Return of Premium Life Insurance Rider (2024)

FAQs

Is return of premium rider worth it? ›

Whether a return of premium (ROP) rider is worth it depends on your personal circ*mstances, financial goals, and risk tolerance. It can be a valuable addition for some individuals, but the extra cost may not be justified for others.

A return of premium rider allows term life insurance policyholders to recover the premiums they've paid over the life of their policy if they don't die while the policy is in effect. Policies with this provision are also referred to as return of premium life insurance.

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.

The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.

If you outlive your coverage, 100% of the money you paid in premiums during the term is returned to you, tax-free. However, if you fail to make your payments or cancel the policy, you may not get a premium refund (exact rules vary by insurer).

Return of Premium is a feature on some long-term care insurance policies that gives you your money back, either in full or in part, if you end up not needing long-term care. It provides valuable peace of mind, knowing that your premiums won't go to waste if you stay healthy.

A Waiver of Premium Rider is an optional add-on to a life insurance policy that will waive or pay your life insurance premiums for you if you become disabled and unable to work.

Return of premium (ROP) is a type of term life insurance that is about 30% more expensive than a term life policy, but it comes with a feature that some people bet on: If you outlive your term, all the premiums paid throughout the life of the policy are refunded to you, tax-free.

What is the return of premium rider on an annuity? ›

A return of premium rider is a low-risk add-on to your annuity plan. It is a type of death benefit rider that ensures your beneficiary will receive payments if you die before the set term of the plan has elapsed. In addition, a return of premium rider may be a good replacement for a life insurance policy.

A return premium factor is calculated by taking the number of days remaining in the policy period divided by the number of total days of the policy. This factor is multiplied by the written premium to arrive with the return premium.

It works by providing you, the policy holder, a return of your premium dollars if you are still alive when your term policy comes to an end. For example, if you purchased a 20-year term policy at age 30 and now, 20 years later at age 50 you're still alive, your money will be refunded to you.

If the premium is not paid before the grace period expires, the policy will lapse. During the grace period the policy remains in force. If the insured dies during the grace period, the insurance company may deduct any premium due from the death benefit.

Double indemnity is a clause or provision in a life insurance or accident policy whereby the company agrees to pay the stated multiple (e.g., double, triple) of the face amount in the contract in cases of death caused by accidental means.

Return of premium (ROP) insurance is a type of term life insurance policy that provides a death benefit to your beneficiaries if you die during the term of your policy but refunds the premiums paid if you outlive the policy term.

What Is a Waiver of Premium Rider? A waiver of premium rider is an insurance policy clause that waives premium payments if the policyholder becomes critically ill, seriously injured, or physically impaired. Other stipulations may apply, such as meeting specific health and age requirements.