What is Return of Premium life insurance?

Return of Premium life insurance may offer you a refund.

A multigenerational family walking outside.

You buy term life insurance to protect the ones you love from financial hardship if you should die. With most term policies you pay your scheduled premium, and when the term is done, you typically stop making payments and your coverage ends. What if that life insurance policy refunded all the premiums you paid directly to you if you outlived the term?

That's the premise behind Return of Premium life insurance. Here's what to know about this coverage.

What is a Return of Premium life insurance policy?

Return of Premium life insurance is a term policy with a level premium period of either 20 or 30 years. At the end of the term, if the death benefit hasn't been paid and you've made your scheduled premium payments, you'll be refunded the money you've paid over the level premium period less any loan you may have taken, and accrued loan interest not paid on the policy. You can use that money however you wish.

What are the potential benefits?

In addition to the protection that the policy offers your loved ones:

  • The money you get back from a Return of Premium term policy is generally tax-free.
  • You can use the returned premium any way you choose — to help pay off a mortgage, fund college tuition, boost your retirement savings or something else.
  • Over the level premium period, your policy will build cash value and you can borrow against it during the initial term period.1
  • The death benefit1 of your policy is generally income tax-free.

What else should you consider?

To keep the policy from lapsing, you'll need to make scheduled premium payments for 20 to 30 years.

Also, Return of Premium can be converted to a permanent coverage and premiums at any time — no matter your state of health. Additional riders are also available to customize coverage to your situation.

Learn more about the Return of Premium policy from State Farm®, or contact your State Farm agent for details or for a quote. Also, visit Simple Insights for other important information about life insurance.

If you are interested in a quote on this type of life product, please contact a State Farm agent.

1 Unpaid loans and withdrawals will reduce the guaranteed death benefit, and policy cash value and any Return of Premium benefits. Loans also accrue interest.

Adjustable Premium Level Term Life Insurance policy series 08025 in all states except MT, NY, WI; 08075 in MT, A08025 in NY & WI.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

Insurance policies and/or associated riders or features may not be available in all states, and policy terms and conditions may vary by state. This is only a general description of coverage. A complete statement of coverage is found only in the policy.

Policy Series Info


State Farm Life Insurance Company (Not licensed in MA, NY or WI)
State Farm Life and Accident Assurance Company (Licensed in NY and WI)
Bloomington, IL



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