Money-back guarantees are always tempting, and companies offer them all the time. You’ve probably purchased items that either promised your money back if they broke down, didn’t perform as expected, or you ended up not liking the product you were sold.
Would you believe that these sorts of guarantees even apply to financial products, like life insurance? You actually can get your money back with a return of premium life insurance policy.
When you have a term insurance policy with a return of premium (ROP) option, you’ll get all the money you paid in premiums at the end of your term contract. So, if you took a 20-year term insurance policy and never needed to use it, you would get back all the premiums you paid over those 20 years in one lump sum payment.
For example, if your insurance plan costs $1,000 each year for the next 20 years, every year, you’d get $20,000 back at the end of the term contract.
That might sound like a pretty good deal.
After all, most people buy term policies in the hopes they’ll never have to use them, and most people that do purchase term insurance are likely to outlive their coverage.
The idea of getting a large sum of money back for never using your policy is appealing when people first hear about the coverage option. So you might be surprised also to learn that return of premium term insurance policies is quickly becoming a thing of the past.
While there is a demand for the return of premium term life insurance policies, they’re becoming a rare option. In fact, over the last few years, many companies have decided to no longer offer the life insurance option.
Instead, you’re more likely to see this option on permanent life insurance plans such as guaranteed universal life policies.
If you’re thinking about buying a return of premium term life insurance policy, our advice is not to delay as we are not sure how much longer the remaining few companies that do offer them with continuing to.
This article will help you find the best companies that currently offer the option for a return or premium for both term insurance and guaranteed universal life insurance.
Return of Premium Term Life Insurance Policies
A return of premium policy is commonly associated with a term life insurance policy. Depending on the insurance company, it can be offered in the form of a policy rider to a traditional term insurance policy or designed as its own individual form of term life insurance.
Regardless of how it’s being offered, they provide the same benefit, which is getting your money back after making several payments over the course of many years.
A return of premium term insurance policy works by choosing a contract length that will generally last between 20 or 30 years. It is not available on lower term lengths such as the 10 or 15 year options.
You’ll set the death benefit amount based on your financial needs, and the insurance company will assign you a premium based on your rate classification.
Your premiums will be locked in at one price for the entire duration of the contract, and if you were to pass away, your death benefit would be paid out to your beneficiaries as long as your death was during the term of your policy.
Normally, your fixed premium will expire at the end of a term length, and coverage will end. You’ll no longer have coverage, and since term insurance does not have cash value, you will not receive any monetary value for having the coverage.
This is where a return of premium policy is different. Your policy will still end, but you’ll get back all the money you paid into the policy. You’ll receive a large lump sum you can use for any purpose.
Like with a traditional term policy, when your policy comes to an end, you won’t have coverage anymore. What you will have is years’ worth of premiums returned to you. You’ll get back exactly what you put in. The money isn’t’ taxed, but it doesn’t earn any interest, either.
A return of premium policy gives you back the exact amount of money you paid in premiums over the term of your policy, no more and no less.
Return of Premium Universal Life Insurance
At the beginning of our article, we had mentioned that the return of premium term insurance is becoming a thing of the past, with just a few insurance companies currently offering the option.
Some of the life insurance industry’s biggest names, such as AIG, Genworth, Prudential, and VOYA, have discontinued offering their return of premium term life insurance plans.
Why?
There’s not a clear answer, but if we had to guess, we believe that the return of premium life insurance has not been a profitable product for companies.
When these plans first came out, an insurance company could make money investing premiums over the course of 20 or 30 years even if they ended up having to refund the policyholder at the end of the term.
However, interest rates are not the same as when the return of premium plans first came out. People are living longer and outliving their term insurance plans. That’s a lot of money insurance companies having to refund back customers, leaving them with very little profit.
While it is our opinion as to why we think that is the main reason companies have opted out of offering return of premium term insurance plans, it’s not uncommon for insurance companies to discontinue products to make room for new plans with new features.
One of those new features has become a return of premium universal life insurance coverage, and many companies have begun to offer it.
If profitability were a focus, it would make sense to add the option of a return premium feature to a permanent life insurance plan, and that’s exactly what many life insurance companies have started to do.
Universal life insurance is designed to last an entire lifetime, and you might be wondering why it would make sense to have a return of premium feature on a permanent life insurance plan?
For most people, life insurance needs now may not remain the same 20 or 30 years from now. At the same time, permanent life insurance plans may make sense now, but later in life, that could easily change.
