Term Plan with Return of Premium

Secure your loved ones and get your money back if you survive the policy term.

2025-08-29

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When planning for your family's future, it's natural to seek financial products that offer both security and value. A Term Plan with Return of Premium (TROP) does exactly that: combining the pure protection of term insurance with the added benefit of getting your money back if you outlive the policy term. Unlike a regular term plan that only pays out on the policyholder's death, a TROP plan ensures your hard-earned premiums don't go to waste, making it a smart choice for risk-averse individuals.

Let us discuss how return of premium term insurance works, its features, benefits, and whether it’s the right fit for your financial goals.

What is Term Insurance with Return of Premium?

A term plan with return of premium (TROP) offers life coverage like a regular term plan, but differs in certain aspects. In a regular term insurance plan, the premiums you pay are purely for the life cover. This means if the policyholder survives the policy term, no amount is returned, and the plan simply ends. It’s like paying for protection: you’re covered during the term, but there’s no payout if the cover is not used.

On the other hand, a Term Plan with Return of Premium (TROP) includes a built-in savings component. If the policyholder survives the term, all the base premiums paid (excluding taxes and rider costs) are returned as a lump sum.

This makes it appealing for those who want a safety net for their family, but also wish to receive something back if the insurance isn't claimed. It ensures financial security for your family in case of your untimely demise and also provides a maturity benefit if you outlive the policy duration.

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To secure your family’s financial future and protect their dreams, you’ll need an additional cover of

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Desclaimer-

The above calculation and illustration of figures are indicative only and not on actual basis.

Key Benefits of Term Insurance with Return of Premium

A Return of Premium (TROP) Term Plan blends life insurance protection with a guaranteed return of premiums, offering a compelling value proposition for those who want both security and savings. Here's why you need a TROP.

1. 100% Premium Refund on Survival:

If you survive the entire policy term, the insurer will refund all base premiums paid (excluding applicable taxes, rider premiums, or extra charges). This feature transforms the plan from a “pure expense” into a risk-free savings tool, ensuring you get your money back if no claim is made.

2. Full Life Cover During the Policy Term:

Just like a regular term plan, a TROP plan offers comprehensive life coverage throughout the term. In the unfortunate event of your death during the policy term, your nominee receives the full sum assured, providing financial security to your loved ones.

3. Risk-Free Savings with Guaranteed Returns:

Unlike investment-linked plans that are subject to market risks, the TROP plan offers guaranteed, tax-free returns of premiums. It’s ideal for those seeking stable and predictable outcomes without exposure to market volatility.

4. Peace of Mind: No Wasted Premiums:

Many people hesitate to buy term insurance because they feel they’re paying for something they may never use. The TROP plan eliminates that concern. You either leave behind a financial safety net for your family or receive your premiums back, ensuring your money never goes to waste.

5. Encourages Financial Discipline:

The plan requires regular premium payments (monthly, quarterly, or annually), which help inculcate structured savings habits. It ensures you consistently contribute toward long-term financial protection without skipping.

6. Tax Benefits Under Indian Tax Laws:

As per section 80C of the Income Tax Act, premiums paid are eligible for tax deductions up to ₹1.5 lakh per annum. Additionally, as per section 10(10D), the death benefit and the maturity amount (premium refund) are exempt from tax, subject to prevailing terms and conditions.

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Features of Term Plan with Return of Premium

A Term Plan with Return of Premium is a unique blend of pure life insurance and guaranteed returns, designed for individuals who seek financial protection without the feeling of losing their invested premiums. Here’s a detailed breakdown of its key features:

