Return of Premium Life Insurance
Return of premium life insurance is a type of term life insurance with return of premiums paid throughout the policy term. Like other forms of life insurance, if you die during the term of the policy, your family will receive the lump sum benefit of the policy. If, however, you live and the policy comes to term, you are repaid for all of the premiums that you paid!
we are all looking for ways to save some money, right? Have you ever heard of term return of premium? It is most often referred to as "ROP" or just return of premium life insurance.
Do not get confused by the name; it is just a term life policy just like any other term policy. The one difference being that term return of premium (ROP) will give you back a huge percentage of the money you paid for the policy if you out live the term. Then you would actually have been covered with life insurance and paid next to nothing for it. In fact, there are some "A" rated carriers that return 100% of the premium. This would probably be the cheapest way of having life insurance unless you can find someone who is willing to pay for your policy for you.
The other great advantage to these (ROP) policies is the forced savings plan if you do not pass away. What is that suppose to mean? Imagine, if you will, that you purchased a 20- year, million-dollar term return of premium policy today. Now, lets say that your premium for this policy is fifty dollars a month or six hundred dollars a year. Alright, now in twenty years you are still alive and feeling great maybe even getting close to retirement. The only thing that matters is you are still alive so now you get a check from the insurance company for twelve thousand dollars. To recap you were covered for a million dollars if you passed away for twenty years of your life and it cost you nothing. This is a product that people should take a closer look at!
Features of ROP:
ROP life insurance works much like other types of life insurance. If you die while you are a policy holder, your beneficiaries, usually your family, receives a lump sum, valued at whatever the value of the policy is. If you do not die, at the end of the term, you are repaid the premiums, provided you keep your life insurance with the company the entire term of the policy.
Cost of ROP Life Insurance
Return of Premium life insurance does cost more than regular term life insurance, since the company will be paying you back at the end of the term. But, most customers who use return of premium life insurance feel that the extra expense is worth it, because if they live through the term of the policy, they are not out anything. And the added cost is usually only a few dollars a month, which is well worth the investment. The typical difference between return of premium insurance and traditional term insurance is 30%.
The reason that the life insurance company will be able to repay their return of premium clients their premiums at the end of the term is that they are investing the premiums during the policy term. Each time you pay your monthly premium, it gets invested, bringing income into the company. Also, many people choose to take their business to another company before the term is up. When this happens, they do not receive their premiums back. That money, as well as the money from investments, is now available to pay you back for your premiums.
