With a return of premium benefit QLAC purchasers can assure themselves that they will get their premium investment back in the event of a premature death.
The IRS regulations allow QLAC contracts to pay a Return of Premium (“ROP”) death benefit when the contract owner dies before collecting payments equal to the QLAC premiums paid. The ROP equals the balance of premiums not recovered via annuity payments. This is a benefit which the insurance carrier will charge for, and the purchaser must decide between a higher benefit without a return of premium rider if they do die prematurely, and the certainty of getting their premium back but with a lower payout should they life a long time. When evaluating a QLAC purchase, buyers should explore purchases with and without Return of Premium benefits.