Having the option to cancel your permanent life insurance and get up to a full refund of every premium paid will benefit anyone who had invested in a permanent life insurance plan that no longer needed it.
Best of all, the return of premium universal life insurance plans does not cost any extra as the feature is built right into the coverage, whereas adding it to a term insurance policy will add to the overall premium.
Costs of Return of Premium Life Insurance
Return of premium insurance is more costly than a traditional term insurance policy. You’ll get your money back in the end, as long as you outlive your policy, but you’ll pay a lot more along the way.
With a traditional term policy, you’re only paying for the cost of your coverage. Your price reflects the amount of death benefit being requested, and most importantly, your overall risk of how likely it is the insurance company will need to pay out a death benefits claim. When you have a return of premium policy, you’re also paying an extra cost for the ability to get your money back.
Think of it this way. A traditional term policy is the cheapest form of life insurance because it’s temporary. You pay for your coverage, and when it’s done, the policy is over. The only potential money that can come from a term insurance policy would only come from a death claim payment.
Since most people are likely to outlive their term insurance coverage, the insurance company keeps the cost of coverage lower than permanent plans.
When you take out a return of premium policy, there is a 100% chance of getting all your money back if you outlive your term contract. That’s a greater cost to the insurance company since, again, it’s likely that you will outlive your coverage. Since the insurance company would be refunding all the premiums, they charge extra to make money by investing your premiums over the course of 20 or 30 years.
How much more does a return of premium term insurance policy cost?
It depends on the company, but it’s generally double the cost of a traditional term insurance policy. That could add up to thousands of additional dollars over the life of your policy.
Cost of Non-ROP vs ROP Rider
| Male | 20-Year Term | 20-Year Term ROP | 30-Year Term | 30-Year Term ROP |
|---|---|---|---|---|
| Age 25 | $12.35 | $31.75 | $17.61 | $27.41 |
| Age 30 | $12.52 | $31.75 | $18.34 | $28.28 |
| Age 35 | $13.38 | $40.89 | $21.09 | $41.33 |
| Age 40 | $16.56 | $69.17 | $28.48 | $63.95 |
| Age 45 | $26.31 | $99.22 | $42.89 | $99.40 |
| Age 50 | $38.92 | $157.96 | $68.07 | $157.30 |
| Age 55 | $61.26 | $232.76 | $120.71 | $248.60 |
| Age 60 | $105.04 | $374.88 | NA | NA |
| Female | 20-Year Term | 20-Year Term ROP | 30-Year Term | 30-Year Term ROP |
| Age 25 | $10.89 | $20.44 | $14.78 | $21.10 |
| Age 30 | $11.10 | $21.97 | $15.69 | $21.54 |
| Age 35 | $11.83 | $34.15 | $18.28 | $32.85 |
| Age 40 | $14.96 | $53.95 | $23.10 | $49.81 |
| Age 45 | $21.22 | $81.57 | $33.40 | $74.17 |
| Age 50 | $30.99 | $123.42 | $51.81 | $122.23 |
| Age 55 | $45.39 | $185.24 | $91.55 | $199.10 |
| Age 60 | $75.81 | $292.60 | NA | NA |
*Preferred Plus Non-Nicotine underwriting classification. $250,000 monthly male/female non-return of premium rates vs return of premium rates current as of 01/05/2021
Why is the 30-Year ROP cheaper than a 20-Year ROP?
A shorter contract length will always be cheaper than a longer contract length for traditional term insurance. It’s less of a risk for the insurance company having to pay out a claim over 10 years compared to 30 years, and the less of a risk, the cheaper the insurance cost.
However, with return or premium, it’s often the complete opposite. Return of premium term contract lengths is generally 20 and 30 years. But if you choose the 20-year option, you’re likely to pay more because it’s a shorter amount of time for the insurance money to make a profit on your premium payments.
When to Consider Return of Premium Insurance
For some people, return of premium policies can be a great fit. One popular motivation is the idea of getting that large lump sum back at the end of your term. This can seem especially tempting if your term is set to end close to when you retire. Knowing you have that large sum coming can help you plan for retirement and your changing finances.
In that way, a return of a premium policy can work like a savings account. You’ll pay a little more, but you’ll be able to access that money at the end of your term. Plus, the money you get back is a return of your own money. You won’t be taxed on it since there will not be interest gains.
Only you can look at your financial situation and goals to see if a return of premium policy is a good idea for your family. If you need help deciding, check out some of the pros and cons below.
