TROP stands for Term Insurance with Return of Premium. It is a type of term life insurance plan that refunds the total premiums paid (excluding GST) to the policyholder if they survive the policy term. This article explains what influences the cost of Term Insurance with Return of Premium. It also covers how premium rates vary and how to compare affordable options to choose the best term insurance plan with return of premium.
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A term insurance with return of premium policy provides life cover and a maturity benefit. It works like a standard term plan. However, unlike regular term insurance, where no payout is made if the insured survives the term, TROP ensures that if the policyholder outlives the policy term, all premiums paid (excluding GST) are returned.
In simple terms, TROP provides financial protection to your family in case of an untimely death. But if you live through the entire duration of the policy and no death claim is made, the insurer will return all the premiums you paid.
Let’s take a look at the pricing comparison to understand the extra you pay for TROP:
A 30-year-old non-smoker can get ₹1 crore coverage for around ₹11,000 per year. Explore the ACKO Life flexi Term Plan now.
The same individual may have to pay ₹27,000 per year to get their premiums refunded after 30 years.
There are various cost factors that determine your term plan with return of premium, which include the following:
The younger you are, the lower the premiums you will be required to pay. Age is regarded as one of the main determinants of pricing when considering the purchase of a life insurance plan.
Having a higher coverage means you will pay higher premiums. For instance, a ₹ 1 crore sum assured plan would cost you more than a ₹ 50 lakh plan.
Term insurance premiums increase with the length of the policy term. It is simply because the insurer is taking on risk for a longer period. For example, a 30-year term will generally cost more than a 10-year term, assuming the same sum assured and age at entry
Your medical history and lifestyle choices, such as smoking or alcohol intake, will directly affect your premium
Adding riders, such as critical illness and accidental death benefits, will increase your premium. They are usually optional, but they add great value.
If you have a risky job or engage in high-risk hobbies, your premiums will be higher
While choosing the best term plan, keep in mind:
Choose insurers with a claim settlement ratio (CSR) above 95%.
Check for monthly, quarterly, and annual options for payments.
Based on your needs, choose plans with riders, such as return of premium, critical illness, waiver of premium, etc.
Choose an insurer that has a strong financial standing.
Verify that the policy has a free-look period during which you can review the terms and cancel at no extra cost. Also, check the grace period for premium payments to avoid accidental policy lapses.
A term insurance with return of premium (TROP) is more expensive than a regular term plan, but it is a suitable option for those looking for life coverage and a guaranteed return at maturity. Always consider your age, need for coverage, and pricing of various insurers before choosing your best term insurance plan.
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Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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