Difference between regular & term plan with return of premium

Ankit wasn’t worried when his parents retired. He knew that both his parents had been investing in term insurance plans for many years. The entire family was reassured that even if one of them died unexpectedly, the other person would never be in need of any financial aid. However, since both of them were in good health, they decided to try to bring an end to their term insurance and withdraw their funds instead. They assumed that the premium they had paid could be refunded, and approached the insurer. To their great shock, they were told that their term insurance policy did not cover that. That very day, though, Ankit learned about term plan with return of premium , which offered policyholders the option to get their paid premiums refunded.

Regular term insurance plans offered by most insurers offer lump sum benefits and a regular income to the beneficiaries upon the death of the policyholder. However, a term plan with return of premium provides for survival benefits upon maturity of the policy term. Aside from this, a term plan with return of premium offers the same protection benefits that can be availed with a term insurance policy. However, a term plan with return of premium has several additional benefits in the form of riders such as conditional paybacks in case of accidental death or grave illness. Read on to learn the other benefits offered by a term plan with return of premium.

1. Survival Plan:

With a regular term plan, there is no payback of the premiums paid over the year if the policyholder survives the term period. However, with a term plan with return of premium, it is possible to avail a survival benefit if the policyholder lives past the term defined by the policy. This is especially useful since the premium can come in useful during retirement.

2. Tax Benefits:

Premiums paid for the term plan with return of premium are exempt from tax under Section 80C of the Income Tax Act.

3. Death Benefits:

Under the term plan with return of premium, death benefits can be availed. This means that the beneficiaries of the policyholder receive a sum assured if the policyholder meets their demise during the policy term.

4. Returnable:

The protection available under a term insurance policy ends as soon as the policyholder stops paying their premiums. However, with a term plan with return of premium, policyholders can choose to discontinue premium payments. For these kinds of term plans, policyholders can choose to return their policies and all the premiums paid till that date will be reversed with pre-stated deductions. It is important for policyholders to discuss the deductions with the insurer before signing up for the policy.

5. Continued protection:

If term plan policyholders discontinue paying their premiums, the policy lapses. This means that the nominees are not eligible to receive death benefits in case of the policyholder’s demise. Additionally, other benefits such as a regular income to the dependents are held back if the policy lapses. With a term plan with return of premium, even if the policyholder misses paying their premiums, the policy continues to be in effect. However, the benefits of the policy may be decreased, including the death or maturity benefits.


A term plan with return of premium is beneficial mainly because of the fact that it provides survival benefits, which is not a feature for regular term insurance policies. However, a term plan with return of premium is assumed to be more expensive in terms of premium over the regular term insurance policy. The Future Generali Flexi Online Term Plan is a term plan that provides life cover of up to Rs. 1 crore with a premium of only Rs. 16 a day. The flexible coverage options offered allow policyholders to choose a basic life cover which ensures a lump sum payout at the time of the policyholder’s death, or offers a monthly income to the dependents. This term insurance policy provides life cover even up to the age of 75 years, and a discounted rate of premiums for women. Policyholders are even offered a discount on the premium rate if they opt for a Higher Sum Assured. Additional riders such as accidental cover are even offered, which provide policyholders with coverage against accidental disability or demise.