What is a Term Insurance Plan with a Return of Premium and How Does it Work?
Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

What is a term insurance plan with a return of premium, and how does it work?

A term plan with a return of premium is similar to a standard term plan. It works as a life cover and provides a death benefit for the insured. Read here to know what a term insurance plan with a return is of premium and how it works.

  • Dec 07, 2022
  • 2,722 Views

One type of term insurance policy that is specifically created to meet the needs of policy purchasers is term insurance with return of premium (TROP). Similar to a regular term insurance plan, the TROP provides the advantage of financial protection for the insured’s family against any sort of emergency. But one of the distinguishing characteristics of term insurance with a return of premium plan is that it additionally provides the benefit of survivor rewards.

What is a Return of Premium Term Insurance Plan?

With one significant exception, the term plan with return of premiums (TROP) is similar to a standard term insurance policy but reimburses your premiums when the policy matures. You pay the yearly premiums throughout the policy’s term. If you live longer than expected, the policy will reimburse 100% of your premium payments, known as the “survival benefit,” tax-free.

TROP effectively lowers the cost of your policy to almost nothing while providing you with more substantial financial advantages. The policy pays your beneficiaries the death benefit, which is a predetermined amount for which you pay the premiums if you pass away during the term.

What is the Operation of Term Insurance with Return of Premium?

Consider a term plan with a ₹30 lakh rupee cover for 10 years with a premium of ₹3000 rupees yearly. The family would receive ₹30 lakh as the sum assured amount in the event of the life assured’s passing. However, the insurance provider will refund the whole premium amount, or ₹30,000, if the life assured lives out the policy’s entire term (Rs.3000 X 10).

A term return of premium plan is a non-participating insurance policy that provides the insured’s family with a death benefit in addition to the return of the premium as a survival benefit if the life assured survives during the period of the policy.

Benefits of Term Insurance with Premium Refund

Here are some of the key characteristics of the term plan with the return of premium:

Maturity Benefit or Survival Benefit

The term return of the premium policy differs from a pure term insurance policy as it offers a maturity or survival reward. Under TROP, if the policyholder survives for the duration of the insurance, the entire premium is returned to them as a survival reward. On the other hand, a conventional term insurance plan does not provide a maturity benefit.

Sum Assured

The life insurance coverage that is provided by the insurance company to the policyholder at the time of plan enrollment is referred to as the sum assured in the term plan with a return of premium. The TROP gives a lesser sum insured amount than a pure protection plan because the policyholder receives their premium refund.

Surrender Value

Depending on the method of payment selected by the policyholder, the surrender value of term insurance under a return of premiums plan varies. The surrender value is offered more for single premium policies where the entire insurance premium is paid at the time of application. Insurance companies base their calculation of the surrender value on several variables. Therefore, before obtaining the policy, a person should make an estimate of the amount they will get as a surrender benefit.

Death Benefit

In TROP, in the unfortunate event that the insured individual passes away during the policy term, the death benefit is offered as the complete sum assured amount to the beneficiary of the policy. The sum guaranteed is determined by the kind of coverage and premium payment method selected by the policyholder when the policy was purchased.

Tax Benefit

According to Sections 80C and 10(10D) of the Income Tax Act, the premium paid toward the policy up to the maximum of ₹ 1.5 lakh, and the maturity proceeds are tax-exempt.

Term insurance with a return of premium is the most fundamental kind of life insurance available on the market. The rates for a term insurance plan are significantly less expensive than those for an endowment or ULIP plan. Additionally, you get the money that is guaranteed to cover your life. With a term insurance plan, you may protect your life for as little as ₹7,000 for up to ₹1 crore (actual sum assured and premiums may differ from one insurer to another). Because it will pay out the death benefits if your other investments don’t due to things like turbulent markets, term insurance is a wise way to supplement any other investments you may have made (particularly in the case of ULIPs). The fact that you may leave behind a sizable sum of money for your family without having to pay top dollar for it makes it also quite practical.

Kotak e-Term Plan

Download Brochure

Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

T&C

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Can A Housewife Buy a Term Insurance Plan - All You Need to Know

Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products

5 Benefits of Early Retirement Planning

Can I Make Changes to My Term Insurance Policy Post Purchase?

Does Term Insurance Cover Accidental Death?

What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

How Much Cover Should I Take In A Term Plan?

Tips to Choose the Right Term Period for Term Insurance Plan

Top 3 Reasons Why You Should Buy A Term Plan Now

What Are Insurance Riders and How to Choose Them in a Term Plan?

Should Youngsters, Working Couples Buy Term Insurance Plans?

Can Non-Resident Indians (NRIs) Buy Term Insurance In India?

