Also called ROP Life Insurance, return of premium life insurance is very much like other forms of life insurance—it’s contract between you and the insurance carrier where by you agreeing to pay the premiums the carrier agrees to pay money to your beneficiaries upon your death.
Just like all other types of life insurance return of premium life insurance is a great way to protect your family at an affordable price.
What makes return of premium life insurance different from other types of term life insurance? The biggest difference is that at the end of the guaranteed term period the carrier will refund you all of the previous premiums you’ve paid; Hereby eliminating your costs for the ROP life insurance policy.
So now we need to ask ourselves, what are the reasons for getting return of premium term life insurance?
With ROP life insurance it’s possible to have coverage while having a net cost of zero since at the end of the policy’s term you would have received coverage and the return of all of your money.
Return of premium life term life insurance is a very safe place to allow your money to earn a modest ROI over time.
If you stopped reading this page at the above paragraph you might wonder “why haven’t I heard more about return of premium life insurance?” and the reason is simple: It can be up to three times more expensive than traditional term life insurance.
There are many financial advisors that suggest that if you’re able to afford return of premium life insurance you’re better off buying term life insurance and investing the difference; by investing the difference you’ll be able to have more money than you may have received at the end of the ROP life insurance term in the form of your premiums refund.
It’s because of this dichotomy most people only get ROP life insurance for longer terms (20 or 30 years) since the longer the term of the policy the higher the comparative ROI will be as it’s a very safe investment.
