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Disability / Salary Insurance - Return of Premium

I would like to introduce you to a disability insurance, which can offer a return of premium if you the insured do not become disabled. Some policies offer a partial refund of premium if the individual insured stays healthy.

Return of Premium Riders

Some life insurance policies are structured so that policyholders can benefit if the company’s experience on a large block of policies is better than expected. The company will pay out such proceeds in the form of policyholder dividends. Disability insurance does not have this feature. Disability insurance is a “pure” insurance that pays if the insured event occurs and does not pay if the insured event does not occur.

Most clients understand that disability is an event that must be insured. They understand that many disabilities, such as a car accident, are beyond their control. However, at the same time of purchase they feel healthy and “invulnerable”. It is hard for them to imagine themselves being disabled, and hard to imagine themselves using the disability policy they know they must own. This feeling of “wasted money” is in itself an issue that needs to be addressed. It is for such clients that the Return of Premium rider (ROP) was developed.

The ROP rider refunds a specified percentage of premiums after the policy has been in-force a specified number of years, provided few or no claims have been paid. Basically the rider rewards good claims experience at the individual policy level. The percentage return and return period may vary.

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