Return-of-Premium (ROP) Life Insurance

Return-of-premium life insurance — or refundable life insurance — combines regular term life insurance with a return of premium feature. You choose the term — 20, 25, or 30 years.

At the end of the term, you get all the premiums you paid back, as long as you made all payments and the policy didn’t lapse. For monthly payments of $26.50, a return of premium term life insurance can benefit you.

Get your money back when you outlive your coverage with a return of premium (ROP) life insurance policy. Who offers return of premium term life insurance quotes?

Many companies offer return-of-premium life insurance quotes and even return of premium rider life insurance, so be sure to shop around. Ready to start saving? Take advantage of our FREE quote tool and enter your ZIP code above!

What is the catch with return of premium life insurance?

Return of premium riders will add more to your term life insurance cost. Many companies offer return of premium life insurance policies. Life insurance companies charge a higher rate for return of premium policies; however, this additional cost may be worth the return of premium benefits in the end. They invest the difference and use the earnings to help pay back your premiums at the end of the policy term.

So, can you get your life insurance money back? Yes. Will it cost you more? Also, yes.

What type of insurance would be used for a return of premium rider? Usually, return of premium life insurance is most important for term life insurance policies since they don’t add cash value.

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How does return of premium life insurance work?

It’s life insurance that gives you money back. Some companies even offer a partial premium return if you cancel your policy before the end of the term. No cash value is similar to no equity. Is a cash value life insurance policy all it’s cracked up to be?

We understand that not everybody will know what a return of premium life insurance policy is. Quizlet might have some answers but read on to learn more about return of premium life insurance.

What is a return of premium rider?

Term life insurance policies work perfectly with return of premium riders. Here’s a list of term life policies that work with return of premium life insurance:

• No Medical Exam Life Insurance
• Mortgage Protection Life Insurance
• Level Term Life Insurance

The purpose of the return of premium rider is to give you all the money you paid into a term life policy. It’s a great way to create savings for a cheap life insurance option.

How much more does return of premium term life insurance cost?

It all comes down to the interest you can earn. Remember, you’re paying more than regular term life costs. In exchange, you get all of your money back. But is that return better than the return you could earn on your own? In other words, can you do better investing that extra cost each month?

Check out a return of premium life insurance calculator to help you decide after you compare quotes. In some cases, it makes sense. In others, not so much.

How much more will I pay for return of premium life insurance? Check out the table below that compares ROP and MassMutual term life insurance rates based on healthy 30-year-old males. (For more information, read our “MassMutual Life Insurance Review“).

Return of Premium vs Term Life Insurance Rates

For a middle-aged non-smoking male insured, return of premium life insurance rates can start at $26.50 per month or $318 per year. This rate is much cheaper than other companies like State Farm’s return of premium life insurance, which is estimated at $49.50 per month for a younger and healthier female.

Curious about rates in your area? Start comparing return quotes now using our FREE quote tool above.

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What are the best companies with return of premium life insurance riders?

Let’s examine the top five companies with return of premium riders.

• AAA Life Insurance — AAA is known for its higher coverage limits.
• Assurity Life Insurance — Assurity has term life policies that last longer than the average company.
• Cincinnati Life Insurance — For a more personal customer service experience, choose Cincinnati Life insurance.
• Indiana Farm Bureau Insurance — Indiana Farm Bureau is known for term life to permanent life conversion.
• State Farm — State Farm is one of the best companies for building cash value, but you won’t be able to borrow against a term life policy.

A return of premium life insurance company will also carry permanent life insurance and other life insurance policies. Ask your life insurance company about other riders and benefits you can use.

Read more: AAA Life Insurance Review

Is return of premium term life insurance right for you?

Q:  Is return of premium term life insurance a good deal?

A:  Sometimes. It depends. Only time will tell.

I’m not trying to be cute with the ambiguity here. But truth be told, this is not merely a ‘yes’ or ‘no’ question. It’s slightly more involved than that. Let’s take a look at each response.

• Sometimes — ROP term life insurance is a good option for some people, but not everyone. To say that one is better than the other in all cases is just inaccurate. Who is it suitable for? Well, that depends.
• Depends — Three primary factors determine whether ROP term or regular term is the best fit for you.

• Only Time will Tell — Investment returns fluctuate over time. You really won’t know your investment return on the regular term/invest the difference yourself option until the end of the policy term. It’s somewhat of a leap-of-faith. But you will know upfront what the investment return on the ROP term insurance policy will be because the premiums will be guaranteed to remain level, and the amount you will receive back will not change.

You may be surprised to see that price differential is not a primary factor in determining whether ROP term is a good deal. However, it is essential to consider whether you can afford the higher costs of return of premium. Dave Ramsey might advise some clients to find a different policy since rates are higher.

To determine return of premium rates, be sure to compare free ROP term life insurance quotes online.

Return of premium life insurance, or ROP life insurance, is very much like other types of term life insurance. It is an agreement between you and the life insurance company. You agree to pay premiums, and the carrier agrees to pay your beneficiaries a sum of money should you die.

