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ROP option: Understand the pros and cons

May 13, 2019

A traditional term insurance plan is the one that offers sum assured i.e. the main plan benefits to the policy holder's nominee(s) in the event of the policy holder's demise during the policy term. However, there are no accrued benefits in the event of the maturity of the plan in case the policy holder survives the policy term. However, there are insurance providers who provide the return of premium option which entitles the policy holder to receive the premiums paid during the policy term at the time of maturity of the plan. This can be seen as additionally advantageous because together with the life coverage like a traditional term insurance plan, ROP plans also offer additional guaranteed benefits at the time of maturity. However, needless to say that this also increases the price of the plan and the payable premiums increase. Therefore, before choosing for ROP term plans, there are certain things that you must keep in mind. You must understand the various pros and cons of ROP plans and the factors involved therein. Following are the various points that cover this:

  1. ROP plans offer an add-on benefit that is in fact, guaranteed after the maturity of the plan. This means that the monetary-benefit factor of ROP plans is their core advantage.
  2. Apart from the guaranteed maturity proceeds, there are additional bonuses and coverage factors that figure in ROP plans. These advantages are listed below:
    1. The survival benefits are returnable in full after maturity. Therefore, this can be thought of as an investment component in the entire plan and hence, it can be viewed as a combined insurance and investment platform
    2. As per the Section 80C of the Income Tax Act, 1961, the payable premiums are eligible for tax benefits.
    3. In case the policy holder does not survive the policy term, the nominee(s) of the policy holder are eligible to receive the entire sum assured, just like a traditional term plan.
  3. ROP plans come with an option of being returnable i.e. in case the policy holder decides to discontinue the plan, the premiums paid till date are returned as maturity benefit.

However, before opting for ROP plans, it must be kept in mind that the payable premiums are quite heavy in comparison to the traditional insurance plans. The accrued benefits are no doubt, in proportion to the payable premiums. Yet, while choosing an ROP plan, it must be kept in mind that a thorough online comparison of the various plan options must be made and the insurance provider must be chosen after checking the CSR (Claim Settlement Ratio). This enables you to make an informed decision in view of your specific needs and requirements of your loved ones.


HDFC Life offers Click 2 Protect Life - an online term insurance plan that offers guaranteed financial protection against the unforeseen maladies like death, disease and disabilities. It seeks to protect your family's financial needs, even in your absence.

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