Digit Glow Term Life Insurance

0% GST on Premium

Date of Birth

Annual Income (In Lacs)

Mobile Number +91

I agree to the Terms & Conditions

Written By

Fathima Tabasum

Reviewed By

Ashok Manwani

Term Insurance with Return of Premium (TROP)

If you want long-term financial security for your family, a Term Plan is a great choice. It’s affordable and straightforward. You get coverage at a low premium. If the policyholder dies during the term, the beneficiary gets a Death Benefit.

If the policyholder survives, there’s no payout. This lack of survival benefits is a downside, leading some to think, “Term Plan pays only if I die.” However, a Term Plan with a Return of Premium Option (TROP) offers some cash value and is more affordable than a permanent plan.

What is Term Plan with Return of Premium?

Term Insurance with Return of Premium is a non-participating insurance plan that provides a guaranteed return of premium option. Under this variant, there are two types of claim benefits:

The nominees are paid Sum Assured in case of the policyholder's death during the policy term.
In a case where the policyholder survives the term, the entire premium paid towards the policy is reimbursed to the policyholder, provided all the premiums are paid.

Key Insight about Term Plan with Return of Premium

Here’s a table summarising the key aspects of a term plan with a return of premium:

Feature	Description
Policy Type	Term Insurance with Return of Premium
Premium Payment	Regular premiums paid throughout the policy term
Policy Term	Typically ranges from 10 to 30 years
Death Benefit	Sum assured paid to beneficiaries if the policyholder dies during the term
Return of Premium	100% of premiums returned if the policyholder survives the policy term
Tax Benefits	Premiums paid may be eligible for tax deductions under relevant tax laws
Riders	Additional riders like critical illness, accidental death, etc., can be added
Surrender Value	Applicable within a pre-determined period of time.
Maturity Benefit	Return of all premiums paid if the policyholder survives the policy term
Premium Cost	Higher than regular term insurance due to the return of premium feature

Features and Benefits of Term Plan with Return of Premium

Below are some striking features and benefits of a Term Plan with a Return of Premium. While most of these features are uniform, there might be some differences depending on your insurance provider and the policy.

Affordable Coverage

A Term Plan with Return of Premium is known for its affordability. Compared to traditional life insurance, the premium for TROP is generally higher, but it provides an attractive proposition of a potential premium refund.

Guaranteed Premium Return

The primary feature of a TROP is the guaranteed return of premium. If the insured survives the policy term, i.e., the policy's maturity, the premiums paid throughout the policy duration are returned. This ensures that the insured receives back the total amount of premiums paid, making it a popular choice for those seeking life coverage and a potential financial return.

Paid-Up Option

Some TROP policies offer a paid-up option. If the policyholder is unable to continue paying premiums due to financial constraints, they can convert the policy into a paid-up policy. This means that the coverage amount is reduced, but the policy remains in force without the need for further premium payments. The reduced coverage is typically calculated based on the premiums already paid and the premium payment term.

Riders

Term Plans with a Return of Premium often allow adding additional riders or benefits to enhance the coverage. Common riders include critical illness riders, accidental death benefit riders, waiver of premium riders, and disability riders. Adding riders allows policyholders to customise their coverage based on their specific needs and provides added protection against unforeseen events.

Death Benefit

Like traditional term insurance, a TROP policy provides a death benefit to the nominee in case of the policyholder's untimely demise during the term. The death benefit is paid as a lump sum amount and can help provide financial support to the family and dependents left behind. It can cover daily expenses, outstanding debts, children's education, mortgage payments, and other financial obligations.

Tax Benefit

TROP policies offer tax benefits under the prevailing tax laws. The premiums paid towards the policy are eligible for tax deductions under Section 80C of the Income Tax Act, subject to the specified limits. Additionally, the death benefit received by the nominee is generally tax-free under Section 10(10D) of the Income Tax Act, ensuring that the family receives the full benefit without any tax liability.

