An ancillary benefit returning the premiums paid if the insured dies before the main benefit could ever be drawn.
A return of premium rider is an ancillary benefit that pays back to beneficiaries all or part of the premiums paid where the insured dies before ever drawing the main benefit. It was invented for a precise problem: in a deferred annuity contract, death during the accumulation phase wiped out every contribution, a result technically correct in pooling terms but unbearable for families, to the point of deterring people from buying at all. Technically it adds a term life cover to the retirement savings contract, and its cost reduces the future annuity accordingly, which makes it an explicit trade between protecting heirs and the level of lifetime income. It also appears in some loan contracts and in immediate annuities, as a reversion to a survivor or a minimum number of guaranteed payments. The problem solved is loss aversion toward accumulated savings, which weighs more on a saver's decision than the mathematical expectation of the contract.
France's Madelin retirement contracts, created by the act of February 11, 1994 for the self-employed, allowed only a life annuity at maturity: the return of premium rider was the sole way to prevent death at fifty-five from erasing twenty years of contributions. The retirement savings plan introduced by the PACTE Act of May 22, 2019 made the arrangement largely pointless by allowing a lump sum.
restitution des cotisations, garantie de remboursement des primes