Pros and Cons of Return of Premium Life Insurance
| Pros: | Cons: |
|---|---|
| You'll get your money back at the end of your term | Your policy will be more expensive than a standard term policy |
| You won't pay taxes on the money you get back | You won't earn interest on the money you pay |
| You can use your policy as a savings plan | Your term length is limited to 20 or 30 years |
| You can use the money you get back to plan for retirement | The money you get back could have been invested or put into an interest-earning account |
Advantages of Return of Premium Insurance
Having life insurance coverage is important. You’re protecting your loved ones from serious financial hardship in the event of your death. However, life insurance is a product you don’t want to ever have to use. You’re paying for the security and peace-of-mind that comes from knowing your policy is there.
For some people, this might seem risky. They might not be comfortable putting 30 years’ worth of payment into something they never use. After all, if you had a 30-year-policy with a $40 payment each month, you’d pay $14,400 over the life of your policy.
For some people, that $14,400 is well worth it for the security of their policy. Other people might feel that $14,400 could have been better spent on other things.
A return of premium policy saves you having to make that choice. You’d get the security of a policy and the security of knowing you’d get your money back when the policy ends. Plus, your return of premium policy can act as a sort of “forced savings” plan.
You’ll need to make the payments each month to keep your policy active, and you won’t be able to touch them until your policy ends. You can’t take that money out before your policy ends like you could if it was in a savings account, so you can count on it being there.
In that way, a return of premium policy shares similarities with a whole life insurance policy. Whole life policies have a cash value that builds over the life of your policy.
You can use this money when you need it or use it as a type of savings. However, return of premium policies is a lot less costly than whole life insurance policies.
This can make them an appealing option for people looking to add a savings component to their life insurance plan without the high cost of a whole life insurance plan.
Disadvantages of Return of Premium Insurance
Return of premium policies isn’t a good fit for everyone. They cost much more than traditional term insurance policies, meaning they won’t fit into everyone’s budget. Plus, while you’ll be getting that extra money back, a return of premium policy isn’t always the best use of that extra money.
One reason is that your money won’t earn any interest. You’ll get back the same amount of money you put in. All the money you get back after a return of premium policy was already yours. You’re not receiving any additional money.
If you had taken that extra difference in premium cost and invested it instead, you could have earned a lot more money. That money could go a lot further toward your retirement planning. Even if you’re not comfortable with the risk of investing, something like a high-yield savings account could be a better choice. That way, your money will earn interest without the risk of investment accounts.
The lack of ability to grow your money is only one possible drawback you should be aware of. Another is that your premiums are only fully refunded if you live to see the end of your policy. If you decide that you no longer need the insurance coverage, you will only receive a percentage of the paid premiums, not the full amount.
One final disadvantage is the limited companies that offer the ROP term life insurance option. You’re really limited to just a few insurance companies to choose from. Remember, life insurance companies are constantly adding new features such as living benefits and other policy riders that may not be available with the companies offering the return of premium feature.
Best Life Insurance Companies for Return of Premium Policies in 2023
If you’re interested in a return of premium policy, you’ll want to make sure it’s from a top company you can trust. Check out our picks for the best companies that offer a return of premium policies.
Return of premium term life insurance companies
Return of premium universal life insurance companies
AAA
AAA term life insurance offers the option to add a return of premium rider that allows for up to 100% of every premium payment returned once the insurance contract has ended.
Choose between level premium term lengths of 15, 20, or 30 years with the option to convert to permanent coverage at the end of the initial term.
Company: AAA Life Insurance Company
AM Best Rating: A (Excellent)
Policy Name: AAA Traditional Term Life Insurance
Product Type: Term life insurance with return of premium rider option
Contract Type: Guaranteed level premium term for periods of 15, 20, or 30 years
Issue Ages: Eligible ages vary. Required to contact AAA for details.
Minimum Amount: $100,000
Maximum Amount: $5,000,000+
Medical Exam Requirments: A medical exam could be required pending the outcome of a telephone interview.
Conversion Option: Convertible up to the end of the initial term period or the policy anniversary after the insured’s 65th birthday, whichever is earlier.
Policy Riders: No additional policy riders available when adding the AAA return of premium rider. Their basic term insurance plans offer an accelerated death benefit, child term, and disability waiver of premium.
State Availability: All states except NY
AIG
AIG offers a guaranteed universal life insurance policy with two built-in return of premium opportunities under the Enhanced Surrender Value Rider available at no additional cost.
