How does a return of premium rider work?

A return of premium rider is designed to provide a refund of the premiums paid if the insured person is still alive at the end of the policy's term. This means that at the conclusion of the specified term, if the insured has outlived the policy, they receive back the total amount of premiums paid throughout that term. This rider is appealing to policyholders who may want the security of life insurance while also wanting a form of investment or return on their premiums if they do not pass away during the policy term.

The other options do not accurately describe how a return of premium rider functions. Options that refer to increased death benefits for accidental death, immediate funds upon diagnosis of a terminal illness, or borrowing against premiums pertain to different types of riders or provisions within life insurance policies that serve other specific purposes. For instance, accidental death benefits enhance the death benefit under certain circumstances, while terminal illness riders provide immediate financial benefits upon diagnosis, and loan provisions allow borrowing against the cash value of a policy rather than the premiums themselves. Each serves its unique role within life insurance products.