What is the return of premium rider?

The return of premium rider is designed to provide a benefit that aligns with the premiums paid over the life of a term insurance policy. This rider guarantees that, at the end of a specified term, the total amount of premiums that the policyholder has contributed will be returned if the insured person is still alive. Hence, it effectively equates to an increasing amount of term insurance equal to the premiums paid, reflecting a cash value component that is not typical in standard term insurance policies.

This rider enhances the appeal of the policy by offering the potential for a refund of the premiums if the term concludes without a claim, making it a more attractive option for individuals who seek both protection and a form of savings or investment potential. It creates a safety net for the policyholder, as they can receive back the total amount they have invested in the policy, which is particularly appealing to those concerned about the loss of premium payments if the coverage is not needed.