The first return of premium opportunity comes at policy year 20, allowing the policy to be surrendered to receive up to 50% of all premium payments paid. The second opportunity comes again at policy year 25 for up to 100% of all premium payments refunded.
Company: AIG
AM Best Rating: A (Excellent)
Policy Name: AIG Secure Lifetime GUL 3
Product Type: Guaranteed universal life with enhanced surrender value rider
Contract Type: Permanent life insurance with guaranteed level premiums to age 121
Issue Ages: 18-80
Minimum Amount: $100,000
Maximum Amount: $1,000,000+
Medical Exam Requirments: A medical exam will be required
Policy Riders: Accidental Death Benefit, Children’s Insurance Benefit Rider, Enhanced Surrender Value Rider, Accelerated Access Solution, Lifestyle Income Solution, Terminal Illness Rider, Waiver of Monthly Deduction Rider
State Availability: All states
Americo
Americo offers its HMS Plus CBO flexible premium universal life insurance that works similar to a term life insurance policy. With HMS Plus CBO, you have the choice to choose a level premium period of either 30, 25, 20, or 15 years.
Depending on your choice of a level-premium period, once it has come to an end, you will have the option to continue coverage or opt for a cashback payment of 100% of all premium payments paid.
While this type of policy is a universal life insurance policy, it is also referred to as a blended term policy because it combines term like features to a permanent life insurance plan.
Company: Americo
AM Best Rating: A (Excellent)
Policy Name: Americo HMS Plus CBO
Product Type: Universal life insurance with cash back option
Contract Type: Permanent life insurance with guaranteed level premium periods of 30, 25, 20, or 15 years
Issue Ages: 20-60
- 15 Year CBO: 20-55 Non-nicotine; 20-47 Nicotine
- 20 Year CBO: 20-60 Non-nicotine; 20-52 Nicotine
- 25 Year CBO: 20-55 Non-nicotine; 20-50 Nicotine
- 30 Year CBO: 20-55 Non-nicotine; 20-50 Nicotine
Minimum Amount: $25,000
Maximum Amount: $400,000
Medical Exam Requirments: Simplified non-medical underwriting – Saliva test if coverage amount is over $250,000
Policy Riders: Accidental Death Benefit Rider, Additional Insured, Children’s Term, Disability Income, Income Term Rider, Involuntary Unemployment Waiver of Premium, Waiver of Monthly Specified Premium
State Availability: All states except NY
ANICO
ANICO offers a guaranteed universal life insurance policy with three built-in return of premium opportunities under its Guaranteed Cash-Out Rider.
The ANICO Guaranteed Cash-Out Rider is included at no additional costs. It works by providing the opportunity to get up to 100% of every premium payment paid at certain anniversary periods.
The first option to surrender coverage for a 50-60% return of premium comes at policy year 15 and then again at policy years 20 and 25 for up to 100% of every premium payment refunded.
Company: ANICO
AM Best Rating: A (Excellent)
Policy Name: ANICO Signature Guaranteed Universal Life
Product Type: Guaranteed universal life with cash-out rider
Contract Type: Permanent life insurance with guaranteed level premiums to age 121
Issue Ages: 18-80
Minimum Amount: $25,000
Maximum Amount: $1,000,000+
Medical Exam Requirments: No medical exam options are available
Policy Riders: Accelerated Benefit Riders (Chronic, Critical & Terminal Illness), Children’s Term Rider, Guaranteed Cash-Out Rider, Disability Waiver of Stipulated Premium Rider
State Availability: All states except MT
Assurity
Assurity offers its Endowment Benefit Rider to both their 20 and 30 year guaranteed premium term life insurance plans.
Adding the policy rider provides a return of every premium at the end of the level premium period. It can also pay out a percentage of your total premiums if the coverage is canceled early.
Assurity’s return of premium term insurance is a solid option if you’re looking for an insurance company that offers affordable rates, no medical exam underwriting, and unique policy riders.
Company: Assurity Life Insurance Company
AM Best Rating: A- (Excellent)
Policy Name: Assurity Term Life with Accelerated Underwriting
Product Type: Term life insurance with endowment benefit rider option
Contract Type: Guaranteed level premium term for periods of 20, or 30 years
Issue Ages: 18-60
- 20 Year ROP: Ages 18-60 Non-Tobacco; Ages 18-55 Tobacco
- 30 Year ROP: Ages 18-55 Non-Tobacco; Ages 18-50 Tobacco
Minimum Amount: $25,000
Maximum Amount: $10,000,000
Medical Exam Requirments: No medical exam options are available
Conversion Option: Convertible up to two years before the end of the initial term period or the insured’s 65th birthday, whichever is earlier.
