Glossary
Return of premium rider
An add-on to a term policy that refunds the premiums paid if the insured is still living when the level term ends.
Also called: ROP rider, return of premium term, ROP term
A return of premium rider attaches to a term life insurance policy and promises to refund premiums if the insured survives the full level-premium period. Some insurers offer it as a rider and others sell return of premium term as a separate product. If the insured dies during the term, the beneficiary gets the death benefit, not the death benefit plus a refund.
The refund usually covers base premiums and the rider charge, but read the terms: some exclude other riders, flat extras or fees, and many pay only a partial refund, or nothing, if you cancel early. Hypothetically, if a 20-year, $500,000 policy costs $40 a month without the rider and $90 with it, you'd pay $21,600 over 20 years and get it all back, but you'd have paid $12,000 more than for plain term. In effect, the extra $50 a month earns whatever implied return produces the refund.
Compare that implied return with what the money could earn elsewhere, remembering that the refund shrinks or disappears if you lapse early. The refund is generally not taxable because it doesn't exceed the premiums you paid. See return of premium term life insurance: is it worth it and the return of premium term calculator.
Last reviewed October 4, 2026