Return Of Premium Riders: A Guaranteed Return On Investment

Resize image project - 13 October 2026 at 12.06.14

One of the most common objections advisors hear when discussing disability income insurance is, “What if I never use it?” After all, many clients may spend decades paying premiums and never file a claim.

While the income protection and peace of mind provided by disability insurance are valuable benefits on their own, some clients struggle to see the value in paying for coverage they hope never to need.

Return of Premium (ROP) riders were designed to address this concern by allowing policyholders to recover a portion, or in some cases all, of the premiums paid if they reach the end of the policy period without a significant claim.

How it Works

Consider a 39-year-old private school principal earning $80,000 annually who purchases a disability income policy providing a $4,000 monthly tax-free benefit.

His monthly premium is $86.49 per month, with his total premium paid reaching $27,518.40 at age 67.

However, if he adds the Return Of Premium Advantage to his plan – his monthly premium would be $143.57 – BUT he would receive a check for a tax-free amount of $45,680.60 at the end of his policy, assuming no claims placed.

For an additional $57.08 per month, the client maintains access to up to $1.344 million of disability protection while accumulating a guaranteed potential refund of $45,680.60 at age 67, equivalent to approximately a 5.77% annual return on the additional rider premium, assuming no benefits are paid.

This creates a unique value proposition that blends income protection with a potential future return of premiums. While the rider increases the overall cost of coverage, supporters view it as a way to reduce the “use-it-or-lose-it” perception of disability insurance and encourage clients who might otherwise postpone purchasing coverage.

*The IRR will vary subject to clients’ age, occupation and benefit amount, and is not available in all states. The ROP is not an investment and should not be compared to any specific investments, securities or other assets with value.