Like all life insurance, ROP term life insurance is an excellent way to protect your loved ones and give them financial security. There is one main difference between return of premium life insurance and other types of life policies. With a return of premium policy, a death benefit is paid out if you pass away with all insurance plans.

If you live beyond the term, you get all of your money back dollar for dollar. So no matter what happens to you, whether a claim is made while covered or you outlive the policy money is distributed.

Why should I buy return of premium life insurance?

Return of premium life insurance makes it possible to have coverage with a net cost of zero. ROP life insurance is also a safe place to put your money to receive what amounts to a modest return on your investment.

Return of Premium (ROP) term life insurance combines traditional term life insurance advantages such as affordable, guaranteed level premium periods with a return of premium feature. At the end of the level-premium period, 100 percent of the premiums paid will be returned to you!

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Why shouldn’t I buy term life insurance with return of premium?

The main reason people don’t get ROP term life insurance is that it costs more. The insurance companies that offer this product charge slightly more for it than for non-ROP term insurance.

During the level-premium period, the insurance company can invest portions of the premium for capital growth. As a result, they can return your premiums to you at the end of the level-premium period.

You are paying for the convenience of securing level term life insurance with an added return on your policy premiums. Return of premium life insurance policy is a non-forfeiture option, so it gives you the advantage of a level death benefit and level policy premiums just as a term policy does, but with the added feature of return on your premiums.

At the end of the level period, you select 100% of the premiums paid will be returned to you as long as you have paid your premiums throughout the period of insurance and a claim is not filed.

Most people get return of premium term life insurance policies for 20 or 30 years as the comparative return on your investment will be higher the longer you have the policy.

Return of premium senior life insurance policies may not be necessary. Adding a rider will raise your cost, so if you get a long enough term, you might not have to consider outliving your policy and needing ROP.

For more information, start now with a free return of premium term life insurance quote and compare the affordable return of premium life insurance.

Read more: Life Insurance Non-Forfeiture Option (Terms Explained)

What is the least expensive type of ROP life insurance?

The least expensive type of life insurance is term life insurance. Yet, some people shy away from it because of its temporary nature.

Term life provides coverage for a set period of time (generally 10, 15, 20, 25, or 30 years). If you die before a traditional term life policy has expired (or if you renew your policy to extend the term), your beneficiaries get a payout. If you don’t die during the policy term, they don’t get a payout and you dpremuon’t get any of the money back that you’ve paid in premiums.

But what makes term life insurance a viable option is that it’s flexible and extremely affordable compared to permanent life insurance policies that come with high-priced premiums.

That’s precisely why I opted for a 20-year term policy to protect my family. While there are still mortgage payments to make and college education expenses to pay in the not-so-distant future, I feel better knowing my husband will have a financial cushion if tragically the unexpected happens to me.

So what do you do if you need cost-effective life insurance but you’re not digging the idea of making premium payments that will be all for naught if you outlast the term of your policy?

Do you get money back on premium return term life insurance?

Return of premium term life insurance typically provides coverage for a term of 15, 20, 25, or 30 years. If you don’t die before your policy’s term ends, the insurance company pays you back in full for the amount you’ve paid on your premiums.

State Farm return of premium life insurance lays out some of their specific details on their website.

Return of premium insurance may even be available from other insurance providers that offer a variety of insurance types.

For example, AAA return of premium life insurance is a policy that many didn’t know was available. Still confused about what return of premium is? Get familiar with life insurance terms to stay on track.

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What are the pros of ROP term life insurance?

With return of premium life insurance, you could have coverage with a net cost of zero dollars. If you pass away during the term of the policy, your beneficiaries receive a death benefit; if you outlive the policy’s term, you get all your money back.

ROP term life insurance combines the advantages (affordability and guaranteed level-premium periods) of traditional term life insurance with the return of premium component.

Who sells premium life insurance returns? Many companies offer return of premium life insurance now, so you should have plenty of options.

What are the cons of term life return of premium insurance?

It probably comes as no surprise that ROP term life insurance will cost more than traditional term life. Life insurance companies would need to get something in return to guarantee that they’ll either be paying a death benefit or returning all premium costs dollar for dollar to you one day.

Also, you need to stay current with your premium payments throughout the policy term. And if you terminate your policy early, you will likely only receive a portion of the premiums you’ve paid to the insurance company. Many sources warn buyers that normal term life insurance could be an empty investment.

Is return of premium life insurance worth it?

While you will probably find it more affordable than permanent life insurance, that’s not a question I can answer here. Only you can decide what will be the best choice for your peace of mind and your loved ones’ financial well-being.

Finding the best term life insurance coverage with return of premium could be a smart investment over time.

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What’s the bottom line?

Educate yourself about your options, talk with a trusted insurance professional, and ask questions so you understand the pros and cons of this type of policy. An ROP calculator can help you compare the cost of a traditional term life policy to an ROP policy. Ultimately, it’s up to you to decide what life insurance coverage is best for you.

Now that you know more about this money-back insurance, get started comparing return of premium life insurance quotes and regular term life insurance quotes with our FREE quote tool below.