Premium Payment Options

TROP policies provide flexible premium payment options to match policyholders’ financial needs. These include a one-time lump sum payment at policy inception, regular payments (annual, semi-annual, quarterly, or monthly) throughout the term, “Pay till 60” where premiums stop at age 60, and limited pay options where premiums are paid for a shorter period while coverage continues for the full term.

Maturity Benefits as Refund Amount

The maturity benefit of a Term Plan with Return of Premium (TROP) is a refund of all premiums paid if the insured survives the policy term, excluding taxes and deductions. This lump sum can be used for future financial goals, retirement, or personal needs. Use our term insurance calculator to estimate your premium based on age and coverage.

Surrender Value

Most Term Plans with Return of Premium (TROP) offer a surrender value, allowing policyholders to withdraw premiums or surrender the plan. The surrender amount varies by payment option: for single premium policies, it becomes valid after the lump sum payment, while for limited and regular pay options, it applies after completing one full year of premium payments.

How Does Term Plan with Return of Premium Work?

A Term Plan with a Return of Premium (TROP) works similarly to a standard term life insurance policy but with an added benefit. Here’s a breakdown of how it functions:

Premium Payments

Pay regular premiums for a specified term, ranging from 5 to 30 years.

Coverage

If you pass away during the policy term, your beneficiaries receive the sum assured, just like in a regular term plan.

Return of Premium

If you outlive the policy term, the insurer refunds all the premiums you paid over the term tax-free. This is the key feature that differentiates TROP from standard term plans.

Cost

TROP policies are more expensive than regular term plans because they return premium features.

Riders

Some insurers offer TROP as a rider that can be added to a regular-term life insurance policy.

Understanding Term Plan with Return of Premium Scenarios with Illustration

To understand how Term Insurance with the Return of Premium works, let us take an example:

Rohan is a 35-year-old software engineer living in Bengaluru. He is married and has a young daughter. Rohan is very conscious about securing his family’s future, so he buys a term plan with a return premium policy.

After researching, Rohan selects a TROP policy with a 20-year term and a sum assured of ₹50 lakhs. So, Rohan diligently pays his premium of ₹25,000 every year. He knows this policy provides life cover and returns the premiums if he survives the term.

Term Plan with Return of Premium Scenarios

Scenario 1

Scenario 2

Death During the Policy Term

If Rohan passed away during the policy term, his family would receive the sum assured of ₹50 lakhs, ensuring their financial stability.

Outliving the Policy Term

If Rohan has successfully paid all his premiums and is in good health, the insurance company will return a total of ₹5 lakhs (₹25,000 x 20 years) as a tax-free lump sum of the premiums he paid over the 20 years since he has outlived the policy term.

Some Relatable Real-Life Examples of Term Plans with Return of Premium

Ravi

Anita

Rajesh

Ravi, a 28-year-old, Young Professional

Ravi, a software engineer, married and started thinking about his family’s financial security. He decided to purchase a term plan with a return of premium. This plan offered him a high sum assured at a low premium, ensuring his family’s financial stability in case of his untimely demise.

If Ravi survives the policy term, he will get back all the premiums paid. This feature appealed to Ravi as it provided a sense of security and savings. By the end of the policy term, Ravi received the total premiums paid, which he used to make a down payment on a new house.

Anita, a 35-year-old, Single Parent

Anita, a single mother, wanted to ensure her daughter’s future was secure. She opted for a term plan with a return of premium. This plan gave her peace of mind, knowing that her daughter would be financially protected if anything happened to her.

Moreover, the return of premium feature meant that if Anita outlived the policy term, she would get back all the premiums paid. This money could then be used for her daughter’s higher education. Anita felt reassured knowing she had a safety net for her daughter’s future.

Rajesh, a 55-year-old, The Retiree

Rajesh nearing retirement, was looking for a way to ensure his wife would be financially secure if he were no longer around. He chose a term plan with a return of premium. This plan provided a substantial death benefit at an affordable cost.

