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- With a return of premium (ROP) rider, you get your premiums refunded if no claims are made, either upon death, expiry, or policy surrender, offering additional peace of mind
- The cost of adding an ROP rider can increase your premiums by 30-50%. For example, a basic critical illness policy costing $79.65 per month could rise to $117.99 with an ROP rider, adding an extra $33.84 monthly
- While the ROP rider increases the premium, it provides significant benefits such as the possibility of receiving a refund of premiums, making it a good choice for those seeking financial security
- ROP benefits in Canada are not taxable since the refund is considered a return of your own premium payments, which were made with after-tax dollars
- How does a return of premium work?
- Can I get a return of premium on term life insurance?
- Benefits of return of premium
- Drawbacks of return of premium
- Which critical illness insurance providers offer return of premium riders?
- What is the cost of a return of premium rider in critical illness insurance?
- Is return of premium on critical illness taxable?
- Comparison of return of premium riders with traditional critical illness insurance
- How do I get a return of premium coverage?
- Frequently asked questions
A return of premium (ROP) rider in critical illness insurance is an optional add-on that refunds the premiums you’ve paid if you don’t make a claim during the policy term or under specific conditions, such as surviving the term or passing away.
If you’re considering critical illness insurance, adding an ROP rider can help you feel more secure about your investment. This rider ensures that even if you never need to use the coverage, you’ll still benefit financially.
In this article, we’ll explain how the return of premium rider works and benefits your finances.
How does a return of premium work?
In critical illness insurance, return of premium riders are available usually as an add-on. With this rider, you pay your monthly premiums as usual, and the policy provides coverage for critical illness or disability claims.
However, if no claim is made or under specific conditions, the insurance provider refunds a portion or all of the premiums you’ve paid.
There are three common types of ROP:
- Upon death (Return of premium on death – ROPD): If you pass away while the policy is active, the insurer refunds all eligible premiums to your appointed beneficiary
- At the end of the contract (Return of premium on expiry): If the policy term ends without a claim, the insurer refunds the premiums paid
- On cancellation or surrender (Return of premium on cancellation/surrender): Some insurers offer partial or full premium refunds after a set number of years or at specific ages, like 65 or 75
Each provider has unique rules about how premiums are refunded and under what circumstances. To ensure you choose the right option for your needs, we recommend that you schedule a call with our experienced advisors.
Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them below.
Can I get a return of premium with critical illness insurance?
Yes, you can get a return of premium (ROP) rider with critical illness insurance. This optional add-on allows you to receive a refund of the premiums you’ve paid if no claim is made during the policy term, on the expiry of the policy or death.
Since critical illness coverage pays out a lump sum if you’re diagnosed with a covered condition, the ROP rider ensures your investment isn’t lost even if you remain healthy.
What are the benefits of return of premium riders?
Return of Premium (ROP) riders provide peace of mind by refunding premiums, adding value to your insurance, offering flexible refund options, and reassuring risk-averse policyholders.
A return of premium rider:
- Ensures that you get a refund of premiums if no claim is made
- Turns your policy into a savings tool with either coverage or a payout
- Offers reassurance for those worried about losing their investment
- May offer refunds on expiry, surrender, or death, depending on the rider
What are the disadvantages of return of premium riders?
The disadvantages of return of premium riders are that they come with higher premiums, require long-term commitment, may exclude certain fees from refunds, and could limit potential investment opportunities.
- Higher premium costs: The rider significantly increases your policy premiums
- Long-term commitment: Requires maintaining the policy for the full term to benefit
- Limited returnable premiums: Refundable premiums may exclude certain fees or add-ons
- Opportunity cost: Extra premiums could be invested elsewhere for potentially higher returns
Which critical illness insurance providers offer return of premium riders?
Many Canadian insurance providers such as Beneva, Sun Life, RBC, Industrial Alliance, Desjardins, Manulife, Canada Life, and Empire Life offer return of premium (ROP) riders.
These riders are offered with different options like Return of Premium on Death (ROPD), Return of Premium on Expiry (ROPX), Return of Premium on Cancellation (ROPC), and other flexible refund features.
Insurers offering return of premium riders with critical illness plans
| Insurance Provider | ROP Options |
| Beneva | ROPD, ROPX, ROPC |
| Sun Life | ROPD, ROPX, ROPC |
| RBC | ROPD, refunds all premiums if the policyholder dies while the policy is active |
| Industrial Alliance | ROPD and flexible ROP options that vary by term |
| Desjardins | ROPD, ROPX, ROPC |
| Manulife | ROPD, ROPX, Return of Premium on Surrender (ROPS), with partial/full refunds based on term |
| Canada Life | Various ROP options included in critical illness plans; specifics depend on the plan |
| Empire Life | Return of Premium on Surrender or Maturity, offering percentage refunds if no claims are made |
What is the cost of a return of premium rider in critical illness insurance?
