People are often looking for ways to grow their wealth and secure their family’s future, along with their own. In such cases, a great deal is always valued.
What if there was a term plan that is beneficial for both – an individual and their family—even if the individual outlived the policy term? Furthermore, what if all these benefits were available without having to spend a significantly higher amount?
If you are intrigued by the idea, then a Term Plan with Return of Premium is what you are looking for.*
What is a Term Plan with Return of Premium?*
A basic term plan, also known as a level term insurance plan, is a pure protection policy. It offers financial security to dependents in case the policyholder passes away in an untimely manner.
On the other hand, a Term Plan with Return of Premium (TROP) goes a step further. If you outlive the policy term, the insurer will return the premiums you’ve paid into the policy. If an unfortunate event occurs during the term, your beneficiaries receive the death benefit. It is the predetermined sum assured for which you’ve been paying premiums.
Essentially, a Term Plan with Premium Return makes your policy cost-neutral while offering the dual benefits of a maturity payout and death benefit in one plan.
How a Term Plan With Return Of Premium Works*
Here is an example To show you how Term Insurance With Return Of Premium works:
Sushila Singha is a healthy 35-year-old who works in an MNC and is looking for a plan to secure her family’s financial future in her absence. She decides to buy a term insurance plan with return of premium, with a Sum Assured of INR 1 Crore and coverage till age 85.
She pays an annual premium of INR 76,814 (exclusive of taxes) for 10 years.
On Sushila’s untimely demise at age 70, a sum assured of INR 1 Crore will be paid to her nominee & the policy will terminate.
If she survives the policy term, at age 85 (end of PT), she will receive INR 7,96,000 (Total Premiums Paid) as Maturity Benefit under ROP Option.
Benefits Of a Term Plan With Return Of Premium*
A term life insurance plan with return of premium offers more benefits than traditional term plans.
Premium refund: 100% premiums are refunded if you outlive the policy term, excluding taxes paid and applicable deductions. You can use this money to clear debts or fulfil aspirations.
Retirement savings: The maturity benefit from a term plan with a premium return feature doubles as a retirement corpus, which can be reinvested to earn higher returns.
Assured financial security for your family: In case the policyholder passes away before the policy matures, the entire sum assured is paid to the beneficiaries, and the policy is terminated.
Protection against misfortunes: At any point of the term, if the policyholder is diagnosed with a terminal illness, your term insurance plan with return of premium may also have the provision of paying part of the sum assured and continue or terminate the policy (as the policy conditions may stipulate) even if the policy has not completed its term.
Choose the percentage of returns: This type of term insurance plan comes with a higher premium. But you can still take advantage of its benefits by choosing to have either 10% to 50%, in multiples of 10%, of the applicable death benefit to be paid immediately as lumpsum and the balance amount to be paid later.
Pay premiums conveniently: Pay monthly, quarterly, half yearly, yearly premium.
GST savings: Term plans attract a GST of 18%, whereas on term insurance with return of premium, the GST is 4.5% in the first year and 2.25% in the subsequent years.
Tax savings: The premiums paid for the policy are eligible for tax deductions of up to Rs 1.5 lakh per annum under Section 80C of the Income Tax Act, 1961. The payout is exempt from income tax under Section 10 (10D) of the tax laws.**
It is important to consider the above benefits and review your options beforehand to choose the best term insurance plan with return of premium that fits your needs.
Comparing Regular Term Insurance with TROP Plans*
To better understand how a term insurance plan with return of premium can benefit you, here is a table comparing it with a regular term plan:
Feature
| Pure Term Insurance
| Term Insurance with Return of Premium (TROP)
|
Death Benefit
| Pays the sum assured to the nominee if the policyholder passes away during the term.
| Similar to regular term insurance: The sum assured is paid on the demise during the policy term.
