Likely if you are shopping for a term life insurance policy you have seen ROP or Return of Premium. A return of premium policy is a term life insurance policy usually 20 or 30 years in length that once completed will return your cumulative premiums. If your premium is $225 per year your cumulative payments for a 30 year term policy is $6750. You will receive a check for the full amount paid of $6750 once the policy is up.
Unlike a whole or universal life insurance policy a return of premium's cash value does not increase or fluctuate, it acts a simple return on money.
What's the catch? How can life insurance companies offer return of premium policies? The return of premium policies often have higher premiums than standard term life insurance policies. A return of premium policy is a good option for young healthy individuals who will outlive a 20 or 30 year policy.
As with some term life insurance policies a return of premium policy has the option to be converted into a permanent life insurance policy such as a whole or universal insurance policy. Restrictions may apply depending on age of the insured and the type of policy but it does seem to be a good option for young individuals looking to get back what they put into their life insurance policy.
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