Policy Riders: Accelerated Benefits Rider, Accident-Only Disability Income Rider, Children’s Term Rider, Critical Illness Benefit Rider, Disability Waiver of Premium Rider, Endowment Benefit Rider, Monthly Disability Income Rider, Other Insured Term Rider
State Availability: All states
Cincinnati Life
Cincinnati Life offers it Termsetter ROP term life insurance plans in contract lengths of 20, 25, and 30-year durations.
The money-back guaranteed plans offer a return of premium feature built into the policy with a full refund of premiums being returned at the end of the guaranteed term period provided the policy is in force, and the insured is still living.
Company: Cincinnati Life
AM Best Rating: A+ (Superior)
Policy Name: Termsetter ROP
Product Type: Term life insurance with return of premium feature
Contract Type: Guaranteed level premium term for periods of 20, 25, or 30 years
Issue Ages: 18-65
- 20 Year ROP: Ages 18-65
- 25 Year ROP: Ages 18-60
- 30 Year ROP: Ages 18-55
Minimum Amount: $25,000
Maximum Amount: $1,000,000+
Medical Exam Requirments: Will require you to take a medical exam
Conversion Option: Convertible to an eligible permanent insurance product through the end of the guaranteed term period or the policy anniversary following the insured’s 70th birthday, whichever comes first, without providing health information or proof of insurability.
Policy Riders: Accelerated Benefit Rider, Accidental Death Benefit Rider, Children’s Term Life Insurance Rider, Disability Waiver of Premium Rider
State Availability: All states except NY
Illinois Mutual
Illinois Mutual Path Protector Plus Return of Premium (ROP) term life insurance is available in contract lengths of 20, 30, and pay to age 65.
The pay to age 65 makes it a unique option as it is not an actual term length but making payment to a specific age. Illinois Mutual is one of the only companies to offer this option on a return of premium plan making it great for someone who needs coverage that will take them near retirement.
As with any return of premium life insurance policy, if your someone that doesn’t like paying for something “you might not need,” an Illinois Mutual ROP policy is an option worth looking into.
Company: Illinois Mutual
AM Best Rating: A- (Excellent)
Policy Name: Path Protector Plus
Product Type: Term life insurance with endowment benefit endorsement rider
Contract Type: Guaranteed level premium term for periods of 20, 30, or to age 65
Issue Ages: 18-60
- 20 Year ROP: Ages 18-60 Non-tobacco; Ages 18-55 tobacco
- 30 Year ROP: Ages 18-50 Non-tobacco; Ages 18-45 tobacco
- To age 65 ROP: Ages 18-45 Non-tobacco; Ages 18-45 tobacco
Minimum Amount: $50,000
Maximum Amount: $500,000
Medical Exam Requirments: A medical exam may be required
Conversion Option: Convertible to an eligible permanent insurance product through the end of the guaranteed term period or the policy anniversary following the insured’s 70th birthday, whichever comes first, without providing health information or proof of insurability.
Policy Riders: Accidental Death Benefit, Terminal Illness Accelerated Death Benefit
State Availability: All states except AK, CA, DC, HI, and NY
Mutual of Omaha
Mutual of Omaha offers its ROP term life insurance option called Term Life Express. With Term Life Express, you will not be required to take a medical exam, and approval can be made rather quickly for many applicants.
The only available term length is the 30 year level period plan if adding the ROP rider. Coverage offers multiple policy riders that can be added to the life insurance coverage.
Company: Mutual of Omaha
AM Best Rating: A+ (Superior)
Policy Name: Term Life Express
Product Type: Term life insurance with ROP rider
Contract Type: Guaranteed level premium term for a period of 30 years
Issue Ages: 18-50
Minimum Amount: $25,000
Maximum Amount:
- $300,000 (Ages 18-50)
- $250,000 (Ages 51-60)
- $150,000 (Ages 61-70)
Medical Exam Requirments: A medical exam will not be required
Conversion Option: Convertible after policy year two through the lesser of the end of the level term period or the policy anniversary following the insured’s 70th birthday, whichever comes first.