Additionally, if Rajesh survived the policy term, he would receive all the premiums back, which he planned to use as part of his retirement corpus. This dual benefit of protection and savings made the plan ideal for Rajesh, giving him peace of mind as he approached his retirement years.

Disclaimer: The above illustration is a hypothetical example created for educational purposes only and does not represent a real-life scenario. Please read your policy documents to understand the terms and conditions clearly.

Who Should Buy Term Plan with Return of Premium?

Any individual can buy a Term Insurance plan with a Return of Premium. You can easily compare online term insurance plans with the return of premium option and take a decision based on your requirements. Analyse your age, income source, lifestyle habits and medical conditions to find the right policy.

A Term Plan with a Return of Premium can be a viable choice for the following people:

Single or Unmarried Individuals

For those who are single or unmarried with limited dependents or elderly parents to care for, a term insurance plan with a return of premiums can be advantageous. This plan provides dual benefits, ensuring that your loved ones are financially secure in the event of your passing and the payouts remain tax-free under relevant tax regulations.

Coverage for the Entire Family

When children enter the equation, your responsibilities multiply. Therefore, investing in life insurance solutions like a term plan with a return of premiums is essential to protect your spouse and children from potential future financial crises. Additionally, the maturity benefit can assist in covering essential expenses, such as your child’s college education.

NRIs

For Non-Resident Indians (NRIs) with dependents in India, a term insurance plan featuring a return of premium can offer peace of mind for your loved ones. As an NRI, you can also benefit from tax relief on your maturity proceeds due to India’s Double Taxation Avoidance Agreement (DTAA), ensuring you are not taxed twice on the same income – in your country of residency and India.

Senior Citizens and Retirees

A term insurance plan offering a money-back feature can prove invaluable if you are nearing retirement or already enjoying it. It secures your family’s financial future and ensures you have extra funds available during your retirement years.

Newlywed Couples

As newly married partners, your financial responsibilities are likely to have grown. You'll need to plan for your spouse, dependent parents or in-laws, and any future children that may come along.

Why Choose a Term Insurance Plan with Return of Premium?

Guaranteed Premium Refund at Maturity

A term plan with the return of premiums guarantees a lump sum payout of all premiums contributed when the policy matures, provided you outlive the term. You could receive a refund equal to 100% of the total premiums paid after the policy term.

This feature ensures that you and your family gain from the term insurance plan, with the premiums paid throughout the policy duration not going to waste. T&C apply.

Tax Savings

Similar to standard term plans, those with money-back options provide tax benefits to policyholders and their beneficiaries.

According to Section 80C of the Income Tax Act, you can claim a deduction of up to ₹1.5 lakhs for the premiums paid for the policy. Section 10(10D) also provides a tax exemption on the death and maturity benefits associated with the TROP plan.

Life Coverage and Death Benefits

Many term plans that offer a return of premium also provide whole-life coverage, ensuring that your family has financial support in the event of unforeseen circumstances. A term plan's flexible death benefit payout can be structured as a lump sum, regular income, or a combination.

Enhance Risk Coverage with Riders

The most advantageous term insurance with a return of premium typically includes several optional riders you can select. These can support the foundational coverage of your TROP plan.

Here are term plans with return of premium, providing risk coverage along with additional riders:

1. Critical illness rider covers specific conditions like heart attacks, strokes, cancers, and certain heart surgeries. The range of illnesses protected by different insurers can vary, so individuals should carefully review the covered conditions before selection.

2. Waiver of premium rider eliminates future premium payments under particular circumstances in life insurance policies.

3. An accidental death benefit rider is an optional enhancement to a standard life insurance policy. It offers additional coverage for a modest increase in premiums.

4. Accidental Total and Permanent Disability Rider offers financial security for policyholders who face a permanent disability resulting from an accident during the policy's life.

What to Expect at Maturity with your Term Plan with Return of Premium Policy?

