Return of Premium Life Insurance
If you have been looking for term life insurance, you may have already noticed that there are several options available. One type of term life insurance is called a Return of Premium Life Insurance or ROP.
What is a Return of Premium life insurance Policy
Return of premium is a type of life insurance policy that normally remains in effect for 20 to 30 years. At the end of the policy’s term, the insurance company will return all of the premiums you paid. For example, if you paid $275 each year, your cumulative payments for a 25-year policy would be $6875. Therefore, you would receive a check for $6875 as soon as your return of premium life insurance policy expires.
Unlike universal or whole life insurance, the amount of money that will be returned will not increase or decrease; it will merely reflect the exact amount you paid for your annual premiums
Why Insurance Companies Can Afford to Sell Return of Premium Policies
ou may be wondering how life insurance companies can sell such life insurance policies and still make money. The answer is that you will normally pay more for your premiums than standard term life insurance coverage when you purchase a return of premium term life insurance policy. If you are a young and healthy and have a high probability of outliving a 20 or 30-year policy, you may want to consider purchasing a return of premium life insurance policy.
Ability to Convert to Permanent life insurance
Just like a standard term life insurance policy, you have the option of converting your return of premium policy to a permanent life insurance policy such as universal or whole life insurance coverage. Certain restrictions concerning the type of policy and your age may apply. However, young individuals can be guaranteed to receive all of the premium money they paid at the end of their return of premium policy.
Benefits of Purchasing Term life insurance
Do you have children or a spouse? If so, you may want to consider purchasing term life insurance. This type of insurance will protect your family if you happen to die unexpectedly, especially if you are the main income earner.
Provides Significant Coverage
Unlike other types of permanent life insurance, term life policies do not build any cash value and are not designed to be used as long-term investments. However, they will provide you with significant coverage to protect your family after your death. Your beneficiary can use the death benefit funds to pay for legal expenses, funeral or burial expenses, unpaid medical bills or to supplement the family income following your death.
Offers Affordable Coverage
Term life insurance is the most basic form of life insurance available; it offers affordable, temporary protection for anyone who has a limited budget. This type of insurance is one of the most affordable, with the average cost of a policy for a healthy, non-smoking 30-year-old male policyholder paying approximately $2,500 annually for approximately $50,000 in death benefits. Of course, this will depend on various factors such as your age, occupation and health status, as well as the particular insurance company.
Guarantees Premium Rates
Your premiums will increase with your age, but not until the original term of your policy expires. You only pay the established premium for the full term of a term life insurance policy, so you don’t need to worry about having to pay a higher rate.
Covers Income Loss
If you have a large debt such as a car loan or unpaid mortgage, you may want to purchase a term life insurance policy in case your spouse dies prematurely or becomes permanently disabled. Given the rising cost of inflation, many households struggle to keep up with daily expenses with both partners working. Therefore, you need to protect your family if one person dies leaving the other with only one income to cover all the necessary expenses.
Protects Your Family
Many policyholders choose term life insurance coverage because it protects their children and spouse for the term of the policy. If you are a parent, you can purchase a term life insurance policy that covers the time period when you are still raising your children. Once your children leave home or attend college, you can let your policy expire.
Healthy individuals should consider purchasing term life insurance to protect your family members if you die unexpectedly. This affordable coverage will provide you with the peace of mind that your family will be able to cover financial responsibilities such as funeral expenses and any unpaid bills or debts without the help of your income. You know your family will receive death benefits if you happen to pass away during the term of your policy.
If you have further questions, please give me a call. 512-963-5000 or fill out my contact form and I will give you a call.