Return of Premium on Survival: One of the most attractive features of this plan is that it refunds all base premiums paid (excluding taxes, rider charges, and underwriting extras) at the end of the policy term if the policyholder survives. This acts as a maturity benefit, unlike standard term plans that offer no survival benefits.
Comprehensive Life Coverage: Just like a regular term plan, a TROP plan provides full life insurance coverage throughout the policy tenure. In case of the policyholder’s death during the term, the entire sum assured is paid to the nominee, ensuring complete financial protection for dependents.
Fixed Policy Term: The policyholder can choose a fixed policy duration, typically ranging from 10 to 40 years, based on their age, income, and future financial responsibilities. The plan remains in force as long as premiums are paid regularly.
Multiple Premium Payment Options: Insurers offer various premium payment modes to suit different financial needs:
- Regular Pay: throughout the policy term
- Limited Pay: for a shorter duration while enjoying coverage for the full term
- Single Pay: one-time payment for the entire policy term
Maturity Benefit: Unlike regular term plans, TROP plans offer a guaranteed maturity benefit, which is equal to the total base premiums paid over the policy term (excluding extra charges). This ensures that your investment is not lost if no death claim is made.
Tax Benefits: Policyholders can enjoy tax benefits under Indian tax laws:
- Section 80C: Premiums paid are deductible up to ₹1.5 lakh per annum
- Section 10(10D): Both the death benefit and survival benefit (premium refund) are exempt from tax, subject to conditions
Optional Riders: To enhance coverage, insurers allow policyholders to attach additional riders, such as:
- Accidental Death Benefit Rider
- Critical Illness Rider
- Waiver of Premium Rider
- Terminal Illness Rider
  
  These riders provide customisable protection based on individual health and financial risks.
Entry Age and Eligibility: Most insurers offer TROP plans to individuals aged between 18 to 60 years, with the policy term extending up to 75 or 80 years of age, depending on the plan. This makes it suitable for both young professionals and mid-life earners.
Premium Rates: Premiums are higher than standard term plans due to the maturity benefit, but still affordable compared to investment-linked policies. The extra cost is justified by the return of premium feature.
Surrender and Paid-Up Options: In case of financial constraints, many TROP plans come with:
- Surrender Value: A portion of the paid premiums may be returned if the policy is surrendered early
- PaidUp Option: If you stop paying after a few years, the plan may continue with reduced benefits (based on terms)

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Documents Required to Buy Return of Premium Term Insurance

To purchase a Return of Premium (TROP) Term Insurance Plan, insurance companies require specific documents to verify your identity, assess your financial background, and complete the underwriting process. Here's a detailed list of what you’ll typically need:

This is required to establish your legal identity. Acceptable documents include:

Aadhaar Card
PAN Card
Passport
Voter ID
Driving License

Note: Some insurers may require both Aadhaar and PAN for compliance with KYC norms.

To verify your current residential address. You can submit:

Aadhaar Card
Passport
Utility Bills (Electricity/Water/Gas – not older than 3 months)
Bank Statement with Address
Driving License

Your income helps determine the eligibility for the sum assured. Documents may include:

Latest Salary Slips (last 3–6 months)
Income Tax Returns (ITR) for the past 2–3 years
Form 16 (for salaried employees)
Bank Statements showing salary credits
CA-certified financials (for self-employed individuals)

A recent colored photograph is usually required to complete the application and for official records.

A recent color photograph is required to complete the application process.
The photograph will be used for official documentation and record-keeping.
Please ensure the image meets the specified guidelines for size, background, and clarity.
Submitting the photograph promptly will help avoid delays in policy issuance.

To facilitate premium payments, refunds, and claim settlements, you may need to provide:

Cancelled Cheque or Bank Passbook copy
Bank account number, IFSC code, and branch name

In some cases, age needs to be verified separately. Documents accepted include:

Birth Certificate
10th or 12th Grade Marksheet
Passport

A Return of Premium Term Plan (TROP) is designed to provide financial protection to your family while also ensuring that you don’t lose your money if you outlive the policy term. It combines the core purpose of term insurance, life coverage, with a guaranteed maturity benefit.

Here's how it works in both scenarios, whether the policyholder survives the term or not.

Example:

Mr. A, a 30-year-old professional, purchases a Return of Premium Term Plan with the following details:

Sum Assured: ₹25 lakh
Policy Term: 30 years
Annual Premium: ₹15,000
Total Premiums Paid Over 30 Years: ₹4.5 lakh

Scenario 1:
Scenario 2:

Mr. A Passes Away During the Policy Term

His nominee (e.g., spouse, parents, or children) will receive the entire ₹25 lakh as a death benefit.
No maturity or return of premium is applicable since the life cover has been claimed. This helps the family handle financial responsibilities like debts, education, or living expenses.

Mr. A Survives the Policy Term

If Mr. A survives the full 30-year term:

He receives a refund of all base premiums paid, totaling ₹4.5 lakh (excluding GST, rider premiums, or other charges).
This acts as a guaranteed maturity benefit, similar to receiving your money back at the end of a savings scheme.
The amount received is tax-free under Section 10(10D), subject to applicable conditions.

