When it comes to life insurance, two options often come up for comparison: Return of Premium vs Traditional Term Insurance. Both offer life coverage, but their cost structures, benefits, and maturity outcomes are significantly different. Understanding these two products is essential if you're evaluating life insurance for financial security and long-term planning. This article explores the cost differences, benefit comparison, return on investment, and long-term value of both plans to help you make the right choice.
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A Term Plan with Return of Premium is a type of term insurance in which the policyholder gets back all the premiums paid if they survive the policy term. In case of untimely demise during the policy period, the nominee receives the death benefit, just like a regular term plan.
The key feature that distinguishes it from a traditional term plan is the maturity payout. This makes Term Insurance with Return of Premium attractive to people who want some form of return on their investment in the policy.
For example, if you pay ₹30,000 annually for 30 years for an ROP plan and survive the policy term, you will get back ₹9,00,000 (without interest).
Here’s why many policyholders are drawn to the best term insurance plan with return of premium:
One key feature of this plan is that it gives policyholders a full refund of their premiums (excluding taxes) when they survive until the end of their policy duration.
The return of the premium plan grants death benefits to the beneficiary when the insured person meets their demise before the end of the policy period.
The Income Tax Act allows premium payments made into this policy to be deducted under Section 80C. According to Section 10(10d) of the Income Tax Act, the maturity amount from this plan can be tax-free, provided the policy meets specific conditions.
Many prefer a plan that does not result in “wasted” premiums if the policy is not claimed.
The policy strengthens financial discipline because premium refunds occur only when policy surrender does not occur, thus promoting long-term financial planning.
A Regular Term Insurance Plan is a simple life insurance policy. Here, in the event of the policyholder's demise during the policy term, the nominee receives the sum assured from the insurer. However, no sum is paid if the policyholder survives the term. The Regular Term Insurance Plan is the most budget-friendly life insurance option that provides extended coverage through inexpensive premiums.
For example, a 30-year-old non-smoker might pay ₹8,000 per year for a ₹1 crore term cover for 30 years. This would be significantly less than an ROP plan for the same cover.
The main attributes of regular-term insurance include the following benefits:
The plan gives policyholders extensive death benefit coverage while staying inexpensive.
This policy is focused entirely on providing a safety net for dependents in the event of the policyholder’s death.
Additional riders such as critical illness protection, accidental death, disability income, and more are available for policy customisation.
The reduced premiums from term insurance create better opportunities to invest this money in more profitable returns.
It is easy to understand and buy without additional complexity.
Let's have a detailed term insurance comparison across key parameters to understand how they differ:
| Feature | Regular Term Insurance | Return of Premium (ROP) Insurance |
| Premium Cost | Low | High (1.5 - 3 times of the regular term) |
| Death Benefit | Yes | Yes |
| Maturity Benefit | No | Yes (Premiums refunded) |
| Tax Benefits | Section 80C and 10(10D) | Section 80C and 10(10D) |
| Complexity | Simple | Moderate complexity |
| Policy Type | Pure risk cover | Risk cover with savings benefit |
| Best For | Budget-conscious policyholders | Buyers seeking guaranteed maturity return |
The following elements should form the basis for your decision:
The cost difference stands out as the most important consideration. Regular-term plans provide better affordability for purchasers. An ROP plan creates a premium expense equal to 1.5 - 3 times more than the cost of pure term policies.
When talking about benefit comparison, regular premium plans provide life insurance coverage and death benefits, while return of Premium (ROP) policies include death benefits, life coverage, and maturity payments. However, the maturity payment does not include interest or earnings, meaning it may not keep up with inflation or rising costs over time.
Regular term plans offer better long-term value when paired with disciplined investing. ROP plans can help people who don’t usually invest or save money. These plans make sure the money comes back, even without any extra profit.
While Return of Premium (ROP) term insurance plans appear attractive due to the promise of refunding premiums at maturity, ACKO Life takes a more transparent and financially efficient approach. ROP plans come with higher premiums, but the refund at maturity is not an actual return; it’s simply the policyholder’s money, returned without any interest. Instead, the ACKO Life Flexi Term Plan provides affordable premiums, flexible protection options, and an adaptable life cover designed to match your evolving needs.
Learn more about: ACKO Life Flexi Term Plan, Critical illness Rider, Accidental Benefit Rider and Disability Income Rider.
Term life insurance covers you for a set number of years, providing a lump sum payout to your loved ones if you pass away within the specified term. The ACKO Life Flexi Term Plan is like other term plans, but with one big difference - it lets you change your policy coverage and years as per your changing needs and responsibilities.
In addition, ACKO Life has a solid claim settlement ratio of 99.38%* and offers a smooth, quick claim process, so your family receives financial support without any hassle. You can confidently choose ACKO’s term plan as reliable financial protection for your family.
| Feature | ACKO Advantage | Traditional Plans |
| Claim Settlement Ratio | 99.38%* | Varies from 95-98% |
| Policy Adjustments | Instant changes via app | Often requires paperwork |
| Coverage Flexibility | Increase or decrease coverage anytime | Usually restricted to life events |
| Cost Efficiency | Up to 40% savings | Higher premiums |
| Premium Stability | Age-wise premiums remain fixed | May increase with inflation |
| Digital Experience | 100% online process | Often requires offline steps |
| Free Will Creation | Yes | Generally not offered |
When you buy a term insurance plan, adding riders (extra coverage options) helps protect against unexpected life challenges. To give you more security, ACKO Life offers 3 important riders: Accidental Death Benefit, Accidental Disability Benefit, and Critical Illness Cover.
If you pass away due to an accident, the ACKO Life Accidental Death Benefit Rider provides an extra payout to your family, over and above the base term insurance amount.
If an accident causes a major disability, the ACKO Life Accidental Total Permanent Disability Benefit Rider offers additional financial support to help you and your family manage living expenses and maintain stability.
The ACKO Life Critical Illness Benefit Rider covers 21 critical illnesses, including cervical cancer, breast cancer, ovarian cancer, fallopian tube cancer, and many others. This rider ensures that if you are diagnosed with a serious illness, your family’s financial security is not at risk. Here is the complete list of covered critical illnesses.
✔️ Cancer of Specified Severity
✔️ Myocardial Infarction (First Heart Attack Of Specific Severity)
✔️ Open Chest CABG
✔️ Open Heart Replacement Or Repair Of Heart Valves
✔️ Coma Of Specified Severity
✔️ Kidney Failure Requiring Regular Dialysis
✔️ Stroke Resulting In Permanent Symptoms
✔️Major Organ /Bone Marrow Transplant
✔️ Permanent Paralysis Of Limbs
✔️ Motor Neuron Disease With Permanent Symptoms
✔️ Multiple Sclerosis With Persisting Symptoms
✔️ Benign Brain Tumor
✔️ Blindness
✔️ Deafness
✔️ End Stage Lung Failure
✔️ End Stage Liver Failure
✔️ Loss Of Speech
✔️ Loss Of Limbs
✔️ Major Head Trauma
✔️ Primary (Idiopathic) Pulmonary Hypertension
✔️Third Degree Burns
Both ROP and Regular Term Insurance serve different purposes, but their effectiveness depends on individual needs and financial behaviour. Choose Regular Term Insurance if you are looking for low-cost coverage. Opt for the best term insurance with return of premium if you prefer guaranteed returns and are comfortable paying higher premiums. Remember, the primary role of insurance is protection, so choose the right plan based on your needs.
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Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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