Return of premium life insurance, or ROP life insurance, is very much like other types of life insurance. It is an agreement between you and the life insurance company. You agree to pay premiums, and the carrier agrees to pay your beneficiaries a sum of money should you die. Like all life insurance, ROP term life insurance is an excellent way to protect your loved ones and give them financial security. There is one main difference between return of premium life insurance and other types of life policies. As with all insurance plans, with a return-of-premium policy, a death benefit is paid out should you pass away. But if you live beyond the term, you get all of your money back dollar for dollar. So no matter what happens to you whether a claim is made while covered or if you outlive the policy money is distributed.
Why Should I Get ROP Term Life Insurance?
Return of premium life insurance makes it possible to have coverage with a net cost of zero. ROP life insurance is also a safe place to put your money to receive what amounts to a modest return on your investment. Return of Premium (ROP) term life insurance combines the advantages of traditional term life insurance such as affordable, guaranteed level premium periods with a return of premium feature. At the end of the level-premium period, 100% of the premiums paid will be returned to you!
Why Shouldn't I Get ROP Term Life Insurance?
The main reason people don't get ROP term life insurance is that it costs more. The insurance companies that offer this product charge slightly more for it than for non-ROP term insurance. During the level-premium period, the insurance company can invest portions of the premium for capital growth. As a result, they can return your premiums to you at the end of the level-premium period.
You are paying for the convenience of securing level term life insurance with an added return on your policy premiums. Return of premium life insurance gives you the advantage of a level death benefit and level policy premiums just as a term policy does but with the added feature of return on your premiums. At the end of the level period, you select 100% of the premiums paid will be returned to you as long as you have paid your premiums throughout the period of insurance and a claim is not filed. Most people get return of premium term life insurance policies for 20 or 30 years as the comparative return on your investment will be higher the longer you have the policy.
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