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Return of Premium Life Insurance
Return of premium life insurance policies allow you to recoup some of the money you've paid over time for your coverage. Here, we'll review the costs and benefits of return-of-premium life insurance so that you can decide if this type of policy is right for you.
What Is Return of Premium Term Life Insurance?
Traditionally with term life insurance, your beneficiaries receive a death benefit if you die while your policy is in force. But if you outlive your policy’s term of coverage, you and your beneficiaries may receive nothing.
It can seem like a major loss, considering the thousands of dollars you may spend over the course of a term life plan. For some, it’s just the cost of good fortune. But for others, those are valuable dollars worth recovering and a major incentive to purchase a term policy with a return of premium option.
A return of premium life insurance policy allows you to recoup some or even all of the premiums you paid into your policy if you outlive your policy’s term. In many cases, this return of premium option is a rider on your traditional term life insurance policy. That is, it’s a feature that an insurance company may or may not offer on top of the base policy.
How Much Does a Return of Premium Policy Cost?
Return-of-premium life insurance can cost hundreds of dollars more annually than traditional term life insurance. While you may recoup your money on the back end, it could mean paying higher premiums throughout the life of the policy.
Deciding whether to purchase this kind of life insurance policy means thinking through your long-term expenses. You may also want to consider the increased costs of the policy. There could be better uses for the extra money you spend on premiums.
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*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.