Is return of premium life insurance worth it? Here's what you need to know (2024)

If you have term life insurance, your policy may never pay out. In some ways that's a good thing — it means you're still alive! But it also means the coverage from the policy has expired and you (or your beneficiaries) didn't receive any payment.

That's where return of premium term life insurance comes in. With it, you can get back some or all of the money you've paid in premiums.

Here's what you need to know about return of premium insurance, including how much it costs and whether it's worth getting.

A term life insurance policy is only in effect for a set amount of time, usually 10, 20 or 30 years. If you outlive the term, there's no death benefit paid out. But a return of premium policy (or rider) means you'll get reimbursed some or all of the premiums you've paid if the term life policy expired without paying out.

Return of premium riders are typically available with level-term life insurance policies, where premiums are set when you purchase the policy and stay the same throughout the entire term.

Term life is typically the most affordable type of life insurance, but a return of premium policy or rider can double or even triple the cost, according to Policygenius.

Should you invest in return of premium life insurance? Here's what you need to know.

Pros

• Less risk. Term life insurance doesn't provide a payout if you outlive the term. A return of premium policy (or rider) would refund some or all of the money you paid.
• Can build cash value. Unlike other term life options, return of premium insurance may build cash value that you can withdraw or borrow against.

Cons

• High cost. Return of premium life insurance can cost two or three times what a typical term life insurance policy would.
• Poor return. The money you put into the policy won't earn interest the way it would if you invested it.
• Limited availability. Few companies offer return of premium policies and riders.

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