When your Term Return of Premium (TROP) policy matures, here’s what you can typically expect:

Base Premiums: The base premiums you paid during the policy term will be returned to you.
Modal Loading Premiums: If you opted to pay your premiums monthly, quarterly, or half-yearly instead of annually, you paid additional modal loading premiums. These are usually returned to you upon policy maturity.
Additional Underwriting Premiums: You might have paid these extra premiums based on medical reports, health conditions, or lifestyle habits. Generally, these premiums are also returned to you.
Rider Premiums: Premiums paid for additional riders (such as critical illness or accidental death benefits) are typically not refunded. However, depending on the specific terms of your policy, there may be exceptions.
Taxes: Any taxes associated with your premium payments are not refunded when the policy matures.
Non-Refundable Additional Underwriting Premiums: Some TROP products may have specific additional underwriting premiums that are not refundable. It’s important to check the terms of your policy for details.

How to Choose a Term Insurance Plan with Return of Premium?

Selecting the right Term Insurance with a Return of Premium (TROP) option requires careful consideration and evaluation of various factors. Here are a few pointers to help you choose the best TROP policy:

Assess Your Needs: Evaluate your financial goals, your family's lifestyle, and future obligations. Determine the desired coverage amount and policy term based on your current income, outstanding debts, children's education, and other financial responsibilities. This assessment will help you determine the appropriate coverage that aligns with your needs.
Compare Premiums: Obtain premium quotes from multiple insurance providers offering TROP policies. Compare the premium rates while considering the coverage amount, policy term, and additional features. Ensure that the premium amount is affordable and fits within your budgetary constraints.
Understand Policy Terms and Conditions: Thoroughly review the terms and conditions of the TROP policy. Pay attention to details such as the policy term, premium payment period, surrender value, and exclusions. Understand the circumstances under which the premiums will be refunded and any penalties or charges associated with policy cancellations or alterations.

Eligibility Criteria for Term Insurance with Return of Premium

Several key factors exist when considering a term insurance plan in India, you typically need to meet the following criteria:

Criteria	Details
Citizenship	Indian citizens, NRIs, and PIOs can buy a term insurance plan in India.
Age	Eligible age range: 18 - 65 years.
Health Status	Insurers require medical tests to assess health risks before issuing a policy. Your medical history can influence term insurance premiums and the maximum sum assured.
Income	There is no minimum income requirement. Bank statements and salary slips are needed to determine coverage and premium payment ability.
Occupation	Professionals, salaried individuals, self-employed persons, and housewives. Certain high-risk occupations may be restricted.

Documents Required for Buying Term Insurance with Return of Premium

To apply for a Term Insurance with Return of Premium (TROP) plan, you will typically need the following documents:

Identity Proof

Age Proof

Address Proof

Income Proof

Photographs

Medical Reports

Note: Depending on the insurance provider, each section requires one or two documents as proof.

How to Buy a Term Plan with Return of Premium Online?

Purchasing a term plan with a return of premium online is straightforward and efficient. Follow these six simple steps:

Step 1

Assess your financial goals, liabilities, and the amount of coverage you need.

Step 2

Research and compare different insurance companies.

Step 3

Choose a TROP plan that fits your budget and offers the coverage you need.

Step 4

Check the policy term, premium payment options, and any additional benefits or riders.

Step 5

Complete the application form with accurate personal and medical information.

Step 6

Select your premium payment frequency and pay online via debit/credit card or net banking. Once the payment is made and documents are verified, the policy will be issued and sent to your registered email.

Tax Benefits of Term Insurance with Return of Premium

For individuals holding term insurance several tax benefits can be availed under the Indian Income Tax Act, 1961. Here is an overview of the key tax benefits:

Section 80C: Premium Payments

Deduction Limit: Under Section 80C, the premium paid for a term insurance policy is eligible for a tax deduction, subject to a maximum limit of 1.5 lakh INR per financial year.
Eligibility: To qualify, the premium must not exceed 10% of the sum assured if the policy is issued on or after April 1, 2012. The premium should not exceed 20% of the sum assured for policies issued before this date.
Applicability: This deduction is applicable to individuals and Hindu Undivided Families (HUFs).

