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Return of premium (ROP) is a type of term life insurance policy that provides a death benefit to your beneficiaries if you die during the term of your policy, but refunds the premiums you’ve paid if you outlive the policy term. With a standard term life insurance policy, you won’t receive any payout if you outlive your covered term. You’ll pay considerably more for ROP insurance than for a regular term policy, but it can be a way to force yourself to save money that you may later get back. For many people, a better idea is to buy term and invest the difference—if they’re disciplined enough to do that.
ROP insurance isn’t offered by many companies, so we created this list to provide guidance. When researching ROP policies, we looked at many of the same factors we evaluate for other types of term insurance: available riders, customer service, medical exam requirements, the company’s financial strength, and how many different term lengths are available.
Keep reading for insight into the best ROP term insurance companies of 2022.
Best ROP Term Life Insurance
- Best Overall: Mutual of Omaha
- Most Terms Available: AAA
- Best for Corporate Responsibility: Assurity
- Best for Financial Stability: State Farm
- Best for Wellness Perks: John Hancock
Best Overall : Mutual of Omaha
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Generous conversion options
Can apply without an exam
Same-day decision available
Includes a terminal illness rider
Online applications unavailable
Only one term available for ROP policies
Uses simplified underwriting
Mutual of Omaha life insurance offerings stand out for a few reasons. You can get a decision on coverage the same day you apply and skip the medical exam. Additionally, the company includes a terminal illness living benefit on its ROP policies. You can convert your policy to a permanent life insurance policy (such as whole or universal that lasts your whole life) until the end of the policy’s term or your 70th birthday, whichever comes first. And you can even renew coverage after the level-term period until age 100 if you want. That’s impressive, given that some companies limit the conversion period to the first 10 years of the policy, and many limit renewability to age 80 or 90. Mutual of Omaha also offers a wide variety of riders on its ROP policies, including a waiver of premium rider, accidental death benefit, and children’s term rider.
However, if you want an ROP policy for anything other than a 30-year term, you’ll want to consider other insurers. Also, the company uses a process called simplified underwriting to issue no-exam term policies. While this is a swift way to issue coverage, rates could be better with companies that offer another form of no-exam underwriting called accelerated issue.
Most Terms Available : AAA
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More terms available than many competitors offer
Can apply without a medical exam
Convertible until age 65 or the end of the term period
No riders available on ROP policies
Can’t start claims online
More complaints than expected
Those who are unsure of how long they want their term insurance to last will be happy to find that AAA has 15-, 20-, and 30-year terms available on its ROP policies—that’s more terms than is typical. If you prefer the ease and convenience of no-medical-exam life insurance, then AAA may be a good fit for you because it’s one of only three of our top-ranked life insurance companies for ROP term to offer no-medical-exam underwriting. However, if you want to customize your policy with riders, you won’t have that option with AAA’s ROP policies. And AAA receives more complaints than expected for a company of its size, according to data compiled by the National Association of Insurance Commissioners (NAIC).
Best for Corporate Responsibility : Assurity
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Certified B corporation
Flexible conversion options
Fewer complaints than expected
Can apply without a medical exam
No online application (without agent assistance)
Unimpressive financial strength
Assurity has a lot of good traits, but we especially like that it takes corporate responsibility to the next level. Assurity is a certified B corporation, which means the company meets high standards of accountability and transparency, and it's committed to social equity and the environment. It also receives fewer complaints than expected for a company its size. Plus, you can add a range of riders to your coverage, including a disability waiver of premium and a critical illness benefit.
The conversion period for ROP and other term policies lasts until just two years shy of the policy’s level term period (or until you turn 65). For example, if you purchase a 30-year policy, you can convert it to permanent coverage until year 28. That’s not as good as the options provided by Mutual of Omaha and AAA, but it’s still good.
Like our other top companies, Assurity lets you apply for coverage without a medical exam, but you can’t do it without the help of an agent. The company receives an A- financial strength rating from AM Best, which, while solid, is still the poorest of all “best” ROP companies in this list.
Best for Financial Stability : State Farm
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Highest financial stability rating available
Very few customer complaints
No. 1 customer satisfaction rating
No online application
Living benefit riders not included
Choosing a financially stable life insurance company can give you confidence that the company will be able to make payouts decades from now. State Farm earned a A++ rating from AM Best—the highest rating of any company on this list. AM Best ratings measure how strong and stable an insurance company is and how likely it is to meet its contractual obligations now and in the future. In addition to being financially stable, State Farm came in first in a J.D. Power 2021 customer satisfaction survey, which makes sense because the company received far fewer customer complaints than expected, according to the NAIC.
We also like that you can convert your ROP coverage to a permanent policy until the end of the term or age 75, or renew the term until 95. Terms are available for 20 and 30 years, and you can add a premium waiver or children’s term rider to your policy. You can even bundle this coverage with a State Farm auto policy for additional discounts.
Best for Wellness Perks : John Hancock
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Wellness program provides discounts and rewards for healthy living
Includes a terminal illness rider
Same day decision
No-exam policies available
No online application
Cannot be converted to permanent coverage
John Hancock's wellness perks make it stand out from the other life insurance providers we examined. Its Vitality PLUS program gives policyholders up to 15% in premium cashback every year that they participate in the program, plus discounts on a variety of wellness products, tools, and subscriptions. You can also save up to $600 on fresh fruits and vegetables annually through the Vitality PLUS program.
ROP policies are available for 25- and 30-year terms, may not require a medical exam, and may be approved the same day. They also include a terminal illness rider at no extra cost. But policyholders who purchase the ROP rider are only eligible to receive refunds of up to 75% of premiums paid at the end of the level-term policy—that’s lower than the full refund some competitors offer.
