Is TROP Better Than FD or PPF: A Detailed Guide and Comparison

Financial planning isn’t just about growing your money; it’s also about being prepared for life’s uncertainties. That’s why more people today are exploring a mix of options that offer both security and returns. Whether you’re thinking about how to protect your family, save for the future, or just make smarter use of your income, understanding the right tools is key. In this blog, you’ll learn about three popular choices: Return of Premium (ROP) term insurance plans, Fixed Deposits (FDs), and the Public Provident Fund (PPF). Each serves a different purpose, from offering life cover with a payout benefit to helping you save money over the long term. Let's look at how each of these terms works and how to determine which one will work best for you.

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What is TROP?

A Return of Premium Term Insurance plan, or TROP for short, is a type of life insurance that combines protection with a savings benefit. Like a regular term plan, it provides a death benefit to your nominee if you pass away during the policy term. But here's what makes it different: if you outlive the policy, all the premiums you paid are returned to you.

Think of it as protection plus a refund. You don’t lose your money if nothing happens (or if the policy is unused), making it more attractive to people who hesitate to buy pure protection plans.

How it works:

You purchase the policy and pay regular premium
In case something unfortunate happens to you, your family receives the death benefit from the polic
If you outlive the policy, you get the base premiums back

Advantages & Disadvantages of TROP

Provides life cover plus a refund benefit

All base premiums are refunded if the policyholder survives the policy period

Payout received on surviving the policy is usually tax-free under Section 10(10D)

Encourages long-term financial discipline

Suitable for individuals who want protection and their money back if the policy goes unused

Premiums are slightly higher because of the refund benefit

No interest is earned on the refund amount

You only get back the premiums paid, with no scope for growth or profit

Early surrender of the policy might result in loss of benefits or reduced payout

Not ideal for individuals looking for high returns or investment growth

What is an FD?

A Fixed Deposit, or FD for short, is a traditional savings instrument where you deposit a lump sum with a bank or Non-banking Financial Company (NBFC) for a fixed period and earn a guaranteed interest. This interest rate is locked in at the start, and you get your principal + interest at maturity.

FDs are low-risk, predictable, and easy to understand, which is why they remain popular despite lower returns compared to other long-term investments.

How it works:

You choose your deposit amount and select the tenure or duration for which the money will stay locked in
You lock in the interest rate, which stays the same throughout the term.
Your fixed deposit earns interest monthly, quarterly, or at maturity, based on your choice.
At the end of the term, you get the principal amount you invested plus interest.

Advantages & Disadvantages of FDs

Provides guaranteed returns with low risk involved

Easy to open and manage through banks and NBFCs (Non-Banking Financial Companies)

Gives you flexible tenure options for short-term and medium-term needs

Higher interest rates are available for senior citizens

Interest earned is taxable as per your income slab

Returns might not keep up with inflation

Early withdrawals can lead to penalties or reduced interest

Does not offer life cover or additional financial protection

What is PPF?

The Public Provident Fund (PPF) is a long-term government-backed savings scheme that encourages individuals to save for retirement. It comes with a lock-in period, and the interest rate is set by the government every quarter.
You can invest up to ₹1.5 lakh per year and claim deductions under Section 80C of the Income Tax Act.

How it works

You can open a PPF account at either a bank or even a post office..
Your money starts earning interest at the government-declared rate.
Your invested amount is locked in for 15 years.
After 15 years, you can either withdraw the full amount or extend the account in 5-year blocks.

Advantages & Disadvantages of PPF

Eligible for tax deductions of up to ₹1.5 lakhs under Section 80C

Safe and government-backed backed making it a low-risk investment

Compound interest, which means your interest earns interest, growing your money faster over time

You can invest in a lump sum or in instalments

Offers the option to extend in 5-year blocks after maturity

15-year lock-in period might not suit individuals with short-term goals

Fixed investment limit of ₹1.5 lakh per year

Does not provide life cover

Interest rates are not fixed and can change quarterly as per government revisions

Only one account per person is allowed; you cannot open multiple PPF accounts

TROP vs. FD vs. PPF Comparison

Feature	Term Return of Premium Insurance(TROP)	Fixed Deposit(FD)	Public Provident Fund(PPF)

Purpose	Life cover and premium refund	Guaranteed return on savings	Long-term wealth creation plus tax savings
Life insurance over	Yes	No	No
Returns	Base premiums are refunded at the end of the term	Returns with fixed interest	Returns with compounded interest
Tax benefits	Premiums qualify for deduction under Section 80C	5-year FDs qualify for 80C, and interest earned is taxable	Section 80C benefits and the interest + maturity amount are tax-free.
Risk level	Low	Very low	Very Low (government-backed)
Ideal for	People who want insurance plus returns	Those who are seeking low-risk fixed returns	People looking for long-term savings with tax-free growth

Is a TROP Plan Better Than an FD or PPF?

There's no one-size-fits-all answer. A TROP plan serves a different purpose than FDs or PPFs.

Choose TROP if you want life insurance and prefer getting premiums back.
Go for FDs if you have short-term goals and want stable, predictable returns with easy access.
Invest in PPF if you’re thinking long-term, want to build a retirement corpus, and enjoy tax savings.

Frequently Asked Questions

Which is the main difference between TROP, FD, and PPF?

TROP is a life insurance plan that returns premiums if you survive the policy period. FDS and PPFS are savings instruments. FDs offer fixed returns, while PPF provides long-term, tax-free growth.

Can I invest in all 3 at the same time?

Yes. In fact, using a combination of TROP, FD, and PPF can help balance protection, liquidity, and long-term savings.

Are there any tax benefits?

Yes. All three qualify for deductions under Section 80C.

Is the money I get back from TROP taxable?

Mostly not. The death benefit is usually tax-free under Section 10(10D), provided certain conditions are met.

Which one will give me better returns?

It depends on what you're looking for. PPF generally offers better post-tax returns over the long term. FDs give fixed returns but are taxable. TROP returns your premiums without any interest or growth.

Is TROP better than the other two?

It will depend on the individual's needs. TROP offers life cover plus the benefit of premiums being refunded if you outlive the policy term, while FD and PPF are savings plans with no life insurance aspect.

Do insurance companies provide FDs or PPFs?

No. Insurance companies do not offer Fixed Deposits (FDs) or Public Provident Fund (PPF) accounts. They are provided by banks and certain Non-Banking Financial Companies (NBFCs)

Written by Neviya Laishram

1.7K Linkedin Followers

Reviewed by Vaibhav Kumar Kaushik

A senior editor with years of expertise, she fine-tunes content that connects, converts, and builds trust. She transforms heavy life insurance concepts into clear, aha-moment reads. Writing is her passion, and thinking ahead is second nature. When not wrangling words, she’s crushing game levels because every challenge is a puzzle waiting to be solved.