Jeffrey Manola is an experienced life insurance agent and the founder of Top Quote Life Insurance. His mission when he created Top Quote Life Insurance was to provide online consumers searching for life insurance with the absolute best quotes for term life insurance, permanent life insurance, no medical exam life insurance, and burial insurance. Not only does he strive to provide you with the ...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Nov 4, 2020

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Return of premium term life insurance or ROP for short is your traditional term life insurance coverage with an attached policy rider. The rider is the return of premium feature that guarantees to refund all your money back to you at the end of the life insurance contract.

Return of premium term life insurance generally comes in fixed premium term lengths of 15, 20, 25 or 30 years. In order to get 100% of the money you paid into the contract, you have to complete all years of the contract.

The benefit of the return of premium feature is the money you receive back from the life insurance company is tax-free.

Return of premium term life insurance is a very heavily debated life insurance product. You could even say that it’s debated just as much as whether you should buy term life insurance vs. whole life insurance.

The reason for so much debate is that many agents believe that the extra money you will pay for a return of premium term life insurance policy is not worth the long term investment. It is believed by many life insurance agents that investing the premium difference can yield a better return on your money.

Return of premium term life insurance is available in term lengths of 15, 20 and 30 years. Compare rates from the top life insurance companies that offer a return of premium life insurance.

Looking to compare life insurance policies? We can help. Enter your ZIP code to get free quotes from multiple insurers.

The Price Difference Between Term & Return of Premium Term Life Insurance

As mentioned above, return of premium term life insurance is a term life insurance. The only difference between the two is when you add the return of premium rider to the basic term policy.

However, when adding the ROP rider, it does increase the cost of what you will pay for the life insurance coverage in some cases up to 3-5 times what you would pay for a regular term life insurance policy.

EXAMPLE: Male age 35 non-smoker in excellent health seeking $500,000 of 30-year term life insurance

  • Life insurance cost without ROP = $39.73 monthly
  • Life insurance cost with ROP = $87.05 monthly

Monthly difference = $47.32

EXAMPLE: Female age 45 non-smoker in good health seeking $250,000 of 30-year term life insurance

Life insurance cost without ROP = $42.79 monthly

Life insurance cost with ROP = $103.29 monthly

Monthly difference = $60.50

Based off of the two examples, you can clearly see that there is a huge difference in the premium when you elect to add the return of premium rider to a term life insurance policy. With there being such a large premium difference, would a return of premium term life insurance be the right type of life insurance coverage for you? 

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When Should you Consider Return of Premium Term Life Insurance Policy?

Return of premium term life insurance is definitely not a bad choice for life insurance coverage. The only bad choice is life insurance that is needed but not purchased. ROP has its place and is actually preferred by many young families.

Younger families often feel that they will most likely outlive the coverage and like the fact of getting all the money returned at the end of the contract. The life insurance contract acts just like a savings account for them.

Return of premium term life insurance is also not preferred just by younger families, but also people who are ok with spending a little extra for life insurance coverage knowing that they are guaranteed to get their money back tax free at the end of the term length.

We have worked with many clients who have found us online through our article “term life insurance renewal” that wish their original agent had discussed with them prior to purchasing a regular term life insurance policy.

Return of premium term life insurance is also used in many business situations such as business partners needing a buy-sell agreement, with key employees, as well as life insurance coverage that may be needed for a bank loan. 

Pros and Cons of Return of Premium Term Life Insurance

PROS

  • At the end of the term contract, you’re guaranteed a check for all the premiums paid into the contract.
  • Return of premium term life insurance is term coverage so it’s still more affordable than permanent coverage.
  • The life insurance contract acts just like a saving account which can be great for younger families.
  • The money you receive at the end of the term contract is tax-free.

CONS

  • The difference in cost between a regular term policy and a return of premium policy can be up to 30-50%.
  • If you cancel the life insurance early, you run the risk of receiving very little to no money at all.
  • There is a greater possibility that you can make more money by investing the difference in premium between a traditional term policy and return of premium policy.
  • You won’t make any interest on the premiums you will have paid.

Our Top Return of Premium Term Life Insurance Companies

Return of premium term life insurance is one of several types of life insurance coverage options to consider in your search for life insurance. Like all life insurance coverage options, there are pros and cons.

Consider the pros and cons of return of premium term life insurance before making your decision as to if this type of coverage is ideal for you.

Return of premium term life insurance is not offered by every life insurance company. In fact, out hundreds of companies, there are just a few that offer the option.

So to help you out, we put together an extensive detailed list of our top return of premium term life insurance companies.

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How to get an Instant Return of Premium Term Life Insurance Quote

Interested in return of premium term life insurance coverage? The quote form located on this page will allow you to instantly compare the best ROP term life insurance rates.

Simply fill out the required form fields and select the desired ROP coverage length and you will receive rates from lowest to highest priced, based on your input.

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Looking to compare life insurance policies? We can help. Enter your ZIP code to get free quotes from multiple insurers.