What is Return of Premium Life Insurance?
To most consumers, life insurance is used to protect there loved ones in case of a premature death. And most life insurance isn’t something that you get money back unless you do die.
But what if I told you that their is a life insurance product that you if you don’t die, you can get all you money back that you put in. Would that interest you?
You are in luck, Return of Premium life insurance (ROP) is available.
Return of premium life insurance is most commonly added as a rider to a term life insurance policy, but now even some life insurance companies have this feature added at no cost to there guaranteed universal life insurance.
How Does Return of Premium Term Life Insurance Work? (ROP Term Life)
Return of Premium Term Life Insurance (ROP Term Life) works very similar to a term life insurance policy except you can add a rider that allows all premiums paid in to be returned if you live to the end of the term period. You don’t earn interest on the premiums paid in.
For example, if you owned a 20 year Return of Premium Term Life policy (ROP Term) and lived 20 years, you would get all your premium back. If you die during those 20 years then your beneficiary would get the death benefit.
Most ROP Term Life products come in 15, 20, 25, or 30 year term periods, depending on your age and the amount of coverage. Some ROP Term Life Insurance will let you use the premium owed to you to buy a reduced amount life insurance, and never make a premium payment.
This is good for someone whose health has changed since the policy was purchased and can’t qualify for any new life insurance.
Return of Premium Option on Permanent Life Insurance
About 3 years ago, all you could purchase was ROP Term Life Insurance, but that has changed. There are a few companies that do offer the return of premium option on there guaranteed universal life products, already built into the premium.
The way the rider works is very similar to ROP Term Life. At the end of either 20 or 25 years, you have an option to walk away with your premium paid in with no interest. But you also have the option of not cashing in a keep the policy forever.
The guaranteed universal life policies that offer this feature also come with the living benefits rider built into the premium. This allows the insured to access a percentage of the death benefit if he/she become critically/chronically ill.
Return of Premium Term Life Insurance Companies
Not as many companies offer ROP Term Life because of today’s low interest rate market. Here is the list:
- AAA Life Insurance Company
- Americo Financial Life and Annuity Insurance Company
- Assurity Life Insurance Company
- Baltimore Life Insurance Company
- Columbian Life Insurance Company
- Cincinnati Life Insurance Company
- Illinois Mutual Life Insurance Company
- United Farm Family Life Insurance Company
- United of Omaha Life Insurance Company
The rates will differ by company. Just like any other life insurance policy; age, gender, and health will play a key role.
Permanent Life Insurance with ROP
We mentioned earlier that some companies have started offering Return of Premium Life Insurance on permanent policies. They are:
Return of Premium Life Insurance Sample Rates
Male $250,000 Standard Non-Smoker
Female $250,000 Standard Non-Smoker
Term Life vs. ROP Term Life
Below are charts showing the difference in price between a term life policy compared to a ROP term life policy.
Male $250,000 Standard Non-Smoker
Female $250,000 Standard Non-Smoker
Should I Buy ROP Life Insurance?
Whether or not you should buy a Return of Premium Life Insurance policy is going to depend on your needs and what best fits your budget. Make sure to get all options available to ensure you make the right choice for you and your family.
Always work with an independent agent who has access to multiple insurance carriers. This will cut down how much research you have to do yourself. When getting ROP life insurance quotes, always get a full illustration so you can fully understand how the return of premium feature operates.
If you have any questions or need quotes, give us a call or shoot us an email. Thanks for reading.
Should I buy ROP Life Insurance?
Whether or not you should buy a Return of Premium Life Insurance policy is going to depend on your needs and what best fits your budget. Make sure to get all options available to ensure you make the right choice for you and your family.
Is ROP Term Life cheaper than regular term?
No, ROP Term Life is going to be more expensive than regular term life insurance.
What are the advantages of ROP Life Insurance?
The major advantage of return of premium life insurance is that you get all premiums paid in back at the end of the term period.
