Return of Premium Life Insurance

Return of premium life insurance also known as ROP for short is a type of Term Life Insurance policy that provides a death benefit as well as a return of premium (money back) feature. If you cancel a return of premium policy or the insured dies, all or a portion of the premiums paid into the policy will be returned to you –this will vary depending on the insurance company. Also, it's important to note that the longer this policy stays in-force the more premiums that become eligible for refund.

This type of policy is a good option for people who like or need term life insurance but who are concerned about losing money paid into the policy if it is ever cancelled, lapses or if the insured outlives the policy – which is common with term life insurance. The biggest benefit of Return of premium life insurance is that it “rewards” people for staying alive by giving back the entire amount of premiums paid. Just like a standard term insurance policy you can purchase ROP policies with 5,10,15,20, and 30 guaranteed term periods.

Also, return of premium life insurance is considered income tax free, because you are not receiving back more than you put into policy. It's important to note that you'll pay a higher premium for a return of premium policy but if you carry the policy until the end of the term period you'll receive 100% of your money back – so it's definitely worth considering.