Policy Riders: Accelerated Death Benefit Riders, Accidental Death Benefit Rider, Common Carrier Death Benefit Provision, Dependent Children’s Rider, Disability Waiver of Premium Rider, Residential Damage Waiver of Premium Rider, Waiver of Premium for Unemployment Provision
State Availability: All states except NY
Nationwide
Nationwide No-Lapse Guarantee UL II is an affordable universal life insurance product that offers flexible premiums and coverage lengths that allow you to adjust the policy as your needs change.
Nationwide No Lapse Guarantee UL II offers unique features and riders that can help tailor the policy to your specific needs, one of which includes the return of premium rider.
For an additional cost, the return of premium rider allows for coverage to be surrender at two different time periods:
- Year 16 = lesser of 50% adjusted premiums paid or 40% of the base policy specified amount
- Year 21 = lesser of 100% adjusted premiums paid or 40% of the base policy specified amount
Company: Nationwide
AM Best Rating: A+ (Superior)
Policy Name: Nationwide No-Lapse Guarantee UL II
Product Type: Guaranteed universal life with optional return of premium rider
Contract Type: Permanent life insurance with guaranteed level premiums to age 120
Issue Ages: 18-85
Minimum Amount: $100,000
Maximum Amount: $1,000,000+
Medical Exam Requirments: A medical exam will be required
Policy Riders: Accelerated Death Benefit Rider, Accidental Death Benefit Rider, Children’s Term Insurance Rider, Nationwide Long-Term Care Rider II, Return of Premium Rider, Waiver of Monthly Deduction Rider
State Availability: All states except MT
North American
North American Custom Guarantee UL offers a low-cost guaranteed death benefit coverage that can last as high as age 120.
The life insurance coverage offers no medical exam accelerated underwriting, built-in policy features such as living benefits, and the Premium Recovery Endorsement.
At no additional cost, the return of premium rider allows for coverage to be surrender at three different time periods:
- Year 15 = up to 50% of paid premiums may be recovered.
- Year 20 = up to 100% of paid premiums may be recovered.
- Year 25 = up to 100% of paid premiums may be recovered.
Company: North American
AM Best Rating: A+ (Superior)
Policy Name: Nationwide Custom Guarantee UL
Product Type: Guaranteed universal life with return of premium rider
Contract Type: Permanent life insurance with guaranteed level premiums to age 120
Issue Ages: 0-85
Minimum Amount: $25,000
Maximum Amount: $1,000,000+
Medical Exam Requirments: No medical exam options are available
Policy Riders: Accelerated Death Benefit Endorsement for Critical, Chronic, and Terminal Illness, Accidental Death Benefit Rider, Children’s Term Life Insurance Rider, Guaranteed Insurability Rider, Waiver of Monthly Deductions Rider
State Availability: All states except NY
Pacific Life
Pacific Life Promise GUL has a guaranteed death benefit that provides protection up to age 120.
The life insurance coverage offers no medical exam accelerated underwriting to age groups 50-69 that have had a full physical completed within the last 18 months.
The life insurance coverage offers an optional Chronic Illness rider and a built-in return of premium feature called the Enhanced Surrender Value Rider.
At no additional cost, the return of premium rider allows for coverage to be surrender at three different time periods for 40% of the death benefit or a return of premium equal to the following:
- Year 15 = up to 50% of paid premiums
- Year 20 = up to 75% of paid premiums
- Year 25 = up to 100% of paid premiums
Company: Pacific Life
AM Best Rating: A+ (Superior)
Policy Name: Pacific Life Promise GUL
Product Type: Guaranteed universal life with built-in return of premium rider
Contract Type: Permanent life insurance with guaranteed level premiums to age 120
Issue Ages: 0-80
Minimum Amount: $25,000
Maximum Amount: $1,000,000+
Medical Exam Requirments: No medical exam options are available for applicants ages 50-69
Policy Riders: Children’s Term Rider, Chronic Illness Care Rider, Terminal Illness Rider, Waiver of Premium Deduction Rider
State Availability: All states except NY
Protective Life
Protective Advantage Choice is an affordably priced universal life insurance coverage that offers fixed premiums to age 121, flexible features in the form of policy riders, and the potential of cash-value growth through a fixed interest rate.
Advantage Choice UL offers an accelerated non-medical underwriting process available to qualifying applicants and a popular chronic illness protection rider called ExtendCare.
