The return of premium (ROP insurance) is a typical term insurance policy that provides a death benefit for your beneficiaries if your policy ends but returns the premiums if your policy term ends. If you die during the term of a standard term insurance policy, there will not be any payout. ROP insurance is more expensive than regular term policies, but you can save money and get your money back. Although ROP term insurance is not offered by all companies, here are some of the best.
ROP term life insurance may not be right for everyone. It may be more convenient to pay a lower premium and not receive a refund, or to save the difference to invest in your own savings. If this policy appeals to you or fits your lifestyle, there won’t be many options. Only nine of the 91 carriers that we reviewed offer ROP coverage.
State Farm’s A++ AM Best rating is the best option if you want to be financially secure. Get quotes from Mutual of Omaha and John Hancock for at least one living benefit. Assurity will also provide a quote. Assureity’s quote must include the rider. AAA is a good choice if you require a variety of ROP terms. Before you look elsewhere, think about your needs.
Guide to choosing the best return on premium life insurance
What is the Return on Premium (ROP)?
An ROP term insurance policy offers a death benefit in case you die, and a refund of premiums if your policy is canceled. ROP life insurance policies can be more expensive than regular term life insurance policies because of the added benefit.
A term life insurance policy is usually for between 10 to 30 years. ROP policies have shorter-term options, with a 20-year or 30-year term. Your beneficiaries will get a death benefit if you die during this period. However, if you live beyond that period, neither your heirs nor you can receive anything.
An ROP policy can have a cash value component that allows you to borrow against it while it is still intact. If you have an ROP policy, you can add a cash value component to your policy that will allow you to borrow against the policy.
ROP policies are usually purchased as an optional rider or benefit to your standard term life insurance policy. Although it is possible to purchase a standalone ROP policy in certain cases, this is less common.
Is it worth the return of premium life insurance?
ROP life insurance is more expensive than regular term life insurance policies so it’s important that you evaluate whether this policy will give you the best value for your money. This is because premiums don’t earn interest and aren’t invested.
The cost of insurance may be zero if you live beyond the policy term without taking out loans. An ROP policy can be used to save money. It can also build cash value, which you can use to borrow.
You should shop around for the best rates and premiums if you are sure that an ROP policy is right for you.
Alternatives to the Premium Term Return
You have the option to buy normal-term coverage or invest the difference by choosing the ROP policy. This way you could potentially make enough money to cover the fact that you will not see any return on your premiums if the term policy is canceled.
A permanent life insurance policy can be purchased that will last you your whole life. Permanent life insurance policies can earn interest and accumulate cash value. Once the cash value is large enough, you may be able to borrow or withdraw from it. You don’t need to pay taxes unless you withdraw less than what you paid in premiums.
How to choose a Return of Premium Term policy
Insurers don’t often offer ROP term life insurance policies. These are some factors to consider when looking for an ROP policy.
- Cost: It’s easy to compare the cost of an ROP term insurance policy with a standard term policy in order to determine how much you’ll be paying.
- Financial strength To get an idea about how financially sound an insurance company is and how likely they are to fulfill its contractual obligations, take a look at AM Best’s financial stability ratings.
- Customer satisfaction You can view The National Association of Insurance Commissioners complaint index to see how satisfied customers are with particular life insurance companies. J.D. Power’s survey of the 21 largest insurance companies shows how they did.
- Convertibility If you are thinking about changing your term policy to a longer-term policy, be sure to choose a company that allows for this conversion.
- Optional and included riders: Some riders are free, while others will cost extra. Consider the cost of additional riders when comparing life insurance companies.
How we chose the best life insurance companies
We developed a comprehensive life insurance methodology to compile our list. We began by researching the needs of consumers regarding life insurance companies. For that purpose, we used third-party consumer studies such as J.D. Power’s 2021 U.S. Life Insurance New Business Study.
We gathered more than 50 data points about 91 life insurance companies to help us make these findings. This includes ratings for financial strength, customer satisfaction, and customer complaints. It also contains information about years in business and online tools, no exam options, dividends, and maximum issue ages.
We favored companies that offer online quotes, no-medical exam coverage, same-day application decisions, and robust self-service website features. We also looked at each company’s financial stability as well as the history of customer complaints. Ratings were given to companies for having long terms and being able to convert or renew coverage beyond the current level-premium period. Each company was ranked according to the following weights and categories.
- 20%: Same-day decision, online quotes, online application
- 20% Discount on Website Features
- 15%: No need for medical screening
- 10%: Financial stability
- 10% of Consumer complaints
- 10%: Maximum term
- 10%: Conversion features
- 5%: Renewability beyond the level of premium term
We compared the individual offerings of top companies to finalize our list by taking into account third-party ratings as well as delving deeper into product details, including living benefits, and other riders. This research was used to identify the top ROP term insurance companies.