Section 10(10D): Maturity Benefits

Tax Exemption: Any sum received under a term insurance policy, including the death benefit, is fully exempt from tax under Section 10(10D).
Conditions: This exemption is applicable only if the premium paid does not exceed 10% of the sum assured for policies issued on or after April 1, 2012. The premium should not exceed 20% of the sum assured for policies issued before this date.
TDS: If the policy does not meet the criteria mentioned above, a 5% tax deduction at source (TDS) will be applicable on the payout if it exceeds 1 lakh INR in a financial year.

Section 80D: Health Riders

Deduction for Health Riders: If the term insurance policy includes health insurance-related riders such as critical illness or accidental death benefit riders, the premium paid towards these riders is eligible for a tax deduction under Section 80D.
Deduction Limit: The deduction limit under Section 80D is up to 25,000 INR for individuals under 60 and 50,000 INR for senior citizens. This limit is in addition to the limit under Section 80C.

Term Plan with Return of Premium Vs Pure Term Plan

Term Plan is not a usual investment product and is not directed towards the goal of wealth creation. However, it is a wealth protector in case of unfortunate circumstances.

Let’s discuss the striking differences between the Pure Term Plan and Term Plan with the Return of Premium:

Point of Comparison	Pure Term Plan	Term Plan with Return of Premium
Insurance Claim Benefit	A Pure Term Plan provides only death benefit as a part of coverage.	TROP provides death benefit in case of death during the policy term. However, in case of survival, it pays out the sum of all premiums paid.
Premium	The premium of a Pure Term Plan is quite affordable. Usually, 0.1% of the Sum Assured.	The premium of a TROP is usually 2-3 times higher than the Pure Term Plan.
Sum Assured	The Sum Insured for an X amount of premium in case of Term Insurance is usually 10X.	The Sum Assured in case of TROP is usually much lower when compared to the Pure Term Plan.
Goal for Investment	Best suited for people whose primary aim is to provide an elevated level of financial security to their family with a high sum insured.	Best suited for people who are looking for an optimum financial protection and some return value on the investment.
Premium Refund	No Premium Refund in this case	All Premiums paid are refunded on policy maturity
Surrender Value	Does not have any surrender value since there is no savings component	Provides surrender value if the policy is ended early but after the minimum required period for surrender.

A term plan with a return of premium (TROP) offers life coverage for a specified term. It provides financial security for loved ones with death benefits in case of the policyholder’s demise, and if the policyholder survives, the premiums paid are returned.

This plan is ideal for those seeking both protection and savings. While premiums are higher than regular term plans, the return of premium feature ensures no loss of money. It’s a thoughtful investment for those who want to secure their family’s future and get their money back.

FAQs about Term Plan with Return of Premium

All

Eligibility

Premiums

Features

Claims

Do I get my money back if I cancel my term insurance with a return of premium?

No, if the policy is canceled or lapses before the term is complete, you do not receive any premium back. Hence, it is never advisable to cancel your policy mid-term.

Is the return of premium under the term plan with return of premium taxable?

No, since it is a refund and not an income, the return of the premium in a TROP is non-taxable.

Are NRIs eligible to purchase term insurance in India?

Yes, any NRI who holds dual citizenship, and is a citizen of India, can purchase Term Insurance in India.

What are a few cons of term plan with return of premium?

TROP has very limited options across insurance providers. So it's usually difficult to find a suitable insurance policy.

If you are looking at the cash value of your investment, you should rethink. TROP are more expensive than the regular term plans. The extra money spent could be saved somewhere better. Also, if you look at the large tenure of these policies, you will realise that the money that you receive as a refund is depreciated due to inflation.

Is the premium amount higher for TROP compared to traditional term insurance?

