What is return of premium life insurance?

A return of premium (ROP) life insurance rider is an optional add-on to a term life policy that, if you outlive the policy term, pays you all or some of the money you spent on policy payments. Without an ROP life insurance rider, if you're still living when the policy's term ends, your policy will expire without paying a benefit.

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How does a return of premium life insurance rider work?

If you purchase an ROP life insurance rider with your term life policy, you'll make monthly payments to keep your policy active. If you're still living when the policy term ends, the insurance company pays back all or some of the money you spent on payments, depending on your policy, in the form of an ROP benefit.

The money back from your term life insurance may not be taxable, unless there's a gain; consult with a financial advisor to understand these potential implications. The refund might not include fees and other riders you have on the policy, and missing payments can disqualify you from getting your ROP benefit.

If you die during the policy term, your beneficiaries can claim the death benefit, just like with any other life insurance policy.

Example:You purchase a 30-year term life insurance policy with a return of premium rider, and your monthly payment eligible for the ROP benefit is $50. If you're still living when the term ends and you haven't missed any payments, you may get $18,000 back from your insurer ($50 x 360 monthly payments = $18,000).

Am I entitled to return of premium on my term life insurance?

You're typically only entitled to getting your term life insurance money back if you purchased a return of premium rider with your term policy, you made your payments on time, and you're still living when the term ends.

How much will I get back of my term life insurance payments?

A return of premium rider typically refunds you the total premium you paid for your base policy and the ROP rider. It may not refund fees or the premium you paid for other riders on your policy. Being late on payments may reduce your refund or disqualify you from receiving one at all.

Should I get a return of premium rider?

A return of premium life insurance rider is typically for risk-averse individuals who can afford the increased monthly premium and want financial protection for their loved ones. Simply put, it provides added security when purchasing life insurance. Plus, depending on your policy term length, your return of premium could line up with your retirement age, providing a benefit around the time you stop earning an income.

Even if you don't fit that profile, it's possible that you could still find value in an ROP rider. If you're considering life insurance with an ROP rider, speak with a financial advisor about the potential trade-offs and tax implications for your situation.

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Please note: The above is meant as general information to help you understand the different aspects of insurance. Read our editorial standards for Answers content. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to an insurance representative. Coverages and other features vary between insurers, vary by state, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page.