Is Return of Premium Term Life Insurance the Best Policy

It may seem that Return of Premium Life insurance is a product that would best benefit people who are not the greatest at investing. The basic idea of an ROP policy is you pay your premiums and if you outlive your policy, your premium payments are returned to you! It is similar to a savings account, however you can only benefit from that returned premiums if you outlive the policy. It is also important to note the ROP's premiums are more costly than regular term life insurance premiums. So why not invest in a savings account and spare the expensive premiums?

Return of Premium Life Insurance verses Term Life: Insurance ROP (also known as: Return of Premium Life Insurance) is a term life insurance policy, which sets itself apart from a regular term policy by giving the policyholder a return of his or her premiums, if the insured does not does not die during the coverage period (the length of the policy). If you don't use it, you get a refund!

This may sound like a great return policy; it is essentially a money back guarantee. However, some may view this, instead, as a sacrifice. All that money you are investing into your policy, you will not have access to for the next 30 years. It could be classified as a savings plan, however a true investor would quickly notice the potential downsides of an investment strategy such as this. Let's say, hypothetically, your total premiums payments over the course of 30 years would be $20,000; $20,000 could have bought you a lot more 30 years ago. Thanks to inflation, you could have done a lot more with $20,000, 30 years ago, than you can today.

Also, consider that when it comes to comparing ROP with a regular term life insurance policy, ROP life insurance rates are significantly higher (typically about 50% higher than term). While you receive a return of your premiums, should you outlive your policy, you are also paying more upfront, resulting in a greater immediate sacrifice. No one wants to pay high rates (for anything); however, no one wants to pay for something that they may never use either.

Compare Return of Premium Life Insurance Rates: Comparing return of premium life insurance rates takes more effort than comparing regular term life insurance rates. Thanks to the availability of the internet, term life insurance rate comparisons can be easily accessed via numerous websites. By simply answering a few questions, you will be presented with a whole list of carriers and their life insurance quotes. Shopper can only go so far when shopping for return of premium policies. Because it is a term product, ROP quotes can be included when you shop online, however it isn't an extremely popular product and not all carriers provide ROP policies. Feel free to compare online, but you will not receive nearly enough quotes to make an educated decision. Due to the limited access of ROP rates, it would be best to contact and agent. Agents have access to both products and carriers and will be able to find the best policy for your particular needs.