What is return of premium term life insurance?
Return of premium term life insurance refunds the premiums you paid if you outlive the level term period, subject to the policy terms. It provides the same temporary death benefit protection as standard term, but adds a feature that returns your premium dollars when no claim is paid. That refund feature typically costs more than standard term.
Return of premium term is a type of term life insurance that refunds the premiums you paid if you outlive the level term period. You get the same style of temporary protection as standard term, with a feature that returns your premium dollars if no claim is paid.
Who needs it? People who want term protection but dislike paying premiums with nothing back. Those who can comfortably handle the higher premium for the full term. People fairly confident they will keep the policy for its entire length.
Return of premium term costs more than standard term for the same death benefit. The refund typically applies only if you keep the policy for the full term. Canceling early may return little or nothing, so this works best when you are confident you will see the term through. It is a return of the premiums you paid, not an investment gain, and it does not include interest on those dollars.
How we help: We walk through the tradeoffs honestly, compare it against standard term for your situation, and help you decide whether the refund feature is worth the added cost.
The refund is defined by the contract, not by what you paid out of pocket. Riders, policy fees, and any substandard rating are commonly excluded from the amount returned, so read what the schedule actually counts. Surrendering partway through generally returns a fraction, and in the early years often nothing. Compare it against buying standard term and holding the difference yourself, which is the honest alternative.
Before buying the refund feature, price standard term life insurance at the same face amount and term. The difference between the two premiums is the real cost of the refund.
