What is Return of Premium Term Life Insurance?

If term life insurance is like paying rent or fee for service, return of premium term (ROP term) is like getting your payments back. It’s that simple. Only a handful of life insurers in the market offer this coverage. The only downside is that you are going to pay higher premium for the right to receive a refund. The upside is that you would lose nothing at the end of the term.

How much does Return of Premium term cost?

Click here for a sample PDF illustration of ROP term life insurance.

This 30-year return of premium term illustration shows exactly how the plan works. You also have the conversion privilege to switch your term life into a permanent plan until age 70. Restrictions apply. Just remember, this is not a cash-value policy. There are no dividends that the insurance company shares. It only refunds the premiums you paid into the policy, minus any loans, during the term. Most of these plans come with a free a rider called Accelerated Benefits Rider which allows the policyowner to request a portion of the policy’s face amount if the insured is diagnosed by a physician with a terminal illness that is reasonably expected to result in death within 24 months or has been confined continuously for 90 days in a nursing home and is reasonably expected to remain there for the duration of the insured’s life. The maximum lifetime benefit available is the lesser of 50 percent of the death benefit or $250,000.

Refund of Premium Term Rates

As you can see the cost involved in buying a ROP term life insurance is definitely higher than the the traditional term life. So, is it worth it? I think it depends upon your affordability, risk tolerance and individual tax-bracket.

Best Return of Premium Term Life Insurance Companies in 2023

Not all insurance carriers offer this coverage. Here are the top two insurance companies that offer ROP term life insurance:

• Assurity Life
• Cincinnati Life

Get real-time Quotes for Life Insurance

Go to SinglePremiumPlans.com and choose the kind of life insurance plan you are looking for. If you want to see an illustration on how a return of premium life insurance will work, give us a call at 1.866.526.7264.

Sometime back a potential client in average health called me from New Jersey. At 41, he had suffered through a history of high blood pressure and depression for quite a while. A non-smoker and otherwise in good shape, this family law attorney got married a couple of years back and now his wife was pregnant with their first child.

But his heart was set on a policy with a lifetime of coverage. He also wanted to come back in a few years when his practice would begin to do better and convert the term policy into a permanent life insurance plan.  This is where it becomes tricky. Since there are always multiple insurance carriers fighting for your business, it is not always a good idea to go with the one that offers the lowest premium. In his case, for a few dollars more, I found him an A+ rated solid carrier with excellent options to convert to a whole life or guaranteed universal life in future.

The lowest premium term life insurance policy may not be the best option for you.

In my experience, most people who buy a term life insurance policy do it because they could not afford the higher premium of a permanent policy. Since our needs and affordability change over time, it is always a good idea to talk to your insurance advisor before accepting a life insurance carrier. You want to make sure that if you cannot purchase a lifetime of coverage today, you do have reasonable options to pick one in future.

Conclusion

Since most of us do not live beyond the age of 120, a permanent life insurance policy guarantees a financial cushion or in many cases a financial legacy for your loved ones. If purchased at the right time in life, a lifetime of life insurance coverage can be surprisingly affordable.