The cost of adding a return of premium (ROP) rider in a basic critical illness policy costing $79.65 per month could be $117.99 per month.
A return of premium rider significantly increases your critical illness insurance premiums, typically by 30–50%, depending on the rider type, insurer, and your policy details.
These costs also differ based on the type of return of premium rider:
- Return of premium on death (ROPD): Lower additional cost since it refunds premiums only if the insured passes away during the policy term
- Return of premium on expiry (ROPX): Higher cost as it guarantees a full refund of premiums if no claim is made by the end of the term
- Return of premium on surrender (ROPS): Costs are similar to ROPX but allow partial refunds if the policy is canceled early
Additionally, long-term policies like term-75 or lifetime coverage tend to incur higher premiums for ROP riders due to extended refund commitments.
Is a return of premium on critical illness taxable?
No, the return of premium (ROP) benefit on critical illness insurance is generally not taxable in Canada. When you purchase a critical illness insurance policy, you pay your premiums using after-tax dollars, meaning the money you use to pay for the policy has already been taxed.
Therefore, when you receive a refund of those premiums through an ROP rider whether upon expiry, surrender, or death, it is treated as a return of your personal contributions, not as income.
Comparison of return of premium riders with traditional critical illness insurance
Return of premium riders enhance critical illness policies by offering premium refunds, unlike traditional plans that provide coverage only. Here’s how these differ:
Premium refunds:
- ROP riders: Refund premiums if no claim is made (on expiry, death, or surrender)
- Traditional CI plans: Do not refund premiums regardless of claims
Cost:
- ROP riders: Typically 30–50% more expensive
- Traditional CI plans: More affordable but lack refund benefits
Flexibility:
- ROP riders: Allow refunds under specific conditions (expiry, death, surrender)
- Traditional plans: Offer no such options
Best suited for:
- ROP riders: Ideal for risk-averse individuals seeking financial security
- Traditional plans: Suitable for those focused on lower premiums
How do I get a return of premium coverage?
You can add a return of premium rider to your critical illness insurance policy while purchasing the plan or during eligible upgrade periods.
To get ROP coverage, you need to consult with your insurance provider to explore available rider options. Typically, a return of premium rider is added when purchasing a long-term critical illness policy. The process may involve assessing your eligibility based on age, health, and other criteria.
To qualify for ROP coverage, you must meet specific insurer requirements regarding age, policy type, and health status.
- Age requirements: Most insurers offer ROP riders to individuals aged 18–65
- Policy type: ROP is typically available on long-term critical illness policies, not short-term plans
- Health status: Eligibility may require passing a medical exam or meeting the insurer’s health guidelines
- Consistent premium payments: Some insurers mandate a history of timely premium payments
- Insurer-specific rules: Each provider may have unique conditions for adding ROP, such as coverage amount or policy terms
Frequently asked questions
What happens to my return as a premium rider if I cancel my policy early?
If you cancel your critical illness insurance policy early, the impact on your return of premium (ROP) rider depends on the specific terms of the rider. Policies with a Return of Premium on Surrender (ROPS) option may provide a partial refund based on how long the policy was active.
For example, you might receive 50% of your premiums back after 20 years, with the percentage increasing the longer you keep the policy. However, not all ROP riders include this option, so it’s important to review your policy details.
Can return of premium riders be added to existing critical illness policies?
In most cases, return of premium (ROP) riders cannot be added to an existing critical illness insurance policy. ROP riders are usually selected at the time of purchase and integrated into the policy from the start. If you are interested in this feature, you may need to apply for a new policy that includes an ROP option.
How does a return of premium rider affect my overall premium rates compared to standard policies?
Adding a return of premium (ROP) rider to your critical illness insurance policy can significantly increase your premium rates—typically by 30–50%. The exact increase depends on the type of ROP rider (e.g., on expiry, death, or surrender), the policyholder’s age, and the duration of the policy.
For instance, a standard premium of $79.65 per month could rise to $117.99 with an ROP rider, reflecting an additional $33.84 monthly. While the cost is higher, the rider offers added financial security and peace of mind.
Are there any age restrictions for purchasing a return of premium rider with critical illness insurance?
Yes, there are generally age restrictions for purchasing return of premium (ROP) riders, and these vary by insurer. Most providers allow ROP riders for policyholders up to a specific age, such as 60 or 65, since the rider often involves long-term commitments or payouts tied to policy maturity.
Additionally, age impacts the cost, as older policyholders typically face higher premiums for adding an ROP rider. Be sure to check the eligibility criteria with your insurer.
The return of premium (ROP) rider is an optional add-on to critical illness insurance, offering policyholders the assurance that premiums will be refunded if no claims are made. There are three main types of ROP: on death, expiry, and surrender, with each having specific conditions for a refund. While the rider provides valuable benefits, it comes at a higher premium cost. Fortunately, ROP benefits are generally not taxable in Canada. If you’re considering an ROP rider, consult with an advisor to understand eligibility, costs, and the best option for your needs.
