Why Term Insurance with Return of Premium (TROP) is Gaining Popularity in 2025

Term insurance has long been a fundamental pillar of financial planning, offering affordable life coverage. Traditionally, pure term insurance policies provided financial security to policyholders’ families in case of an untimely demise. However, a growing trend in 2025 is the increasing preference for Term Insurance with Return of Premium (TROP).

Unlike standard term plans, TROP offers policyholders a refund of premiums paid if they survive the policy term. This shift in consumer preference is driven by multiple factors, including risk aversion, evolving financial priorities, and increased awareness of insurance benefits.

In this article, we will explore the reasons behind the rising demand for TROP, its key advantages, and whether it is the right choice for different policyholders.

Understanding Term Insurance with Return of Premium (TROP)

TROP is a variation of traditional term insurance that provides a survival benefit. If the insured survives the policy tenure, the insurer refunds all premiums paid, excluding taxes and additional charges. This feature makes TROP an attractive option for individuals who seek both protection and savings in one plan.

For example, if a policyholder opts for a ₹1 crore TROP policy for a tenure of 30 years and pays an annual premium of ₹25,000, they will receive ₹7.5 lakh (₹25,000 x 30 years) as a lump sum if they survive the term. In case of the policyholder’s demise during the tenure, the nominee still receives the sum assured, ensuring financial security.

Why is TROP Gaining Popularity in 2025?

1. Growing Preference for Risk-Free Investment Options:
   With economic uncertainties and fluctuating market conditions, individuals are increasingly opting for low-risk financial products. TROP provides a safety net by ensuring that if no claim arises, policyholders get back their premiums, making it an appealing alternative to traditional term plans that do not offer any survival benefits.
   
2. Psychological Advantage of Return on Investment:
   Many consumers hesitate to buy term insurance because it is perceived as an expense with no tangible returns if the insured survives the policy term. TROP eliminates this concern by refunding the premiums, making policyholders feel their money is not “wasted.”
   
3. Rising Financial Awareness Among Millennials and Gen Z:
   Younger generations are increasingly investing in financial products that offer both protection and savings. As financial literacy improves, more people recognize the value of TROP as a strategic component of wealth planning.
   
4. Employer Benefit Gaps Leading to Individual Policy Purchases:
   Many employees are realizing that employer-provided life insurance may not be sufficient. As a result, they are opting for individual TROP policies to ensure personal financial security beyond their workplace benefits.
   
5. Enhanced Customization and Add-On Benefits:
   Insurance companies in 2025 are offering highly flexible TROP plans with riders such as critical illness cover, accidental death benefit, and waiver of premium. These additional benefits make TROP policies even more attractive to consumers looking for comprehensive coverage.
   
6. Tax Benefits under Sections 80C and 10(10D):
   Policyholders continue to benefit from tax deductions on premiums paid under Section 80C of the Income Tax Act. Additionally, the lump sum refund under TROP is tax-free under Section 10(10D), making it an efficient tax-saving tool.

Who Should Consider Buying a TROP Plan?

While TROP offers multiple advantages, it may not be the ideal choice for everyone. Below are categories of individuals who may benefit the most from opting for TROP:

1. Individuals Who Prefer Guaranteed Benefits: If you are risk-averse and want assurance that your money will be returned, TROP is a suitable option.
   
2. People Seeking a Balanced Protection Plan: If you want life insurance with a built-in savings feature, TROP aligns with your financial goals.
   
3. Taxpayers Looking for Additional Deductions: If you seek tax-saving opportunities while ensuring financial security, TROP provides dual benefits.
   
4. Policyholders Who Want to Avoid Market-Linked Plans: If you are hesitant to invest in market-linked products like ULIPs or mutual funds, TROP offers a safe and stable alternative.

How Does TROP Compare with Pure Term Insurance?

Feature	Pure Term Insurance	Term Insurance with Return of Premium (TROP)
Death Benefit	Paid to nominee	Paid to nominee
Survival Benefit	Not applicable	Refund of total premiums paid
Premium Amount	Lower	Higher than pure term plans
Maturity Benefit	None	Lump sum premium refund
Tax Benefits	Available	Available
Customization	Available with riders	Available with riders

Should You Opt for TROP Over Regular Term Insurance?

The decision to choose TROP over traditional term insurance depends on your financial goals, risk tolerance, and budget. While pure term insurance remains the most cost-effective option for life coverage, TROP is a viable alternative for individuals who want a guaranteed return on their premium payments.

However, it is essential to consider that TROP policies have higher premiums compared to standard term plans. If your primary goal is maximizing coverage at the lowest cost, a pure term plan may be more suitable. On the other hand, if you are willing to pay slightly higher premiums for a refund benefit, TROP could be a smart choice.

Conclusion

Term Insurance with Return of Premium (TROP) has gained momentum in 2025 due to its ability to combine protection with a savings component. The psychological reassurance of receiving a refund, coupled with rising financial awareness and enhanced policy features, has made TROP an attractive option for a growing number of individuals.

While it is not a one-size-fits-all solution, TROP is an excellent choice for risk-averse individuals, salaried employees, and tax-conscious policyholders who want both life coverage and guaranteed returns. However, those seeking affordable pure-risk protection may still find regular-term insurance more beneficial. Before purchasing a TROP policy, it is advisable to compare plans, assess premium affordability, and align the choice with your financial goals. As the insurance landscape continues to evolve, TROP is set to play a crucial role in helping individuals secure their future with added financial confidence.