Return of Premium Life Insurance Policy: What You Need to Know

Shawn Plummer

CEO, The Annuity Expert

A return of premium life insurance policy is a type of life insurance that pays back the amount of premiums you have paid in full once the policy expires. It is a relatively new type of policy, and there are a lot of things you need to know before deciding if it is right for you. In this guide, we will discuss the pros and cons of return of premium life insurance policies and help you decide if this type of coverage is right for you.

Find The Best Return of Premium Life Insurance Coverage At The Cheapest Cost!

Compare life insurance quotes from 25 companies in seconds. Then, apply for coverage in less than 10 minutes.

What Is Return of Premium Life Insurance?

This Return of Premium rider for term life insurance will return all premiums paid in a lump sum if you outlive the term. If you cancel your policy early, you could get back a partial amount of the premiums paid.

How Does Return of Premium Life Insurance Work?

Return-of-premium life insurance can be purchased as a standalone policy or as a life insurance add-on to a standard term policy. You typically choose the length of your return-of-premium coverage when you purchase it, such as 20 or 30 years.

  • If you die during the term, your beneficiaries are entitled to the death benefit.
  • You get back the whole amount you paid in, with no interest, if you outlive the coverage. The money isn’t taxable because it’s simply a return of the payments you made.

If you have a regular term life insurance policy, you’ll get nothing back if you’re still living when the coverage expires.

Return of Premium Life Insurance Pros and Cons


  • If you die before your policy’s expiration date, the insurer refunds your premium payments.
  • Because it isn’t income, the money is not taxed when it’s returned to you.
  • Cheaper than universal life insurance and whole life insurance.


  • It’s significantly more expensive than traditional term life insurance.
  • You generally must hold the policy for the entire term and make all payments in order to receive your cash back.

Need Help Getting Life Insurance Coverage?

Feel free to contact us if you need help purchasing a life insurance policy. The service is free of charge.

Life Insurance Inquiry

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

Scroll to Top