What Is A Return Of Premium Life Insurance Premium?

By Lisa Olsen Posted in Life Insurance News



What Is Return Of Premium

Return of Premium is a relatively new type of term life insurance policy. It provides a return of premium feature as well as death benefits. For years many term life policy holders wondered what happened to all that money they had paid in premiums during their term. When their term ended and they had not collected on the death benefit the policy holder was left without anything to show for all those premiums paid. After much outspoken criticism, the insurance industry finally answered the call and created a term life insurance policy that did offer something back after the term ended.

How It Works

When you purchase term life insurance, you purchase it for a specific amount of time; 15, 20, or 25 years. Once that times ends, with a regular term life policy, the policy expires and, while you are no longer making payments on the policy, you also do not receive any insurance benefits. Essentially the consumer is out that money. It may have offered a modicum of security at the time but if the policy holder remained alive and well during the life of the policy, they won’t receive any return on the policy. Unless they have one of  the newer return of life insurance premium. In this type of policy, once the term has ended, the insurance company will return the entire or partial amount of premium paid over the years.

How This Benefits You

Besides the obvious benefit, the return of all that money you paid, there are other benefits to using this type of policy. One significant benefit is the return of a good chunk of change around retirement time. It’s like hiding $50 a month in your sock drawer only to discover twenty years later that your sock drawer has $12,000 stuffed in it. The downside is that the insurance company is making money off the interest from your premiums the whole time. Another downside is that your premium will generally be higher for this type of insurance than with regular term life insurance. Your paying the insurance company to give your money back to you.

Related posts:

  1. What Does Permanent Life Insurance Mean?
  2. What Is A Level Premium Term Life Insurance Policy?
  3. What Are The Different Kinds Of Life Insurance Plans?
  4. What Is A Suicide Clause For Low Cost Life Insurance?
  5. What Does Traditional Fixed Life Insurance Mean?






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