What is Return of Premium Life Insurance?

You Could Get a Major Refund from This Type of Life Insurance

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 policy could refund all the premiums you paid if you outlive the term.

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

What is Return of Premium life insurance?

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 has not 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.

The return of premiums could be as much as tens of thousands of dollars—and you can use that money however you wish.

What are the potential benefits?

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

  • The money you get back from a Return of Premium term policy is generally tax-free.
  • You can use the refund 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 during the initial term period.1
  • The death benefit of your policy is generally income tax-free.
  • If you have one or more other policies with your insurer, adding this coverage may make you eligible for discounts.

What else should you consider?

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

Learn more about the Return of Premium policy from State Farm, or contact your State Farm agent for details.

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.

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

IL-1016.0

Disclosures

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.