Quick answer
Return of premium (ROP) life insurance is a level term life policy with a built-in rider that refunds 100 percent of the premiums you paid if you are still alive at the end of the term. ROP premiums cost roughly 30 to 50 percent more than equivalent standard level term, but the refund is income-tax-free. ROP is ideal for buyers who want pure term protection but dislike the "use it or lose it" nature of standard term life insurance.
Return of Premium: Insurance and Savings Combined
As a hidden gem in the term life insurance world, return of premium term life insurance policies provide a way to recoup premiums that you would otherwise have forfeited to the insurance company during the time your policy was in force.
Best Return of Premium Life Insurance Companies
The carriers below offer return of premium (ROP) riders on level term policies. Each is A.M. Best A or higher. ROP availability changed materially after several carriers exited the product line in 2022 to 2024, so the shortlist is smaller than for standard level term.
| Company | Recommendation | Rating | Best for | Quote |
|---|---|---|---|---|
 |
Recommended. Term Life Express with optional ROP rider. Ages 18 to 70. Coverage up to $1,000,000. Agent assisted. |
★★★★★ Mutual of Omaha Review |
Best mainstream ROP carrier. Strong for buyers who want both ROP and living benefit riders on the same policy. | Go |
 |
Recommended. 20 and 30-year LifeHorizons Term with ROP rider. Conversion rider standard. Agent assisted. |
★★★★★ A+ rated |
Best ROP term with a strong conversion option. Ideal for buyers who may want permanent coverage later. | Go |
 |
Recommended. 20 and 30-year term with optional ROP rider. No-exam available up to age 65. Agent assisted. |
★★★★★ Assurity Review |
Best ROP for applicants with mild health conditions and for the no-exam ROP option. | Go |
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Frequently Asked Questions
What is return of premium life insurance?
Return of premium (ROP) life insurance is a level term policy with a rider that refunds 100 percent of premiums paid if you are still alive at the end of the term. The death benefit and premium are both fixed, just like standard level term, but ROP adds the refund feature. The refund is income-tax-free under IRS Code Section 7702.
How much more does return of premium life insurance cost?
ROP term costs roughly 30 to 50 percent more than equivalent standard level term insurance for the same death benefit. As an example, a healthy 35-year-old male buying a $500,000 30-year level term might pay around $30 per month for standard term versus $45 to $50 per month with an ROP rider. Older issue ages see a larger relative premium increase.
Is return of premium life insurance worth it?
ROP is worth it for buyers who want term-life affordability but psychologically dislike the "use it or lose it" structure of standard term. Mathematically, the extra premium dollars invested in a tax-advantaged account (Roth IRA, 401(k), HSA) would typically grow to more than the premium refund. According to the Insurance Information Institute, however, behavioral economics favors ROP for many buyers because the guaranteed refund increases the likelihood of keeping the policy in force.
Is the return of premium refund taxable?
No. The premium refund at the end of an ROP term is treated as a return of basis under IRS Code Section 7702 and is not subject to income tax. This is different from policy loans, dividends, or surrender of cash-value policies, each of which has different tax treatment.
What happens if I cancel my ROP policy mid-term?
If you cancel an ROP policy before the end of the term, you receive a pro-rated cash surrender value rather than the full premium refund. Most ROP riders have a graded surrender schedule that pays nothing in years 1 to 5 and increases each year until you reach 100 percent in the final year. Always review the surrender schedule before purchasing.
Can I convert a return of premium policy to permanent life insurance?
Yes, on most ROP policies. The conversion option works the same way as on standard level term: you can convert to a permanent policy (whole life or universal life) without a new medical exam any time before the conversion deadline (typically age 65 to 75 or end of term, whichever comes first). The premium refund does not transfer to the new policy.
Which life insurance companies offer return of premium?
ROP availability has narrowed significantly since 2022. Currently, AAA Life Insurance, Cincinnati Life, Mutual of Omaha (Term Life Express), and Assurity all offer ROP riders on level term policies. State Farm offers ROP but only direct, not through brokers. Banner Life, Protective, Corebridge, Ethos, and Symetra all discontinued their ROP riders between 2020 and 2024.
Is return of premium available on no-medical-exam policies?
Yes. Assurity offers an ROP rider on its no-medical-exam term policy up to age 65, and Mutual of Omaha Term Life Express has ROP available on its accelerated-underwriting policy. Coverage limits are typically lower than fully-underwritten ROP (usually $500,000 or less). For larger ROP face amounts, a paramedical exam is required.
Return of premium vs term life - which is better?
Standard term life insurance is better for buyers who are disciplined investors and will reliably invest the premium difference in a tax-advantaged account. ROP is better for buyers who want a behaviorally-friendly guarantee, dislike the "use it or lose it" framing of standard term, and want a fixed-amount lump sum at the end of the term. For most buyers under age 40 in good health, the math favors standard term plus a Roth IRA. For buyers 40 plus, ROP is often the right behavioral choice.
How long are return of premium terms?
ROP riders are typically available on 20-year, 25-year, and 30-year level term policies. A few carriers offer ROP on 15-year term. Shorter terms (10-year) are rarely offered with ROP because the math does not work for the carrier given the front-loaded reserves. Longer terms (35-year and 40-year) are not offered with ROP on standard issue.
Does return of premium have a cash value?
ROP policies have a surrender value during the term (the pro-rated portion of premiums refundable upon cancellation), but they are not cash-value policies in the traditional sense. There is no investment account that grows tax-deferred, no policy loan feature, and no dividend. ROP is term insurance with a refund feature, not permanent insurance. For cash-value accumulation, look at whole life or indexed universal life.
What is the best return of premium life insurance company?
The best ROP carrier depends on age and health. For healthy ages 30 to 60: AAA Life Insurance for the most competitive ROP rates, or Mutual of Omaha Term Life Express for a strong conversion option. For applicants who want no-exam ROP: Assurity or Mutual of Omaha. For buyers focused on permanent-conversion flexibility: Cincinnati Life LifeHorizons. Insurancy represents all of them and shops them in parallel.