For an additional cost, you can also add the return of premium rider that allows for coverage to be surrender at two different time periods:
- Policy year 21 = 50% of premiums returned
- Policy year 26 = 100% of premiums returned
Company: Protective
AM Best Rating: A+ (Superior)
Policy Name: Protective Advantage Choice UL
Product Type: Guaranteed universal life with optional return of premium rider
Contract Type: Permanent life insurance with guaranteed level premiums to age 121
Issue Ages: 18-85
Minimum Amount: $50,000
Maximum Amount: $1,000,000+
Medical Exam Requirments: No medical exam options are available
Policy Riders: Accidental Death Benefit Rider, Children’s Term Life Insurance Rider, ExtenCare Rider, Income Provider Option, Return of Premium Rider, Terminal Illness Accelerated Death Benefit Rider, Waiver of Specified Premium Rider
State Availability: All states except NY
State Farm
State Farm is one of the most well-known insurance companies around. They are also one of the few to still offer a return of premium term insurance option in both a 20 year and 30 year level premium contract length.
If you are currently a State Farm auto insurance client, you might be eligible to receive a discount on your auto insurance premiums with the company’s multi-line discount program.
Company: State Farm
AM Best Rating: A+ (Superior)
Policy Name: Adjustable Premium Level Term Life Insurance ROP
Product Type: Term life insurance with return of premium feature
Contract Type: Guaranteed level premium term for periods of 20 or 30 years
Issue Ages: 18-60
- 20 Year ROP: Ages 18-60 Non-tobacco; Ages 18-55 Tobacco
- 30 Year ROP: Ages 18-45 Non-tobacco and Tobacco
Minimum Amount: $100,000
Maximum Amount: $1,000,000+
Medical Exam Requirments: Will require you to take a medical exam
Conversion Option: Convertible to an eligible permanent insurance product up to age 75.
Policy Riders: Children’s Term Life Insurance Benefit Rider, Waiver of Premium Benefit Rider
State Availability: All states except MA, NY, and WI
United Home Life
United Home Life / United Farm Family Life Insurance Company may not be one of the bigger names for life insurance coverage, but that doesn’t mean they do not offer some excellent coverage options.
One of those options is the company’s Simple Term 20 ROP life insurance. If you’re looking to completely skip the medical exam or have a few health conditions that may be viewed as a little higher risk, look into a Simple Term 20 ROP as they will be a great option.
Company: United Home Life / United Farm Family
AM Best Rating: A- (Excellent)
Policy Name: Simple Term 20 ROP
Product Type: Term life insurance with return of premium feature
Contract Type: Guaranteed level premium term for periods of 20 years
Issue Ages: 25-60
- 20 Year ROP: Ages 25-60 Non-tobacco; Ages 25-45 Tobacco
Minimum Amount: $25,000
Maximum Amount: $300,000
Medical Exam Requirments: A medical exam will not be required
Conversion Option: Can use ROP cash to purchase a paid-up permanent life insurance plan.
Policy Riders: Child Rider, Terminal Illness Accelerated Benefit Rider
State Availability: All states except AK, MT, NY, OR, PA and WY
Alternatives to Return of Premium Insurance
A return of premium policy is a great fit for some people, but they’re not for everyone. Knowing your options when it comes to life insurance coverage can help you make the right choice.
If you’re not sure about a return of premium policy, you can look into a few of the options below.
Term Life Policies
Term life policies offer a convenient and affordable way to get life insurance. You can get the exact amount of coverage you need at a price that can often fit your budget.
You can also select a term length that will keep your family covered while your kids are in school, while you’re still paying your mortgage, or that lasts into your elderly years.
Many people can rely on the coverage of their term policies during set years. By the time their term contract ends, their expenses and financial obligations often no longer need life insurance protection.
Of course, a return of premium policy is a type of term policy. If you’re interested in a term policy but unsure about a return of premium policy, there are other types of term insurance that might fit your needs better.
For example, you might consider a mortgage life insurance policy.
A mortgage protection life insurance policy protects your home if you die during the term of your policy. The policy amount, in this case, will match your mortgage balance. The death benefit will be the same as the amount of money you own.
This type of policy ensures that your family will keep their home if you were to die. It’s a good choice if your mortgage is your largest expense.
Another option?
No medical exam term life insurance policies. The terms of a no medical exam policy will be the same as a traditional term policy. You’ll select a benefit amount, term length, and the insurance company will assign you a premium rate.
