Best Term Plan with Return of Premium

Term insurance is one of the simplest and most cost-effective ways to secure your family’s financial future. However, many buyers hesitate because they worry that their premiums will feel “wasted” if they outlive the policy term. To address this concern, insurers introduced term insurance plans with return of premium, which promise to refund premiums at maturity.

While this reassurance appeals to many first-time buyers, it comes at a cost. These plans are significantly more expensive than regular term insurance and do not generate any real returns on the refunded amount.

This raises an important question: does a return-of-premium term plan truly add value, or does it simply offer peace of mind at a higher price? Let’s discuss further in this guide.

What Is the Return of Premium in a Term Insurance Plan?

In a standard (pure) term plan, your family gets the sum assured if you pass away during the policy term. If you survive the term, the policy simply ends, with no payout.

A return-of-premium term insurance plan adds one extra promise:

• If you survive the policy term, the insurer refunds 100% of the base premiums paid
• As per the prevailing rules as of 22 September 2025, refunds under TROP plans exclude GST, rider premiums, and underwriting charges.
• No interest or growth is added to the refunded amount

For example, if you pay ₹30,000 annually for 30 years, you’ll get ₹9 lakh back at maturity, exactly what you paid in premiums, nothing more. Due to inflation and the time value of money, the real value of that ₹9 lakh would have reduced significantly by the time you receive it. 

This feature reduces the psychological discomfort of “getting nothing back,” which is why many buyers find TROP plans emotionally appealing.

Things to Consider Before Choosing TROP

01

Premium Costs

TROP plans are comparatively more expensive than regular term plans. Compare premiums carefully to see if the extra cost is worth the refund.

02

Coverage Period

Longer policy terms mean paying high premiums for more years. Choose a tenure that matches how long your dependents actually need financial support.

03

Insurer Credibility

Check the claim settlement ratio, solvency ratio, complaint volume, and claims paid to ensure your family won’t face issues at claim time.

04

Additional Riders

Do not ignore riders. Options like critical illness, disability, and waiver of premium can add meaningful protection.

05

Surrender or Paid-up Options

Some TROP plans allow early exit, but surrendering often leads to losses. Understand exit terms clearly before buying.

List of Best Term Insurance Plans with Return of Premium

There is no single “best” plan for everyone. Instead, insurers are evaluated based on claim settlement ratio (CSR), plan flexibility, rider availability, and long-term reliability.

Some of the most popular options offering term insurance with return of premium include plans from:

Term Insurance Premium Comparison (With Return of Premium)

The premiums below are illustrative Return of Premium (TROP) premiums, calculated for a healthy 25-year-old non-smoker, non-diabetic male, opting for a ₹1 crore cover till age 65.

Note: ROP variants cost significantly more than pure term plans, without increasing your life cover. The extra premium only buys a refund. If the same amount is invested instead, it can grow meaningfully over time.

Using HDFC Life Click 2 Protect Supreme as an example, a 25-year-old buying a ₹1 crore cover till 65 pays about ₹10,945/year for a pure term plan. The same cover with a return of premium costs ₹24,650/year, meaning you pay an extra ₹13,705 every year just to get your money back later.

Over 40 years, the ROP plan returns about ₹9.86 lakh. But if you invest that extra ₹13,705 annually instead, it can grow to ₹27 lakh at 7%, or even ₹1 crore at 12%. This is why pure term plus investing usually creates far more value than ROP.

Should You Choose a Term Insurance Plan with Return of Premium?

Choose a TROP plan only if:

• The idea of “money back” is the only reason you’ll buy insurance
• You value emotional comfort over financial efficiency
• You are okay locking money for decades with zero real returns

Avoid TROP if:

• You’re comfortable treating insurance as a pure protection tool
• You want maximum cover at the lowest cost
• You’re open to investing the savings separately

At Ditto, we generally recommend a pure term plan (including zero-cost options) paired with long-term investments. This approach delivers better protection, higher wealth creation, and more flexibility.

Why Choose Ditto for Term Insurance?

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Ditto’s Take On The Best Term Plan with Return of Premium

The best term insurance plan with return of premium may seem appealing at first, but it often shifts focus away from the core purpose of life insurance, which is financial protection. By prioritizing premium refunds over adequate risk cover, these plans end up costing significantly more while offering limited real value over time. The refunded amount earns no interest and loses purchasing power due to inflation.

For most people, a pure term insurance plan combined with disciplined long-term investing is a far more efficient and flexible approach. Insurance should safeguard your family’s financial future, not function as a low-return savings product.