Best Term Insurance Plans with Money Back

Quick Overview

If you are looking for the best term insurance plan with money back, you’re likely referring to a variant of term insurance known as Return of Premium (ROP) term insurance. These plans refund all of your base premiums if you survive the policy term, while still offering life cover during the tenure.

However, they cost significantly more (60-100%) than pure term plans, and the refunded premium typically does not generate any meaningful returns. So while the idea of “getting your money back” sounds attractive, it comes at a cost: higher premiums and lower flexibility.

A money-back term insurance plan is essentially a pure protection policy with a refund feature. If the policyholder passes away during the term, the nominee receives the death benefit. If the policyholder survives, the insurer returns the total base premiums paid.

These plans are marketed as a compromise between insurance and savings, although they do not generate returns above principal.

What is Meant by Money Back in Term Insurance?

A money-back term insurance plan (technically called a Return of Premium or ROP plan) functions like a regular term policy during the policy tenure. The life assured receives full protection throughout the term, and the nominee is paid the death benefit if the policyholder passes away. If the policyholder survives the entire term, the insurer refunds the total base premiums paid.

These refunds typically exclude rider premiums, underwriting loadings, late fees, and modal charges.

Premiums can be paid yearly, half-yearly, quarterly, monthly, & through limited-pay options, depending on the insurer.

In simple terms, an ROP term plan offers:

Protection benefit: Large life cover during the policy period
Survival benefit: Refund of base premiums at maturity
No investment benefit: The refund equals principal only, with no returns generated on the premiums

Traditional Money Back Policy vs Pure Term Insurance

Category	Pure Term Plan	Term Plan with ROP (Money Back Plan)
Core Purpose	Pure protection	Protection + Return of Premiums Paid at Maturity (if you survive)
Maturity Benefit	Not Applicable	Yes, typically it returns total base premiums paid (excluding taxes, loadings, and rider premiums.)
Death Benefit	Yes (20-30 times of your annual income)	Yes (same as pure term plans)
Premium (Cost)	Lowest possible (rupee paid per lakh cover is highest)	Much higher than pure term plans (60-100%) but lower than traditional life insurance policies
Psychological Comfort	No comfort, knowing that you don’t get anything if you survive. But your family gets the corpus if anything happens during the covered period	Yes, even if an individual does not die, they get some of their money back
Return of Investment	None	0% IRR (you get your money back, no growth, no profit with inflation eroding your principal value)
Taxability	Premium deductions under Section 80C; Maturity amount is not applicable; Death benefit is fully tax-free under Section 10 (10D)	Premium deductions under Section 80C; Maturity amount is usually tax exempt under Section 10 (10D); Death benefit is fully tax-free under Section 10 (10D)
Opportunity Cost	Not Applicable (the extra premiums can be invested)	Cost is high because the extra premiums can be invested in mutual funds or FDs
Surrender/Paid Up Rules	Usually Not Applicable (accepted in case of limited pay options for special exit value)	It’s a common offering: you can surrender your plan

List of Money Back Plans in Term Insurance

Plan Name	Key Features	Benefits	Eligibility
HDFC Life Click2Protect Supreme (ROP Option)	Refund of premiums on survival; high life cover; optional riders (CI, Income Benefit)	Life cover during term; refund of premiums at maturity; flexible payment modes	Entry age: 18–65 years; Policy term: 10–40 years
Axis Max Life Smart Term Plan Plus(ROP Variant)	Return of premium option; joint-life feature; premium break; online issuance	Survival refund + death cover; multiple add-on protections	Entry age: 18–65 years; Policy term: 10–50 years
ICICI Pru iProtect Smart – ROP (Separate Plan)	Return of premiums; limited pay (5/7/10 years); disease-based riders	Survival refund; large life cover; tax benefits	Entry age: 18–65 years; Policy term: 10–40 years
Bajaj Life E-touch IIl – ROP Variant	ROP variant; optional accidental death benefit; multiple pay terms	Refund of premiums if no claim; family protection	Entry age: 18–65 years; Policy term: 10–40 years
Aditya Birla Sun Life Super term plan (ROP Variant)	Returns 100% of base premiums; Cover Continuance; Early Exit Value (ROP variants only)	Life Stage Flexibility and Terminal Illness payout	Limited rider flexibility. Not all benefits are available with the ROP option

IRDAI Classification & Disclosures

Money Back term plans are classified as non-linked, non-participating life insurance products. IRDAI requires insurers to clearly disclose what is guaranteed, what is excluded, which components are refundable, and the conditions for surrender, paid-up status, and lapsation.

