Return of premium (ROP) life insurance is a fairly new style of term life insurance, which answers one of the biggest objections to life insurance. People don’t like paying for insurance, especially life insurance because it is such an intangible product.
One of the most common objections people have to term life insurance is they are paying for a product, which statistically, they probably will never use. Over 99% of people will fortunately never use the death benefit of their term life insurance policy, and other than peace of mind many people feel they are just throwing money out the window. I have even had clients tell me term life insurance is like flushing money down the toilet. If this is how you feel than return of premium (ROP) term life insurance could be the best option for you.
If you feel like term life insurance is just a waste of money, and you can’t afford all of your life insurance in permanent coverage than return of premium (ROP) term life insurance is a happy median. In a return of premium contract, if you outlive the term period of your policy, than the life insurance company will give you back the premiums you paid in over the life of the policy.
This will give you the peace of mind of a life insurance policy over a specific period of time. It will also give you the incentive to pay your premium, since you know at the end you will receive your premiums back (as long as you live). Return of premium (ROP) term life insurance may be a great option for you if this sounds like a good scenario for you.
In my opinion, return of premium (ROP) life insurance policies can be a great option for some people, and for others it can mean a loss in potential investment growth.
If you are someone who has a tough time saving money, but feel a savings plan which systematically and automatically invests your money would work than this may be a great options for you. When you set your life insurance payments up on auto draft, they will be paid each month and at the end of your premium years you will have a large amount of money waiting for you. However if you lapse this policy, you will lose all of the money you have paid into the policy.
The downside of the ROP term life insurance policy is the added cost of this type of policy over a normal term life insurance policy. These policies can be double the premium amount of a normal term life insurance policy. These type of policies do give you money back at the end, but it is normally without any interest, or at a very low interest rate. For the disciplined investor, a “buy term, invest the difference” policy could yield higher returns over a long period of time.
The important thing to remember of a “buy term, invest the difference”strategy is you actually must invest the difference for it to work.
If you like the idea of paying a slightly higher premium for being able to get your premiums back at the end of your life insurance policy than ROP term life insurance could be best for you. We would be happy to give you a personalized quote for a return of premium life insurance policy. We will be happy to discuss your options at 843-742-5981.