Term life insurance that pays you back

Term life insurance that pays you back
Term Life Insurance that pays you back is commonly known at “Return of Premium” term life insurance. It is a great product for those who believe they will out live their term life policy. One of the issues for many younger adults with life insurance is they do not like the idea of paying $25 per month for 30 years and after 30 years the policy is worthless and to expensive to continue. Return of premium life insurance actually rewards the consumer with a big chunk of change if they out live their policy.

Term Life Insurance that pays you back  term life insurance that pays you back

You may say that there is not much of an incentive that getting a return of $9000 ($25 x 360 months) 30 years down the road is not much of an incentive? Maybe not, but the real idea is to keep the insurance in place for the entire term of the policy. But if I offer you a term Life Insurance that pays you back vs a term life policy that essentially expires after 30 years what direction would your interest lie? Most my clients are at least intrigued with the concept and I have even sold return of premium life insurance policies vs no life insurance at all because the clients liked the idea of “free insurance coverage” if the policy was never used.

Cost of the return of premium rider vs straight term?

This will vary a little by carrier and the age of the insured. The younger you are the cost difference is minimal.

Lets look at a couple examples                            term life insurance that pays you back

1.

  • 25 year old male
  • $300,000 coverage
  • 30 year term policy
  • Return of premium policy cost $30-$50 per month
  • Straight term policy cost $20-$30 per month

2.

  • 40 year old male
  • $300,000 coverage
  • 30 year term policy
  • Return of premium policy cost $90-$120 per month
  • Straight term policy cost $40-$50 per month

As you can see the younger male cost difference for return of premium may only be $10-$20 per month. The 40 year old male cost difference can run roughly $40-$70 per month. But in general these plans are designed for a younger age demographic.

What are some other options vs return of premium?

  • Buy straight term and actually invest the difference you would pay for the return of premium policy. This would be a pretty good life insurance strategy if anybody actually did invest the difference. I just do not find anyone who is disciplined enough to invest the difference over a 30 year time horizon.
  • Buy a permanent policy like index universal life insurance. In this case you would not only build “Cash Value” into your policy, but would also have life insurance potentially for life. These are more complex life insurance strategies that are also used as a financial tool to achieve some different goals. In some cases to supplement retirement or resolve long term care issues down the road. generally you would be investing more money into these policies often times $200-$300 per month. So the cost out outlay is significantly higher.

What carriers offer return of premium term life insurance?

If you like the idea of term life insurance that pays you back. There are many carriers that offer the product. Most are carriers you have heard or seen in the past.

  • AIG/American General
  • VOYA
  • Prudential
  • Assurity

In conclusion

If you are someone who is potentially in the market for life insurance. You like the idea of term life insurance vs a permanent policy. But maybe the idea of after 20-30 years your policy is just kind of worthless because the guaranteed premium period is over and the annual renewal rate is cost prohibitive? Term life insurance that pays you back just may be a good option?

About Help Insure Me
About Help Insure Me

We work with individuals across the nation to secure the best life insurance rates.

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