Yes, the premium amount for TROP is generally higher than traditional term insurance due to the return of premium features.

Can I customise my TROP policy with additional riders?

Yes, you can enhance your TROP coverage by adding riders such as critical illness, accidental death, or disability riders, providing extra financial protection.

Is the death benefit different in TROP compared to traditional term insurance?

The death benefit in TROP remains the same as traditional term insurance, providing a lump sum amount to the nominee in case of the policyholder's demise during the policy term.

What happens if I miss a premium payment in TROP?

The grace period for premium payment in TROP varies among insurance providers. If you miss a premium payment, you may have a grace period during which you can make the payment without the policy lapsing.

Can I surrender my TROP policy and receive the premiums paid before the completion of the policy term?

Surrendering a TROP policy before the completion of the policy term may result in a reduced surrender value. It is advisable to review the policy terms and consult with the insurance provider before making a decision.

Can I renew my TROP policy after the completion of the policy term?

TROP policies do not usually have a renewal option as they are designed for a specific term. However, you can explore other life insurance options available at the end of the policy term.

What is the importance of term plans with return of premiums?

Term plans with return of premium offer a unique advantage by returning the premiums paid to you upon policy maturity if you survive the policy term. This means you are financially protected for the policy duration without paying out-of-pocket costs.

Is term insurance with a return of premium worth buying?

Whether a TROP is worth buying depends on your financial goals and risk tolerance. A TROP can be a good choice if you prioritise life insurance coverage and want to minimise expenses.

What are the eligibility criteria for a term plan with return of premium?

Eligibility criteria for a TROP generally align with standard term insurance requirements, including age, health and occupation. However, specific criteria may vary between insurers.

What happens to the return of premium if I cancel the policy mid-term?

If you cancel a TROP mid-term, you may not receive the full return of premiums. The amount returned will depend on the policy’s surrender value, which is typically lower than the premiums paid.

How do you choose the tenure of the TROP policy?

The tenure of a TROP should be chosen based on your life expectancy and financial planning needs. Consider your retirement age, dependents’ financial requirements and mortgage obligations.

What is the death benefit under the return of premium term insurance plan?

The death benefit under a TROP is the same as that of a regular term plan. The death benefit is paid to the nominated beneficiaries if the policyholder dies during the policy term.

Are there any riders available with TROP?

Yes, various riders enhance the coverage of a TROP, such as accidental death and disability benefits, critical illness cover, and premium waivers.

How does smoking habit affect the term plan with return of premium?

Smoking generally increases the premium for a TROP due to the higher health risks associated with it. However, some insurers offer special rates for smokers who quit or meet certain criteria.

What is the grace period in the term plan with a return of premium?

The grace period for a TROP is typically 30 days. The policy may lapse if you fail to pay the premium within this period. However, some insurers offer reinstatement options within a specified period.

Is a term plan with a return of premium more expensive than a regular term plan?

Yes, a TROP is generally more expensive than a regular term plan due to the additional benefit of returning the premiums upon maturity. However, the cost difference may vary depending on the insurer and policy terms.

What happens to the Return of Premium if the policy is surrendered before maturity?

If you surrender a TROP before maturity, you may not receive the total return of premiums. The amount returned will depend on the policy’s surrender value, typically lower than the premiums paid.

How long does receiving the return of premium after the policy matures take?

The time it takes to receive the return of premiums after a TROP matures may vary depending on the insurer’s processes. However, it typically takes a few weeks to a few months.

How does inflation affect the value of benefits received from a ₹1 crore term insurance plan with a return of premium at maturity?

Inflation can significantly diminish the value of the benefits received from a ₹1 crore term insurance plan with a return of premium when it matures. As inflation increases, the purchasing power of money decreases, which means that the amount received upon policy maturity may not buy as much as it would have when the policy was purchased. Consequently, the financial security intended for beneficiaries or the policyholder could be reduced, affecting their ability to maintain their standard of living or meet future expenses as initially planned.