As Indians we have a tendency to extract every bit of whatever we choose to use. This holds true for protection plans as well. Most people want their protection plans to provide for their families in their absence. But at the same time if they survive the term of the protection plan, they want their investment back and luckily if they get something above that then the associated happiness knows no bounds. Still wondering  do you get money back on term insurance if you cancel or outlive your policy? A term insurance is a pure protection life insurance plan with very high sum assured for a nominal premium and the entire sum is paid to the respective nominees on death of the life assured.

So, if someone asks, “do you get money back on term insurance” , the answer is that he/she can purchase return of premium life insurance in order to ensure that money comes back. You will get the entire premium back at the end of the term but because the money gets returned, life insurance companies raise the price of return of premium policies, which are usually 30% higher than standard term insurance policies. The smarter option is to go into an investment vehicle rather than gaining no value over decades.

Term insurance is the least expensive and probably the simplest form of life insurance which insures your life for a specific term, ranging from 1, 10, 20, even 30 years. So, if you expire during the term, you get a death benefit and if you do not die during the term, the policy automatically terminates at the end of the tenure. Term policies are a great choice if you have to cover large debts. A major benefit of  a term policy is that the premium money returned is completely tax-free, as it is not associated as income and simply a refund of premiums instead.

Still pondering upon the question, “do you get money back on term insurance”? Here are the pros and cons of a return of premium coverage:


  1. This policy pays out what you call a death benefit if you die during the term which is the same as any regular term policy.
  2. You get the flexibility to choose the term that makes the most sense for your particular situation.
  3. Your premiums are also returned to you if you by any chance outlive the policy tenure.
  4. It acts like an automated savings plan which forces you to add to your savings every month.
  5. Some return of premium policies also end up building cash value which you can take loans against. The loans have to be repaid or else the refund/death benefit is bound to be reduced by the borrowed amount.


  1. Premiums for a return of premium policy are expensive compared to a normal term policy. The price hike will vary depending on number of factors.
  2. If you can the policy before the term expires, you will receive a much smaller refund or maybe none at all.
  3. You may end up making more money investing the price difference between a normal term policy and a return of premium policy, that’s the irony.
  4. Read the policy details carefully as it may differ between insurers.
  5. You do not earn any interest on your money and only premiums are returned to you.

It is essential to understand the different instruments of term policies before one goes ahead with a single plan. For those wondering, do you get money back on term insurance”, this is a must read. The Future Generali Flexi Online Term Plan encompasses all of these tax benefits and offers life insurance cover of Rs. 1 crore with premiums amounting to just Rs. 16 each day.

ROPs also have a paid-up option if you default on premium payments, which means that if you stop paying the premium after at least 3-4 years, the policy continues but with reduced benefits. However while the premium paid will be returned at maturity, the nominee will get a reduced amount that was assured if the insured expires. Hence, it is important to know that the exact sum will differ for each policy. There is no standard calculation to determine the sum assured.

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About the Author: Praveen Unnikrishnan

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