9 Ways to Help Family Members in Financial Trouble

What Is the Correct Age to Buy Term Insurance?

जीवन बीमा पॉलिसी लेने की प्रक्रिया क्या है?

Why is it important to buy term insurance plan?

What Should You opt for - Limited or Premium Pay?

How to Compare Term Insurance Online

Why Term Insurance Is Better Than ULIP?

Understanding Term Insurance Riders

Everything About Claim Settlement Ratio for Term Insurance

How Does A Term Life Insurance Work in India?

Why Term Plan Should Be The First Step To Securing Your Future?

Does Your Term Insurance Plan Cover Death Due to COVID-19?

Is Group Term Life Insurance Provided By Employer Sufficient?

All about Online Income Tax Calculator

Can I Extend the Tenure of My Term Insurance Plan?

Is Term Life Insurance Plan an Investment or Expense?

5 Reasons to Buy Term Insurance When You are in Your 30s

What is the Right Term Period For Term Insurance Policy? Here's How You Should Choose!

Why 1 Cr Term Plan Is Necessary For Family?

Can Term Insurance Plans Be Purchased As A Gift?

Difference Between Term Insurance and Endowment Plan

How Much Term Life Insurance Cover Do I Need?

What All Documents Required For Term Insurance In India?

Term Insurance Calculator - Everything You Need To Know

What Is a Passive Income? Why Should You Use It to Buy a Term Plan?

Form 16, Form 16A, and Form 16B?

Is it a Good Time to Buy Term Insurance During the COVID-19 Pandemic?

How To Choose the Right Term Insurance Plan?

Protection for your family

Can I Buy Term Insurance for a COVID-19 Patient?

Term Insurance: Smokers vs Non-Smokers

टर्म इंश्योरेंस क्या है? टर्म इंश्योरेंस का मतलब

Insurance Policy for Housewife In India

Buying A Term Insurance? Don't Ignore the Claims Settlement Ratio

Why Should You Buy Term Insurance in 2022?

Should You Buy a Term Plan After 40?

Insuring yourself against Ill Health with a Critical Illness Rider

Is There Any Tax Benefit on Term Insurance?

Advantages of Buying Term Insurance in Your 50s

Is It Good To Buy A Term Insurance Plan In 2022?

Insuring Against Accidents with an Accidental Death Insurance Rider

Make Your Online Term Plan Your Family's Monthly Pay Cheque

Insuring Protection Against Death With Death Insurance Rider

Gift Your Father A Term Insurance Plan This Father's Day

While Buying Term Insurance Compare Features, Not Just Premiums

Make Your Online Term Plan Your Familys Monthly Payout

Why does every working women need life insurance?

3 Things to Consider When Buying Term Insurance, If You are Single

Which Death Type Does Your Term Plan Not Cover?

Do term insurance policy have a waiting period after buying?

How Not To Get Your Term Insurance Claim Rejected

Term Insurance with Critical Illness

Is Life Insurance Investment Worthy Enough

Why Should You Not Take A Term Plan Without Medical Test in India?

Do I Need to Give a Medical Test for Term Insurance in India?

How To Calculate The Amount Of Term Life Insurance You Need?

Why should single women purchase term life insurance?

Endowment Plans vs Term Plans: Understanding the difference

What Should Be The Duration Of Your Term Plan in India?

Should You Have Multiple Term Life Insurance Policies?

4 Reasons Why You Need Critical Illness Cover

6 Types of Death not covered in Term Insurance Plan

Should you have more than one nominee in your term insurance?

Why You Must Include In Your Financial Planning?

4 Methods to Calculate How Much Term Insurance You Need

Should you buy a Renewable Term Life Policy?

4 Things To Expect From Your Term Insurance Plan in India

What is Form 16, Form 16 part A, Form 16 part B, Information Required and FAQs

What Is a Renewable Term Insurance Policy?

Why Should You Add a Rider to a Term Insurance Plan?

Individual Life Insurance vs. Group Term Life Insurance

Key IRDAI Regulations That Changed Face Of Term Insurance Industry In 2020

Term Vs. Whole Life Insurance: Which One You Should Buy in India?

Term Life Insurance Plan for Smokers vs Non-Smokers

Online vs Offline Term Insurance: Which Is The Better Option To Buy

Are The Add-ons and Optional Features of Term Insurance Plans Actually Beneficial?

What Types of Deaths Are Covered in a Term Insurance Plan?

5 Term Insurance Benefits for Single Women

10 Ways to Mentally Refresh After a Stressful Day

6 Reasons That Make Term Insurance a Must Buy

Comparing Term Plans – What Should You Look Out For

Key Differences Between Term Insurance, ULIPs, And Health Insurance

Term Insurance Basics You Should Know

How to Surrender Term Life Insurance When You Have No Liabilities?