Traditional money-back plans, on the other hand, may be issued as:

Participating (Par): benefits and bonuses vary based on insurer performance
Non-Participating (Non-Par): benefits are fixed and guaranteed

We also need a section on ROP vs zero cost (smart exit) benefit feature and why zero cost is better than ROP.

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Who Should Consider Money Back Term Insurance?

Money Back term plans may suit buyers who are uncomfortable with the idea of paying for pure protection without any survival benefit. They work best for hyper-conservative savers who prioritise capital recovery, have limited investment preferences, or prefer extremely low-risk financial products.

However, for most financially active individuals, a combination of pure term insurance and separate investments usually delivers better long-term outcomes.

Payout Structure & Benefit Mechanics

Money Back term plans do not provide intermediate survival payouts. The benefits work in two ways:

If death occurs during the term, the nominee receives the full sum assured.
If the policyholder survives the term, the insurer refunds the base premiums paid at maturity.

The refund includes only the base premium amount. It excludes rider premiums, modal loadings, late fees, and underwriting extras.

Surrender, Grace Period, and Paid-Up Rules

Grace Period:

15 days for monthly premiums and 30 days for other modes. If the premium is not paid within this period, the policy lapses and life cover stops.

Paid-Up Status:

If minimum premiums are paid (usually 1–2 years), the policy may continue as a reduced paid-up plan with lower maturity and death benefits.

Surrender Value:

Surrender is allowed after a specified period. The policyholder receives the higher of the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV). Both paid up status and surrender value rules are clearly mentioned in the policies benefit illustration document.

Best Alternatives to Money Back Term Insurance

Traditional Money-Back Policies: These offer periodic survival payouts and a maturity benefit, but provide low life cover and modest returns.
Guaranteed (Savings) Return Plans: These provide predictable maturity values with fixed returns, but lock in capital for long periods and offer limited flexibility.
Pure Term Insurance + Investments: Buy a pure term plan for adequate life cover and invest the premium savings separately in instruments such as mutual funds, PPF, or FDs. This approach generally provides higher cover, better liquidity, and more efficient returns over the long run.

Why Choose Ditto for Term Insurance?

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Ditto’s Take: Is Money Back Term Insurance Worth it?

At Ditto, we are generally not in favor of mixing insurance with investment. Products that attempt to do both often deliver neither efficient protection nor competitive returns. Our first recommendation is typically a pure term plan, which provides high coverage at low premiums and is better suited for safeguarding major financial responsibilities such as loans, children’s education, and long-term income replacement.

If the goal is wealth creation, options such as mutual funds, PPF, or fixed deposits tend to offer better returns, more flexibility, and lower costs than money-back insurance products. For most buyers, separating protection and investment results in superior outcomes across both objectives.

Frequently Asked Questions

Is there any pure term plan with periodic money back?

No. Pure term policies do not offer periodic payouts. Only ROP variants offer money-back, and refunds are paid at maturity, not at intervals. Alternatively, you can choose a zero-cost term if you want a standard term plan but like the option to stop mid-way (after big liabilities end) and get your base premiums back.

Are money-back returns guaranteed?

Yes. The refund of base premium is contractually guaranteed, provided the policy stays in force. However, no returns are generated on the principal.

Are money-back term plan benefits tax-free?

Yes, maturity refunds typically qualify for tax exemption under Section 10(10D), and premiums paid may be eligible under Section 80C, subject to conditions.