The biggest complaint about the ROP version of John Hancock’s policies is that they’re not convertible—meaning you can’t exchange your policy for a permanent one—and they’re not available to applicants over 50 years old.
Final Verdict
ROP term life insurance is not appropriate for everyone. You may prefer to pay a much lower premium and forgo a refund in order to invest or save the difference in your own account. But if this type of policy piques your interest or works with your lifestyle, you won’t have many companies to choose from. Of the 91 carriers we reviewed, only nine offer ROP term coverage.
If nothing but the most financially secure company will do, consider State Farm and its A++ AM Best rating. If you want at least one living benefit on your policy, get quotes from Mutual of Omaha, John Hancock, and Assurity (make sure your quote from Assurity includes the rider). Or if you need a wide selection of ROP term periods, look to AAA. Consider your needs and review the companies on this list before looking elsewhere.
Guide to Choosing the Best Return of Premium Life Insurance
What Is Return of Premium (ROP) Term?
A ROP term life insurance policy provides a death benefit in the event that you pass away, but also offers a refund on paid premiums if you outlive the term of your policy. Because of this added benefit, ROP life insurance can cost more than a regular term life insurance policy.
A standard term life insurance policy lasts for a set period of time—usually between 10 and 30 years. But ROP policies tend to have fewer term options available, such as only a 20- or 30-year term period. If you pass away during that time, your beneficiaries will receive a death benefit, but if you outlive that period, neither you nor your heirs get anything.
It’s possible to have a cash value component with a ROP policy that makes it possible to borrow against the policy while it’s still intact. When you do this, the loan amount will be deducted from your refund if you outlive the policy.
Usually, you purchase a ROP policy as a rider or optional benefit in addition to a standard term life insurance policy. In some cases it is possible to buy a standalone ROP policy, but this is not as common.
There are some downsides worth watching out for—if you terminate your policy early, you likely won’t get your premiums back.
Is Return of Premium Life Insurance Worth It?
Because ROP life insurance can be more expensive than a regular term life insurance policy, it’s important to evaluate whether or not you’ll get your money’s worth out of this type of policy. This is especially true since the premiums aren’t invested, don’t earn interest, and their value depreciates over time thanks to inflation.
If you outlive the policy term and don’t take out any loans, the cost for the insurance can be $0 (unless you count lost investment and interest potential). An ROP policy can act as a vehicle for saving money and it does build a cash value that you can borrow against.
If you decide an ROP policy is the right fit for you, make sure you spend some time shopping around with different providers to see who can offer you the best premium rates.
Some insurance providers will take your credit score into account when determining what your premium prices should be, so it can be helpful to spend some time improving your credit score before applying for an ROP policy, as they do tend to be pricier than traditional term policies.
Alternatives to Return of Premium Term
If you decide the higher price of an ROP term policy isn’t worth it compared to a standard term policy, you have the option of buying normal term coverage and investing the difference you save by not going with the more expensive ROP policy. That way, you can potentially make enough money on your investments to make up for the fact that if you outlive the term policy, you won’t see a return of any premiums.
You also have the option to purchase a permanent life insurance policy that can last your entire life. Permanent life insurance policies have a cash value that can accumulate and earn interest. You may be able to withdraw or borrow from the cash value once it's large enough, and you don’t have to pay any taxes unless you withdraw more than the amount you paid in premiums.
How to Choose a Return of Premium Term Policy
ROP term life insurance policies aren’t a common offering among insurers. When looking for an ROP policy, these are a few factors you’ll want to take into consideration to make sure you find the best possible fit for your personal and financial needs:
- Cost: It helps to compare the price of an ROP term policy to a standard term policy to see how much more you’ll pay.
- Financial strength: Take a look at AM Best‘s financial stability ratings to get an idea of how financially stable an insurance company is and how likely it is to honor its contractual obligations.
- Customer satisfaction: You can review the The National Association of Insurance Commissioners (NAIC) complaint index to get an idea of how satisfied customers are with a particular life insurance company. And check out J.D. Power’s customer survey of 21 of the largest insurance companies to see how they fare.
- Convertibility: If you think you may want to convert your term policy to a permanent policy down the road, make sure you go with a company that makes conversion possible.
- Included and optional riders: Some riders will be included for free and some will require paying an additional cost. When comparing the cost of life insurance providers, make sure you take the cost of any additional riders that you want into account.
How We Chose the Best Life Insurance Companies
In order to compile our list of the best ROP term life insurance companies, we developed a comprehensive life insurance methodology. We started off by researching what consumers want from life insurance companies, and for that, we looked to third-party consumer studies, including J.D. Power’s 2021 U.S. Life Insurance New Business Study and the 2021 Insurance Barometer Study, by Life Happens and LIMRA.
With those findings in mind, we gathered more than 50 data points on 91 life insurance companies, including ratings for financial strength, customer satisfaction, and customer complaints, as well as information about years in business, online tools, no-exam options, dividends, maximum issue ages, and available riders.
Our review process gave preference to companies that provide online quotes, no-medical-exam coverage, same-day application decisions, and robust self-service website features. We also considered each company’s financial stability and record of customer complaints. Companies received ratings boosts for lengthy available terms, and the ability to convert and renew coverage past the level-premium period. We ranked each company according to the following categories and weights.
- 20%: Same-day decision, online quotes, online application
- 20%: Website features
- 15%: No medical screening required
- 10%: Financial stability
- 10%: Consumer complaints
- 10%: Maximum term
- 10%: Conversion features
- 5%: Renewability beyond level premium term
To finalize our list, we compared individual offerings between top companies by considering third-party ratings and delving deeper into product specifics, including available living benefits and other riders. We used this research to determine the best ROP term life insurance companies.
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