However, getting a no medical exam policy is a lot easier. Since there is no medical exam to take, you can often get one of these policies quickly. Often, you can even get same-day coverage with a no exam policy. They’re a great way to get affordable coverage without the hassle.
Guaranteed Universal life Policies
A guaranteed universal life policy can be seen as the middle ground between term life insurance and whole life insurance. These plans offer a guaranteed death benefit along with a fixed premium to a specific age.
Unlike the 10 to 30 year contract lengths that term life plans can offer, guaranteed universal life insurance could be modified to last to a certain age. However, most plans will last up to the age of 121 by default.
Since guaranteed universal life policies last a lot longer than term policies, they’re more expensive. However, they’re a lot less expensive than whole life policies.
That’s because guaranteed universal life policies have very little, if any, cash value growth potential. They’re not intended to be used as a savings plan, so they don’t require a higher premium to grow cash value. Instead, you’re simply paying for the cost of the coverage that is designed to last the rest of your life.
Not only do they provide an affordable solution to permanent life insurance, but they can also offer some valuable life insurance riders such as chronic and critical illness protection as well as long-term care benefits.
You may have also noticed that many of these universal life insurance plans can come with a return of premium rider as well. As these plans are meant to remain active for your entire life, having a return of premium option on a guaranteed universal life insurance policy can be very beneficial if life changes and your insurance needs are no longer permanent insurance.
Whole Life Policies
Whole life policies are one of the most popular types of permanent life insurance coverage, but for most people they will not be the ideal coverage for everyone, especially those that need a large amount of coverage.
They’re a lot more expensive than any other type of life insurance coverage, but they have some unique advantages if you can afford the price for coverage.
The one obvious advantage is that the insurance protection is permanent, and as long as you make your premium payments, it will be with you until the very end.
However, that’s not the main advantage. That advantage would be with the guaranteed cash value growth whole life insurance can accumulate.
Your cash value comes from the premium payments you make. The insurance company takes a portion of each premium and puts it toward your policy’s cash value.
You can withdraw money from that cash value to pay for any expenses you might have. You can generally take this cash out at any time, although your policy might have stipulations.
Plus, some whole life insurance plans are eligible to receive dividends, resulting in higher cash growth or being used to purchase additional life insurance coverage.
Essentially, a whole life policy combines lifelong coverage with an excellent savings plan. Depending on your budget and financial needs, this could make the extra cost of a whole life policy worth it.
Frequently Asked Questions about Return of Premium Policies
You might have questions if you’re still not sure if a return of premium policy is the right fit for you. Keep reading for answers to some common questions below.
Do return of premium policies have a cash value?
Sometimes. Term life insurance does not accumulate cash value, and while the return of premium will refund your money back if you outlive your coverage, it’s not the same as cash value earned on permanent life insurance plans.
Some return of premium policies, primarily universal life insurance, can earn a cash value. In a life insurance plan with a cash value growth, you’re able to borrow against this cash value as a loan.
However, you’ll need to be careful. Any amount you take out will be deducted from your death benefit or final premium payout until you pay it back. So, if you don’t’ pay the money back, you’ll be left with less at the end of your policy.
If you die without paying back the money you borrowed from the policy, it will be taken out of your death benefit, leaving your beneficiaries with less. Keep in mind that most guaranteed universal life insurance plans do not earn enough cash to borrow from, so these scenarios will not likely occur.
Can I convert a return of premium policy?
Normally, yes. Just like with standard term policy, most return of premium term insurance policies have a built-in ability to convert your policy to a permanent life insurance policy.
Your rates will go up, but you won’t need to apply again or provide evidence of insurability. However, converting your policy to a whole life policy means you’ll lose the ability to get your premiums back.
The additional cost of your premiums beyond what you’d have paid for a standard term policy might not be worth it in this case.
Why don't many companies offer return of premium policies?
As mentioned earlier, there’s no official reason, but if we had to take a guess, we believe they are not profitable to insurance companies. It’s also not uncommon at all for insurance companies to change up their coverage options.
Return of Premium Life Insurance - Final Thoughts
Everyone likes the idea of a money-back guarantee. If you like the idea of getting your premiums back at the end of your life insurance policy, a return of premium policy might be right for you. Knowing you’ll be getting a large lump sum at the end of your policy can help you plan for retirement or other expenses.
The one important piece of advice that we provide for the return of life insurance is not to wait if you’re considering it. We have personally seen too many insurance companies discontinue these plans leaving just a few companies to offer them.
Ready to start shopping?
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