Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Oct 29, 2021

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The Brief

  • Life insurance rebates are illegal in most of the country
  • This is meant to prevent fraud and malpractice
  • Certain types of life insurance policies can earn you additional value

If you’re looking for life insurance companies that allow rebates, you may be out of luck. Life insurance rebates are illegal in most of the United States. That being said, but there are still some term and whole life insurance policies that can accrue additional wealth while you’re living.

If you’re interested in life insurance companies that don’t allow rebates, enter your ZIP code into our free quote tool above.

Are there any life insurance companies that allow rebates?

You’re unlikely to find an insurer that will give you a life insurance rebate because it is illegal in nearly every state to do so. While getting additional benefits with your life insurance policy may seem like a good deal, it is unfair to some insurers.

If life insurance companies were allowed to give insurance rebates, it would provide an unfair advantage to larger insurers that have the assets to spare. Small insurers could easily be priced out of the business by large companies that are able to provide extra benefits with their policies.

That being said, there are still life insurance policies that provide additional value. Some examples of policies with additional value include:

  • Return of premium — This term life policy rider returns a portion of your premiums if you outlive the term.
  • Cash-value life insurance — A permanent life insurance policy may put a portion of your premiums towards a savings account that can be borrowed against. This can be a feature of the policy or a rider.
  • Mutual insurance — Mutual life insurance companies often provide dividends after a successful year.

These types of life insurance policies can provide value to the policyholder as well as their beneficiaries. Below are some examples of life insurance rates for term and permanent policies to give you a chance to compare life insurance quotes:

Annual Term vs Whole Life Insurance Rates: $100,000 Policy

Policyholder Age & Tobacco UseAverage Annual Term Rates: MaleAverage Annual Term Rates: FemaleAverage Annual Whole Rates: MaleAverage Annual Whole Rates: Female
25-Year-Old Non-Smoker$178.54$160.57$1,124.40$1,018.92
35-Year-Old Non-Smoker$185.04$165.91$1,538.88$1,355.16
45-Year-Old Non-Smoker$267.89$240.25$2,289.48$2,918.04
55-Year-Old Non-Smoker$524.95$406.94$3,538.08$5,060.28
65-Year-Old Non-Smoker$1,273.12$880.66$6,336.00$2,445.24
Average Annual Rates for Non-Smokers$485.91$2,235.31$2,965.32$2,445.24
25-Year-Old Smoker$321.76$248.75$1,387.44$1,282.08
35-Year-Old Smoker$360.23$286.18$1,886.52$1,749.72
45-Year-Old Smoker$637.51$493.20$2,692.44$2,469.12
55-Year-Old Smoker$1,364.09$991.63$4,196.88$3,846.12
65-Year-Old Smoker$3,245.05$2,235.31$7,200.48$2,445.24
Average Annual Rates for Smokers$1,185.73$851.01$3,472.80$3,034.32
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Whole life insurance is typically more expensive than term because it covers your entire life and may have a cash value component.

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Can I still buy life insurance with extra cash value?

While life insurance rebates aren’t legal, there are still several policies that can provide you with extra value. With planning and the right policy, you can ensure that your loved ones are covered while you also collect the additional value on your policy.

There are many options to optimize the value that you receive on your policy, with some insurers even allowing you to invest those earnings.

Mutual Insurance Companies

A mutual insurer is an insurance company that is owned by its policyholders as opposed to being publicly or privately traded on the stock market. With a policy at a mutual insurance company, the policyholder gets some benefits they wouldn’t get with a stock insurer. Benefits include:

  • Policy dividends — If the insurer does well in a given year, it will provide dividends to its policyholders. This typically comes once a year, although not guaranteed, and can range from $50 to $100.
  • Vote on the board — With an in-force policy at a mutual insurer, policyholders get a choice over who runs the insurance company and therefore controls the future of their coverage.
  • Customer dedication — Considering the business is focused on its policyholders, mutual insurance customer service will be that much more dedicated to solving issues.

A mutual insurance company can provide additional value that you can use however you want, in addition to creating an environment where you can thrive as a policyholder.

Life Insurance Policies That Accrue Value

When life insurance companies that allow rebates aren’t available, you can still compare different types of life insurance policies that accrue cash value in addition to the death benefit. These policies and riders range from a return on your premiums to investments and long-term care coverage.

Term life insurance only lasts for a period of your life, and if you outlive it, you get nothing. A return of premium life insurance rider can ensure that you get some money back, even if the premiums may go up.

Considering the policy lasts for your entire life, permanent life insurance offers a few more options for additional value. Some of the permanent life insurance policies that accrue value include:

  • Cash value — A portion of your premium each month goes to a savings component, which may have an investment option.
  • Variable universal — This type of policy invests the cash value into stocks, bonds, and mutual funds to grow value. 

While you cannot buy life insurance from companies that allow rebates, these types of policies can help you accrue additional value that you can use to pay your premiums or any other expenses you may have.

Why are life insurance rebates illegal?

A life insurance rebate is a term for an insurance agent giving a portion or all of their commission to the policyholder to secure their business. It is considered underhanded and unfair across the insurance industry.

For example, if the insurance agent works for a larger company, they can likely afford to give you rebates that smaller insurers cannot. Life insurance companies that give rebates create an unhealthy industry environment in which smaller insurers can’t compete with their larger competitors.

Most insurers won’t consider giving life insurance rebates, even in the two states where it is legal:

  • California
  • Florida

The process is still frowned upon in both states and you’re more likely to find a return of premium or some kind of investment option rather than an insurer willing to risk their reputation for a rebate.

Life insurance rebates aren’t legal due to the fact that they can set up an insurer or policyholder for fraud. If an agent is willing to give up a large portion of their incentive to get you into a policy, this is a red flag.

Some agents may be more willing to give a life insurance rebate due to the wide bonus, and this can leave you tricked into buying more coverage than you need.

Life insurance agent commissions are typically based on the first year’s premiums that you would pay as the policyholder. The agent receives a large lump sum as a reward for the policy, but offering an insurance rebate involves the agent sacrificing a portion of this commission for you, the client. 

Since agents will make more money if you buy a more expensive policy, you could be talked into buying more coverage than you need. This is why it’s always important to compare life insurance quotes online first before you buy so you already have an idea of what you should be paying for coverage.

What You Need to Know About Life Insurance Companies That Allow Rebates

Life insurance companies aren’t allowed to provide rebates in most places due to the fraud and malpractice that can take place, but there are still ways to earn additional value on your life insurance while you’re still living.

Return of premium riders on term life insurance policies can provide you with capital after you outlive your policy, and variable universal whole life policies provide investment options for your premiums.

If you’re interested in comparing these policies from life insurance companies that don’t allow rebates, enter your ZIP code into our free quote tool below.