Should you opt for Return of Premium on Term Life Insurance?

A term insurance policy protects your loved ones from financial insecurity. It provides substantial death benefits on your demise during the policy period, at a cost that is comparatively lower than most other insurance products but offers no maturity proceeds if you survive the policy tenure. 

However, many people look for returns on their investment when they purchase an insurance cover. The solution to this is a Return of Premium (ROP) term plan policy that gives you the premium paid as a survival benefit if the insured person survives the policy term. Here’s what you should know. 

Reasons to opt for a term plan policy with return of premium benefits

Modern Indians are more conscious about their health than the generations before. They consciously make better life choices like exercising regularly and eating healthy. Medical procedures have also seen considerable advancements in recent times. As a result, the life expectancy of an average person has gone up significantly. Thus, there is ample chance that you might outlive your term insurance policy. Here lies the advantage of term insurance with the ROP feature as it offers the benefit of the return of your capital. This is how the policy works:

  • Similar to a regular term plan, the policies with the ROP option protect your family’s financial independence against all eventualities.
  • If you survive the completion of the policy term, you are eligible to receive a refund of the entire amount of premiums that you paid throughout the policy period. This enables you to live stress-free without worrying about the financial freedom of your loved ones while the policy is in effect, and you receive a large sum at a later stage in life to meet your own expenses.
  • Some term insurance ROP plans also guarantee additional returns of a small portion of the total premium paid as maturity benefit as a bonus.
  • The term plans that come with the ROP option also provide rider benefits like coverage against critical illnesses, disabilities arising out of accidents, and other uncertainties of life.
  • Just like the traditional term plans, an ROP term plan policy provides tax benefits under Section 80C of the Income Tax Act of India.

Is a Return of Premium term plan policy costly?

Term plans are insurance products with the lowest premiums, and the highest sum assured. These plans offer several options for paying the premium. The choices include paying a lump sum amount at the time of purchasing the policy, in instalments all through the term of the plan, or for a pre-determined duration during the term. Similar options are available for a return of premium plan as well. However, the value of the premium can be slightly higher than what you pay for a regular term plan. The sum assured amount can also be comparatively lower.

The higher cost is balanced out at the end of the policy term when the entire amount you pay is returned to you as a survival benefit. When you select the right coverage and a suitable tenure as per your current age, you may outlive the policy period, but eventually, you will get the outlay returned to you.


You can consider opting for the return of premium plan on your term life insurance if you wish to get some returns along with the security of life coverage. Along with it, try to choose a healthy lifestyle and stay safe. This way, your family will ultimately be benefited with a secure financial future along with the assurance of your continued presence in their lives.




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