What is Return of Premium Life Insurance?

Return Of Premium Life Insurance

What is Return of Premium Life Insurance?

Many people know they need life insurance to protect themselves and their families, but they still procrastinate and put off this important purchase. One of the reasons so many people put off getting the life insurance they need is that the purchase process can often be confusing. There are so many different kinds of life insurance on the market, each with its own set of benefits and drawbacks. Making a smart decision in the face of those overwhelming choices can be very difficult, and that causes many people to abandon the process altogether.

In the end, avoiding life insurance is not a smart move. If you have a spouse to protect or children to think about, you need to have sufficient life insurance coverage in place. Without life insurance, your surviving family members could lose everything they own as they try to keep up with the bills and pay the mortgage without your income. Having life insurance means they can meet those expenses and go on with their lives.

What is Return of Premium Life Insurance and How Does it Work?

Another thing that stops many people from buying life insurance is that it can seem like wasted money. After all, you will never get to enjoy the money. It is simply for the benefit of your spouse and children when you die. It can seem foolish to spend money on something that will not benefit you, even if intellectually you know you should have it.

That is what return of premium (ROP) life insurance is all about. Unlike traditional life insurance, where the premiums are simply lost at the end of the term, this special kind of life insurance can return the premiums to you, even while you are still alive.

Return of premium (ROP) life insurance is perfect for people who need to insure their lives for a specific and limited period of time. If you are working and paying the mortgage, you can use return of premium life insurance to protect your family until the house is fully paid for. If you have children at home, you can use this type of life insurance to protect them until they have graduated from college.

Return of premium life insurance offers a level premium payment for a specific period of time, also known as the term of the policy. That term is variable, but it typically lasts between 15 and 30 years. If you just bought your home, you could protect your family from future mortgage payments by purchasing a 20-year or 25-year level term return of premium life insurance policy. If you were to die while the insurance is in place, the death benefit would help your surviving spouse by paying off the mortgage balance in full or provide enough cash to ease the financial burden. If you are still alive at the end of that 20-year or 25-year level term, the return of premium policy will return all the policy premiums you have paid during the preceding 20 or 25 years and you could use the policy to pay your home off in full, saving you thousands of interest on your mortgage. At the same time, your policy provided your family with protection when they needed it the most.

Return of premium life insurance provides a guarantee of cash back and can remove some of the sting from buying life insurance. If you know you need life insurance but have always considered it a waste of money, return of premium life insurance may be just what you have been looking for. Your family still gets the protection they need, and you get your money back at the end of the term should it not need to be used.