Term life insurance with a return of premium is a relatively new option when it comes to term life insurance. It can be a great option for someone who is worried about outliving their term life insurance policy. A term return of premium is exactly what it says. If you don’t die during the term, and the policy term expires, then you get all the premiums back that you paid in over the entire policy period. In a traditional term life insurance policy, if you outlive your term and the term period expires, all the premium you paid in over the years is gone.
Few people could argue with the idea that it’s better to die knowing you’ve made arrangements to financially protect loved ones than it is to leave the people you care about the most grieving your death while trying to survive financially.
Where people get hung up about insurance, and perhaps the biggest reason people don’t invest in a policy, is the cost. Now, back when whole life or permanent life insurance was the only option, a lot of people went without coverage even though they may have liked to have owned a policy. The solution to making life insurance more widely available was term life insurance, but even then people hesitated to invest because they felt that if they didn’t, in fact, die within the pre-set term and their beneficiaries didn’t receive the benefits of that which they’d been paying into, then what was the point? Enter term return of premium.
Term return of premium was created as an additional option for those buying term life insurance. Basically, by paying premiums that are slightly higher than regular term life insurance, the policy holder will receive all of the money they paid in premiums, should they survive the duration of their term. Term return of premium has encouraged many more people to invest in term life insurance because they have greater assurance that their money will not be lost in the end.
Ways to save on term return of premium life insurance rider:
Buy a longer policy. A longer term length lowers the monthly cost when you add the return of premium life insurance rider to a policy. For example, a 30 year term life insurance policy is cheaper on a monthly basis that 20 year policy at the same amount of coverage. Let’s take a look at a few examples below for a 40 year old male looking to add a return of premium rider to his policy.
1. $500,000 for 30 years
Transamerica Life Insurance Company
Trendsetter Super 30 with ROP / Preferred Non-Smoker
$143.30 per month
2. $500,000 for 20 years
Transamerica Life Insurance Company
Trendsetter Super 20 with ROP / Preferred Non-Smoker
$150.73 per month
How is that possible you ask, you would think if the life insurance company is covering me for a longer period of time why would it be cheaper? Well the longer the term, the more time the insurance company has to invest to get returns on your money.
It’s that simple. This is just one example of this. You can see even more of a price gap between the two depending on your age, and how much you are looking to buy.
If you have questions regarding term return of premium or any of the policies offered at TermLife-Insurance.com, feel free to contact us and one of the licensed agents will be happy to help you.