Eligibility Criteria for Buying Term Insurance in India

Can I Get Term Insurance on Behalf of My Spouse?

All About Term Insurance Inbuilt Coverage

Choosing Riders for Insurance Plans

Do You Need Term Insurance Cover After Retirement?

How to Ensure That Your Term Insurance Claims Are Never Rejected?

Reasons You Need Term Insurance Plan as a Self-Employed Person

What are the Documents Required for Term Insurance Plan?

Buying A Term Insurance Plan? Take These Factors into Account

Why Term Insurance Is Important in times of COVID-19?

Why Married People Should Buy Term Insurance Under MWP Act?

Busting Myths and Facts About Term Insurance Policies

8 Factors to consider before choosing a Critical Illness Insurance

10 Ways to Get Your Kids Involved in Your Healthy Lifestyle

Term Insurance With Riders In India

Planning For Children's Future

Why Surrendering Your Term Plan Policy In The Final Phase Maybe A Bad Idea?

Advantages & Disadvantages of Term Insurance in India

Can Senior Citizens Avail Term Insurance?

Ensure Protection Against Death, Disease & Disability With Life Insurance

Tax Benefits of Term Insurance in India

Term Insurance: Most Common Term Insurance Myths Explained | Kotak Life

How To Choose the Right Sum Assured Under a Term Plan?

How do I Calculate My Term Insurance Premium

Different Types of Protection Plans

Is ₹1 Crore Term Insurance Good Enough Cover?

Why Premium Amount for Term Insurance is So Low?

Why Spending Time with Friends is Essential for Your Mental Health?

What are incremental term insurance plans?

Planning For Son or Daughter's Wedding

Term Insurance: What Happens When You Don’t Pay Your Premiums?

कोविड -19 बूस्टर खुराक के दुष्प्रभाव

How to Buy 1 Crore Life Insurance Policy Without Medical Test

8 Benefits of Term Insurance You Should Know

Why Buy Term Insurance Plan With a High Cover?

What are the Tax Benefits of Sukanya Samriddhi Yojana (SSY)?

Is a Term Insurance Policy Portable?

What Happens if you Hide Facts in your Term Insurance?

Insuring Against Disability With Disability Insurance Rider

Ideal Features of a Suitable Term Plan - Act Now for a Stress-free Future

When is the Right Time to Buy Term Life Insurance Policy for Yourself?

All you need to Know about Term Insurance Plans for housewives

Why Should New Parents Buy Term Life Insurance?

Side Effects of Covid-19 Booster Doses

9 Point Guide on how to File Income Tax Return Online

12 Types of Death not covered in Term Insurance Plans

What is Insurance Premium - A Detailed Guide

Can You Increase Your Term Insurance Cover?

5 Things To Consider While Buying Term Insurance Plan

Steps on How to Buy Term Insurance Online

Term Insurance Plans and Policies for Smokers

How Does Term Life Insurance Work? Learn the Benefits

Do Beneficiaries Pay Taxes on Term Insurance?

भारत में जीवन बीमा कितने प्रकार के होते हैं?

8 Things To Do After Buying Term Insurance

Difference between Section 80C and 80CCC of the Income Tax Act, 1961

What is Critical Illness Policy?

10-Year Term Life Insurance Policy - Explained in Detail

What Happens to Term Insurance Plan With No Beneficiary - Kotak Life

Importance of Term Insurance at Every Stage of Your Life

How to Identify Term Insurance According to Your Needs?

Term Plans are Definitely Cheaper than You Think!

Why Buy Term Insurance Even at Rising Rates?

What is a short term insurance policy?

Term Plan with Spouse Cover

Term Insurance Age Limit – Term Plan for All Age Groups

Different Types of Premiums in Term Insurance?

भारत में गृहणियों के लिए टर्म इंश्योरेंस

How To Change The Nominee in Term Insurance?

9 Most Frequently Asked Questions on Term Insurance

Zero Cost Term Insurance Plan: What is & Should you buy it?

Term Insurance vs Life Insurance: Understand the Difference and Benefits

Cost of Term Insurance Likely to Increase Soon

Know How to Invest at Every Age for Larger Returns

Increasing Term Insurance and Riders

How Much Term Life Insurance Cover Do I Need in India?

Which Term Insurance to Choose: Lump Sum or Staggered Pay-out Plan?

Is term Insurance Needed for People With No Dependents?

What is Term Insurance? Term Plan Meaning and Definition

What Are the Best Term Insurance Plans for Planning Retirement?

Calculating Term Insurance Premium