Return of Premium Term Life Insurance 101

Definition of Return of Premium Term Life Insurance:  If the insured does not pass away before the end of the term period the premiums that are paid over that term will be returned.  You are paid back in complete full every dollar in premiums that you paid in over the term of the policy.  Generally speaking it is more expensive than regular insurance because it is a higher risk to the insurance company.  For many people however they feel like it is a great idea to get all of their money back that they paid in.  During that time the insurance company has your money invested into a capital growth fund that pays them over the years and it make it possible for them to repay you at the end of the term.  

Many people love this idea because the traditionally term life insurance policy will not pay you after the term ends. Many people like the structure and advantages that term life insurance offers and believe that they will out live their policy but, would like a policy just in case. This is where Return of Premium Term Life Insurance comes in and will return your entire amount of premiums paid in. The icing on the cake....it is completely tax free!!!

It does cost more than traditional policies and the price will range among companies that you choose, length of term and, your age.  For example a 30 year Return of Premium Term Life Insurance will cost almost twice as much as traditional life insurance policy.  For any terms that are shorter than that it may cost 3,4,5 times more than a traditional policy.  

The type of people that consider it are people that believe that they will live longer than their policy and people that do not like paying all that money into a traditional life insurance plan and not get anything out of it when it expires.  

Surrendering your policy happens with life.  You never know when a situation will arise and you will no longer be able to afford you policy anymore.  The great thing about the Return of Premium Term Life Insurance is that even if you are forced to surrender the policy some of the premium will still be returned.  The amount varies on how long you have had the policy for.

Life happens and sometimes we need to be insured for our families sake.  Return of Premium Term Life Insurance can provide some great avenues for those folks that like the idea of getting a return of your premium.  However, for some other folks it does not make sense.  The best way to choose is to know exactly what you are looking for and communicate with your family.  That was they know what is going on and you can measure their input.  Knowing what you want and communication is what will help you get what you are looking for in an insurance policy.