In Summary:

Event	Outcome
Death During Policy Term	Nominee receives ₹25 lakh (sum assured)
Survival After 30 Years	Mr. A receives ₹4.5 lakh (total premiums refunded)

How to Choose the Best Return of Premium Term Insurance Plan?

Choosing the right return of premium term insurance plan involves more than just comparing premiums. Since you're investing for both protection and returns, it’s important to evaluate the plan from every angle. Here’s how you can make a well-informed decision:

Compare Plans from Trusted Insurers: Start by researching and comparing plans offered by reputed life insurance companies. Look for insurers with:
- Strong brand credibility
- Transparent policy terms
- Easy claim process
- Digital support and policy servicing
  
  Use comparison tools or aggregator websites to shortlist a few top-rated plans before deciding.
Evaluate Riders and Add-On Benefits: Most TROP plans allow you to enhance your coverage with optional riders such as:
- Critical illness cover
- Accidental death benefit
- Waiver of premium on disability or critical illness
  
  These riders offer additional protection for a small increase in premium. Choose riders based on your lifestyle, profession, and health risks.
Choose a Policy Term That Matches Your Life Goals: Select a policy term that aligns with your long-term financial goals. For example:
- If you're planning until your children complete their education, opt for a term of 20–25 years.
- If you're securing income replacement until retirement, go for a longer policy duration (up to age 65–70).
  
  Remember, longer terms provide longer coverage but may also increase the premium amount slightly.
Check the Claim Settlement Ratio: The claim settlement ratio (CSR) is a key indicator of the insurer’s reliability. A high CSR (typically above 95%) means that the insurer honors most of the claims it receives. This gives your family better assurance that the sum assured will be paid promptly in case of your absence.
Understand What’s Included in the Refund: While a TROP plan refunds the premiums paid, it’s crucial to understand what is excluded from this refund:
- GST and taxes paid on premiums
- Charges for additional riders
- Policy servicing or administrative fees
  
  Read the policy brochure or fine print to avoid surprises at maturity.

Bonus Tip: Use a Return of Premium Calculator

To make the best decision, try an online TROP calculator to estimate:

Premium outgo
Expected maturity benefit
Coverage required based on income and liabilities

This will help you align the policy to your financial goals and affordability.

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Why Choose Canara HSBC Life Insurance Term Plan with Return of Premium?

At Canara HSBC Life Insurance, we understand that when you invest in a term plan, you’re not just seeking protection but also looking for value, flexibility, and trust. Our Return of Premium Term Plan is designed to offer you the best of both worlds: life cover for your loved ones and a guaranteed return of all base premiums if you outlive the policy term. Here's why our plan stands out:

1. A Brand You Can Trust:

Backed by the strong legacy of Canara Bank, HSBC, and Punjab National Bank, we are proud to be one of India’s most trusted life insurance providers. Our high claim settlement ratio reflects our commitment to delivering on our promises when it matters most, ensuring your family gets the financial support they deserve without unnecessary delays.

2. Flexible, Customisable Coverage:

We offer customisable term plans that adapt to your life stage and financial goals.
With our Return of Premium Term Plan, you can choose:

The policy term and premium payment method that suits you best
A sum assured that aligns with your future needs
Valuable add-on riders like critical illness or accidental death to boost your protection

You have complete control to build a plan that works for you and your family.

3. Tax Benefits with Guaranteed Return of Premiums:

We know the importance of balancing protection with returns. That’s why our TROP plan ensures that if you outlive your policy term, you get all your base premiums back, so your money never feels wasted.

Enjoy tax savings under Section 80C on premiums paid
Get tax-free maturity benefits under Section 10(10D)
Receive a guaranteed lump sum refund of all base premiums (excluding taxes and rider charges)

It’s insurance that protects and pays back. At Canara HSBC Life Insurance, we are committed to helping you build a financially secure and rewarding future.
Let’s plan it together.

FAQs

Yes, it offers dual benefits of life cover and premium return on survival, making it suitable for risk-averse individuals.

Yes, all base premiums paid are returned, excluding taxes and rider charges.

No, maturity benefits under Section 10(10D) are tax-free if conditions are met.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.