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Maturity Benefit / Survival Benefit
| No payout if the policyholder survives the policy term.
| All the premiums paid are returned (excluding costs for any term rider chosen/taxes) if the policyholder survives the term.
|
Premium Cost
| Lower premium, because there is no maturity benefit.
| Higher premium, as the plan guarantees a refund of premiums.
|
Savings Element / Cash Value
| None; pure protection only.
| Has a savings element, as premiums are reimbursed on survival.
|
Tax Benefits
| Tax benefits on premiums and death benefit, as per prevailing laws.
| Similar tax benefits; maturity refunds may also be exempt under conditions.
|
Who It Suits / Ideal For
| People seeking maximum coverage at minimum cost and focusing purely on protection.
| People who want protection plus the assurance that their premiums will benefit them even if they survive the policy term.
|
Risk of Loss
| Premiums are affordable, but no returns if you survive the policy term.
| Higher premiums; returns may be less beneficial compared to investing the difference elsewhere.
|
You can use a term insurance calculator to get an idea of the policy costs before you finalise the plan.
Why To Buy a Term Plan With Return Of Premium***
You’ve just read about the many advantages TROP plans offer. With the IndiaFirst Life Super Protection Plan, you can enjoy the benefits of a TROP plan and even more:
- 2 coverage options - Life Option (to financially secure your loved ones against uncertainties), or Life with Return of Premium Option (to ensure a maturity benefit in case of survival).
- Waiver of Premium benefit to ensure uninterrupted coverage in case of 40 critical illnesses or total disability.
- Flexibility in receiving death benefits, either as a lump sum or in monthly instalments.
- Coverage up to 99 years of age.
- Sum Assured boost at different life stages with no underwriting required.
- Joint Life coverage to protect your spouse under the same policy.
- Additional protection via the Terminal Illness Benefit rider.
- Enhanced safety net with additional riders like Accidental Death Benefit (ADB) and Total Permanent Disability (TPD).
Eligibility Criteria for Term Plans with Return of Premium
While the eligibility conditions may differ across plans and insurers, the general criteria are as follows:
- Minimum entry age: 18 years
- Maximum entry age: 65 Years
- Minimum maturity age for the Life Option: 23 years
Minimum maturity age for the ROP Option: 28 years
- Maximum maturity age for Life Option: 99 years
Maximum maturity age for ROP Option: 85 years
- Minimum policy coverage term (single premium): 5 to 10 years
Minimum policy coverage term (limited premium):10 years
- Minimum premium payment term: 5 years to 47 years
Life is unpredictable, but with a term plan with return of premium, you are completely covered. While it may be slightly pricier than a standard term plan upfront, its long-term advantages make it an investment worth considering. TROP is tailor-made for individuals who desire a policy that not only protects their loved ones but also offers a monetary return. It is the perfect balance of protection and profit, providing peace of mind and a tangible benefit.*
Disclaimers:
Total Premiums Paid shall be the Annualized Premium * Number of years for which premium has been paid. Annualized premium payable In a year is the base premium, excluding applicable taxes, rider premium (if any), underwriting extra premium (if any) and loadings for modal premium (if any).
*Applicable when Return of Premium plan option is chosen
There are 2 Riders available with this product: (1) IndiaFirst Life Accidental Death Benefit Rider (UIN: 143B019V01), (2) IndiaFirst Life Total Permanent Disability Rider (UIN: 143B021V01). For more details on the benefits, terms and conditions of the riders, please refer the Rider Brochure.
**Tax exemptions are as per applicable tax laws from time to time.
IndiaFirst Life Insurance Company Limited, IRDAI Regn No.143, CIN: U66010MH2008PLC183679, Address: 12th & 13th floor, North Tower, Building 4, Nesco IT Park, Nesco Centre, Western Express Highway, Goregaon (East), Mumbai – 400 063. Toll free No – 18002098700. Email id: customer.first@indiafirstlife.com, Website: www.indiafirstlife.com. Fax No.: 912268570600.
IndiaFirst Life Super Protection Plan (UIN 143N075V01). For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale. Trade logo displayed above belongs to our promoter M/s Bank of Baroda and is used by IndiaFirst Life Insurance Co. Ltd under License. Purchase of any Insurance product by Bank’s Customer is purely voluntary, and is not linked to availment of any other facility from the Bank.
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