Return of Premium (ROP) term life insurance is a fairly new product that combines the advantages of traditional term life insurance with a return of premium feature. At the end of the level premium period, 100% of the premiums paid will be returned to the policy owner, excluding substandard fees and any extra charges.
Now, there is a drawback to this feature. You will end up paying more for the ROP premiums in comparison to the standard term life insurance. The insurance company generally invests the additional money for the premium during the term of the policy, which will then allow them to return your premiums to you at the end of the term period.
One point to consider is term life insurance rates have dropped over the past decade, generally because people are living longer. If you own a standard term life policy, there's no real penalty in dropping that policy in favor of new and less expensive term life policy. On the other hand, if you own a ROP policy, dropping the policy before the full term has expired means that you will have invested more money for your life insurance coverage and the premiums you've paid may only be partially refunded.
