Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A return-of-premium (ROP) term life policy provides that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A return-of-premium term policy is a term insurance variant that refunds all (or a percentage of) the premiums paid if the insured outlives the term. Because the insurer must return the premiums it collected for insureds who survive, the premium charged for ROP term is substantially higher than for a comparable ordinary term policy. The refunded money is generally treated as a return of cost basis. The trade-off is that the insured pays more each year in exchange for getting money back if the coverage is not used during the term.
Why the other options are wrong
- B) Waiving premiums on disability is the function of a waiver-of-premium rider, not the return-of-premium feature.
- C) The face amount is paid to the beneficiary on death in any term policy; the ROP feature applies to survivors, not to death claims.
- D) Term policies generally build no cash value; ROP term returns premiums (tax basis), not a cash surrender value.
Memory hook
ROP term = pay more now, get it all back if you outlive the term. A refund for survivors, not death.