexible payout and refund options
ICICI PrudentialiProtect Return of PremiumIncludes multiple rider options
Max LifeSmart Secure PlusOffers customizable payout modes

Inclusions of Term Insurance with Return of Premium

  • Coverage for death due to natural or accidental causes.
  • Full refund of premiums if the policyholder survives the term.
  • Option to enhance coverage through riders.

Exclusions of Term Insurance with Return of Premium

  • Suicide within the first policy year (as per policy terms).
  • Death due to hazardous activities or substance abuse.
  • Non-disclosure of pre-existing medical conditions.

Factors Affecting Premiums for TROP

  • Age: The younger the applicant, the lower the premium.
  • Lifestyle Choices: Smokers and individuals with high-risk occupations have higher premiums.
  • Policy Term: Longer terms may offer lower annual premium costs.
  • Rider Additions: Extra benefits increase the overall premium.

Term Insurance with Return of Premium vs. Regular Term Insurance

FeatureTROPRegular Term Plan
Death BenefitYesYes
Maturity BenefitYes (Refund of Premiums)No
RiskLowLow
Premium CostHigherLower
Tax BenefitsYesYes

Drawbacks of Term Insurance with Return of Premium

  • Higher premiums compared to regular term plans.
  • No investment-linked growth.
  • Limited liquidity options before maturity.

Who Should Opt for Term Insurance with Return of Premium?

  • Individuals seeking both life cover and premium refunds.
  • Those who prefer risk-free savings along with protection.
  • People looking for disciplined long-term savings.
  • Anyone without a pension or financial backup for their family.

How to Buy Term Insurance with Return of Premium Online?

  1. Compare plans from different insurers.
  2. Choose a sum assured that fits your financial goals.
  3. Fill out the application and complete KYC verification.
  4. Pay the premium online.
  5. Receive the policy documents digitally.

How to Claim Maturity Benefits?

  1. Submit a claim request to the insurer.
  2. Provide necessary documents, including the policy and ID proof.
  3. Receive the refund of premiums in your bank account.

Points to Consider Before Investing in TROP

  • Ensure the coverage amount is adequate for your family’s financial needs.
  • Check the claim settlement ratio of the insurer.
  • Compare premium costs with regular term plans.
  • Understand the terms related to refunds and exclusions.

Conclusion

Term Insurance with Return of Premium is an excellent choice for those who seek both financial protection and guaranteed savings. By opting for this plan, you not only secure your family’s future but also get back your hard-earned money at the end of the policy term.

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