Wondering What Happens When You Outlive Your Term Insurance Period? Find out!


A non-participating insurance plan is a term insurance plan with a premium return.

A term insurance plan simply provides death benefits, but a TROP offers the return of premium as maturity benefits at the end of the policy period.

The premium rate of a TROP plan is greater than that of a pure term insurance plan due to the guaranteed feature. It is intended for clients who desire to offer financial stability for their loved ones while also reaping the advantages of the returns.

TROP provides both insurance coverage and a refund of premiums. It gives a premium return when the policy matures. If the insured lives, they are entitled to the entire amount of premiums paid into the plan.

Wondering What Happens When You Outlive Your Term Insurance Period Find out

What does Return of Premium mean?

Return of Premium term life insurance policies is also known as Term Insurance Return of Premium policies (TROP). TROP provides all of the benefits of a standard term insurance plan, plus income replacement and premium return at maturity.

ROP is essentially a term plan with death benefits that recovers the money paid if the policyholder survives the insurance term.

On the other hand, regular term insurance pays only when the insured person dies. The case study below will help you better comprehend the ROP term life insurance policy.

Consider a policy with a yearly premium of Rs 5,000 and a cover amount of Rs 50 lakhs for 20 years.

If the insured dies, the family will be reimbursed the money guaranteed, which is Rs 50 lakh. If the insured lives the whole period, the insurer must refund the premium or Rs 1 lakh (Rs 5,000 x 20).

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Features of Term Insurance Plan with Return Of Premium

The main features of TROP are as follows:

1. Sum Assured

The amount guaranteed in TROP plans refers to the life insurance coverage provided by the insurer to the insured at the time of plan enrollment.

TROP provides a lesser sum guaranteed amount than pure term insurance coverage since the premium is reimbursed.

2. Survival Benefits or Maturity Benefits

The survival or maturity advantages provided by a TROP are what distinguishes it from a typical term plan.

An insured individual does not get any survival or maturity benefits under a pure term insurance plan. However, with a simple TROP plan, the insured receives all of their invested money as the plan’s premium, less any income tax surcharge.

3. Death Benefit

If the insured person dies due to any cause, the term insurance plan with a return of premium provides a death benefit as the whole sum promised to the nominee.

Depending on the plan, form of premium payment, or kind of cover chosen, different insurance companies provide a sum guaranteed amount.

4. Surrender Value

The surrender value of a TROP varies according to the payment choice. As a general rule, the surrender value is higher for single premium plans in which the whole premium for the policy is paid at the start of the policy period.

Insurers will calculate the surrender value differently. Those looking into TROP plans should make sure they understand what they are receiving because the amount they may receive will most likely not be what they expect.

5. Paid-Up Value

This is a benefit that a TROP might deliver. As previously stated, if the policyholder cannot pay the premium, the plan will continue, although at a reduced rate.

Before providing this benefit, most firms demand the policyholder to pay the premium for a certain number of years.

6. Riders

In addition to the primary coverage, insurance companies provide a variety of riders. Personal accident or disability rider, critical illness rider, and hospital cash are examples of these.

Why Should You Choose A Term Insurance Plan with Return Of Premium Option?

Given the rising cost of living and our increasing duties in life, we seek better methods to manage our money.

Financial instruments that provide the ability to grow wealth and get life security can be an effective way to do this.

Here are the top five reasons to invest in a premium term insurance policy with a return:

Refund at maturity

A TROP provides a premium reimbursement at maturity if the policyholder lives the tenure. You won’t lose the premiums you’ve paid throughout the years this way.

This makes it a highly appealing option for policy purchasers who are seeking term insurance and want to get their money back.

In some ways, the TROP attempts to provide the best price for the customer by combining the comprehensive coverage of term insurance plans with the saving feature of traditional plans such as endowment plans.

Guaranteed returns on premiums

Policyholders who use an ROP plan do not have to worry about their money being returned to them because the insurance guarantees it.

This insurance offers assured returns on the whole amount of premiums paid, except any additional premium(s) paid to enhance coverage with the rider (if any).

Paid-up option for non-earning investors

ROP includes a ‘paid up’ option for persons who do not have a steady source of income. This function assists policyholders when they fail to pay their premiums on time.

Premium payment options

ROP plans provide a choice of life insurance premium payment options, ranging from monthly to yearly, and additional possibilities. This policy gives the customer the choice of selecting the best payment method for him or her.

For example, if the insured is just starting in his profession, he might choose the single payment option because he may have other responsibilities to attend to.

Get tax benefits

ROP gives tax benefits under current tax legislation. The premium paid and the amount received are tax-free under sections 80C and 10(10D) of the Income Tax Act of 1961.

Policyholders can decrease their income tax surcharge liability to some extent by optimizing the premium amount they’ve paid for TROP. The Income Tax Act offers a deduction of Rs 1.5 lakhs provided the money is invested correctly.

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Wrapping It Up

Having term insurance is a must nowadays since it protects your family’s finances after you die. And with a return of premium term insurance plan, you may be certain of getting your money back. So go ahead and insure yourself immediately!


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