Advantages of term insurance with return of premium

Term Plan with Return of Premium

What is a Term Plan With Return of Premium?

In a world full of responsibilities and risks related to health, wealth, and security loss, we all want to be protected financially and physically. With a term plan with a return of premium comes an assurance of safety and financial protection for your; loved ones. 

Term plan with return of premium is a pure protection plan that provides you a hassle-free management of your money. It covers all the future requirements in an emergency situation where you or your family is going through financial constraints. 

In case of the policyholder’s death before completing his policy term, the beneficiaries or nominees of the insured will get death benefits on his policy. But if the insured person outlives his policy tenure, he will receive a lump sum amount against the premium he has paid to date. 

Is it good to buy Term Insurance With a Return of Premium?

A term plan with a return of premium provides multiple benefits like accidental death benefits, disability benefits, waiver of premium, protection against any critical illnesses, and so on. It gives 360 degrees of protection and a sense of calmness to the policyholder and its family members.

What is the Difference Between Term Insurance and Term Insurance with Return of Premium?

Term plan gives direct death benefit to the policyholder. On the contrary, the term plan with a return of premium provides survival benefits plus a lump sum amount of all the premiums paid to the insurance company. Let’s take a look at this table discussing a broader picture of the differences between a pure term plan and a term insurance with a return of premium. 

Aspects Term Insurance Term Insurance with Return of Premium
Basis If the policyholder dies involuntarily without completing the policy tenure, the pure death benefit is given to the beneficiaries of the insured.  If the policyholder dies before completing his/her policy term, the nominees will receive a death benefit. But if the insured outlives the term of his policy, he is given a lump sum amount of all the premiums paid during the policy term. 
Premiums Premiums are lower  Premiums are higher in comparison to a standard or pure-term plan
Premium returns No premium is returned Premium is returned to the insured
Cost-effectiveness It’s affordable to bear from pockets It’s a little difficult to manage premium expenses on a monthly basis

What are the Pros and Cons of Term Insurance With Return of Premium?

Refer to this table elucidating the advantages of term insurance with return of premium along with the disadvantages of term plan with return of premium:-

Pros Cons
Guaranteed payout of premiums paid by the policyholder after completion of the policy term  The return of premiums at times of inflation may feel way too less on receiving
The premium remains the same throughout the policy tenure The premiums are on the costlier side when compared to a standard term plan 
Under Section 80C of the Income Tax Act, 1961, the policyholder may apply for a tax benefit The return on the premium is not available on the death of the policyholder if the plan term is under maturity


A term insurance plan is beneficial for those who want an additional component of investment in the long term. Though it provides freedom to protect the insured and his/her family members financially. 

It will provide you with a safety net in tough times for sure, but it has two sides of interest as well. So, to a concise it’s better to consult with an agent or you can also visit the nearest branch of the insurance company from which you wanna purchase a policy.

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