“Why buy insurance if I get nothing back?”
That one question stops many Indians from buying a pure term insurance policy. And it’s understandable — no one likes the idea of paying premiums for 30 years, only to “lose” it all if they survive.
That’s why Return of Premium (ROP) term plans are becoming popular. They give you life cover and promise to refund all your premiums if you live through the policy term. Sounds ideal, right?
Well… maybe. Let’s break it down fully so you can decide smartly.
What Is a Return of Premium Term Plan?
A Return of Premium (ROP) term plan offers two benefits in one:
- If you die during the term: Your nominee gets the full life cover amount — just like a regular term plan.
- If you survive the full term: You get back all the premiums you paid (excluding GST and rider costs).
There’s no bonus, no interest — just a refund of what you put in.
Example: You pay ₹20,000/year for 30 years = ₹6 lakh total → At maturity, you get ₹6 lakh back (tax-free)
ROP vs Pure Term Plans: What’s the Real Difference?
| Feature | Pure Term Plan | ROP Term Plan |
|---|---|---|
| Death Benefit | ✅ Yes | ✅ Yes |
| Premium Refund on Survival | ❌ No | ✅ Yes |
| Annual Premium | Lower | 1.5x–3x higher |
| Return on Investment | Nil | Nil (You only get what you paid) |
| Tax-Free Maturity | N/A | ✅ Under Section 10(10D) |
| Ideal For | Risk-takers | Risk-averse savers |
Popular ROP Term Plans in India (2025 Update)
| Insurer | Plan Name | ROP Option | Minimum Policy Term |
|---|---|---|---|
| LIC | Jeevan Kiran | ✅ Yes | 10 years |
| Max Life | Smart Secure Plus | ✅ Yes | 20 years |
| HDFC Life | Click 2 Protect Super | ✅ Select Variants | 15 years |
| Tata AIA | Sampoorna Raksha Supreme | ✅ Life Plus Option | 10 years |
| ICICI Pru | iProtect Smart | ❌ Not Available | – |
Wait — Is the Refund Really “Free”?
Not quite.
Here’s a truth bomb: You pay extra every year for that future refund.
Let’s say:
- A regular term plan costs ₹10,000/year
- The ROP version costs ₹25,000/year
That’s an extra ₹15,000 annually, or ₹4.5 lakh over 30 years.
Now imagine investing that ₹15,000/year in a mutual fund at even 8% returns — you’d make ₹18–₹20 lakh, not just get ₹4.5 lakh back.
So technically, you’re just getting your own money back, with no returns.
When Does ROP Make Sense?
A Return of Premium term plan may still work for some people — especially those who:
- Are risk-averse and don’t like “wasting” money on insurance
- Want the peace of mind of a refund, even if they never claim
- Are looking to save tax under Section 80C and get maturity benefits tax-free
- Prefer a guaranteed, low-risk product instead of market-linked options
Things to Watch Before You Buy
- Premiums are non-refundable if you surrender or miss too many payments
- Riders are usually not refunded
- No interest or bonus is added — you only get what you paid
- Medical checkups and GST are not refunded
Sample Comparison: Pure vs ROP Plan (Same Life Cover)
| Detail | Pure Term Plan | ROP Term Plan |
|---|---|---|
| Sum Assured | ₹1 Crore | ₹1 Crore |
| Term | 30 years | 30 years |
| Annual Premium | ₹10,000 | ₹25,000 |
| Total Paid | ₹3 lakh | ₹7.5 lakh |
| Maturity Payout | ❌ ₹0 | ✅ ₹7.5 lakh |
Difference? ₹4.5 lakh that could have earned you more if invested elsewhere.
Final Word: Should You Buy a Return of Premium Plan?
Yes, if:
- You’re a conservative saver
- You want tax-saving + guaranteed maturity with zero risk
- You’re okay with low returns in exchange for mental peace
No, if:
- You understand investments and can grow the premium difference better elsewhere
- You want value for money, not just return of money
