Risk is a part of life, and financial planning is all about finding ways to manage it. When it comes to life insurance, many people hesitate because they feel they won’t get anything in return if they outlive the policy term. That’s where TROP (Term Return of Premium) insurance stands out.
It offers life cover like a regular term plan but with a key difference—your premiums come back if you don’t make a claim. How can TROP help you secure your future while ensuring you don’t feel like your money is lost? Let’s understand what it is and why investing in it could be the right choice for you.
Meaning
TROP (Term Return of Premium) is a life insurance plan that provides financial protection along with a guaranteed payout. It works like a regular term plan, where your nominee receives the sum assured if something happens to you during the policy tenure.
However, what sets it apart is that if you survive the policy term, you get back all the premiums you paid. This makes it an appealing choice for those who want life cover but don’t want their money to feel like an expense if they don’t make a claim.
Example
Let’s understand how a 1 crore term insurance with return of premium works:
A person purchasing a TROP policy with a ₹1 crore sum assured and a policy tenure of 30 years will pay an annual premium of Rs. 15,000.
If an unfortunate event occurs during the policy term, the nominee will receive ₹1 crore as the death benefit. However, if the policyholder outlives the tenure, they will receive ₹4,50,000 (total premiums paid over 30 years).
This ensures that while the policy provides financial protection, it also refunds the investment if the insured survives the term.
Why invest in TROP insurance?
If you’re looking for a life insurance plan that offers protection without feeling like a sunk cost, TROP (Term Return of Premium) insurance is worth considering. Here’s why it could be the right choice for you:
1. Refund on premium if you outlive the policy term:
One of the key concerns with a traditional term insurance plan is that if you survive the policy tenure, you don’t get anything back. TROP eliminates this worry by refunding all the premiums you paid over the years, ensuring your money isn’t lost.
This feature makes it a practical choice for individuals who want the financial security of term insurance while also having a guaranteed return at the end of the policy term.
2. Get extended coverage with riders:
Life is unpredictable and sometimes basic life coverage may not be enough. TROP policies allow you to add riders like a critical illness rider, which provides financial support if you’re diagnosed with serious conditions like cancer or heart disease.
Other options include accidental death benefits, which offer additional payouts in case of accidental demise and premium waiver riders, which keep your policy active without further payments if you become permanently disabled. These enhancements help customise the policy to your specific needs.
3. Option to increase coverage as per life stage:
Your financial responsibilities grow over time—marriage, children, home loans and other commitments can increase your need for life cover. Some TROP plans come with an option to increase your sum assured at different life stages without needing to buy a new policy.
This means you don’t have to start over with a new premium structure or medical tests. Instead, your existing policy can evolve with you, ensuring adequate protection at every phase of life.
4. Tax benefits:
Investing in a TROP policy not only secures your family’s future but also helps you save on taxes. The premiums paid are eligible for deductions under Section 80C of the Income Tax Act, reducing your taxable income.
Additionally, the maturity benefit—i.e., the refunded premiums—is typically tax-free under Section 10(10D), making it a highly tax-efficient investment. These benefits allow you to enjoy both security and savings while optimising your financial planning.
Conclusion
A TROP insurance ensures financial security while also providing a refund of all premiums if you outlive the policy term. Unlike a pure term plan, where the premiums are only for coverage, TROP guarantees that your investment isn’t lost. Though the premiums may be slightly higher, the benefit of receiving your money back makes it a practical choice.
Even if you discontinue the policy after two years, you may still get a reduced benefit or a surrender value. This flexibility, combined with life cover, makes TROP a smart way to secure your future.
