Our hope is after this brief explanation you’ll know enough about this very popular life insurance feature in order to be able to consider it the next time you decide to run a life insurance quote or purchase a plan to protect the income your family needs.
Term Life Insurance
In order to understand how the return of premium feature works on term life insurance you need to have a basic understanding of how term life insurance works. Basically, term life insurance is temporary life insurance that you purchase for a set term duration. The most common term life insurance duration periods are 10, 15, 20 and 30 years. Once you exceeded that term period duration for your plan the insurance in effect terminates .
When you have a return of premium term life insurance plan you get all the money back that you paid into the plan in premiums over that entire life of the policy.
For example, let’s say you purchased a 20 year return of premium term life insurance policy 20 years ago. Once you have finished the 20th year of the policy you have the option to get a return of all the premiums you paid into the plan over the 20 years you owned the policy. If you paid $10,000 in premiums over the 20 years of the policy you will get a check for $10,000 returning the premiums you paid over the life of the plan.
You also have options like HSBC term life insurance if this is something you would be interested in.
Universal Life Insurance
Universal life insurance, unlike term life insurance, is permanent life insurance. In other words, when you purchase a universal life insurance plan, that plan can remain in-force as long as you live. You don’t choose a duration period for universal life insurance, it’s permanent.
How the return of premium feature works on universal life insurance is that you choose how long you want the policy to be in-force before you have the option to terminate the policy in order to get a return of your premium.
For example, let’s say you purchase a universal life insurance policy with a 20 year return of premium feature. Universal life insurance, unlike term life insurance, can accrue cash value in a separate account for you. So what happens is that after year 20 of your universal life insurance plan you have the option to terminate the plan in order to get all the premiums back that you paid into the plan. If you decide that you want to keep the policy in-force rather than ending it to get your money back the plan will continue to generate cash value for you over the life of the policy.
Note: Despite the fact that you can have a return of premium term life insurance policy the term life insurance plan does not accrue or generate cash value like the universal life insurance plan can above.
To get quotes for ROP life insurance you will need to speak directly with an agent. While our form will give you great rates on term life insurance you will need to speak with one of our agents to know how much the return of premium rider will cost. Get started now by filling out the form on this page or give us a call. If you are not sure about how much life insurance you may need you can still contact us directly our check out our page on determining you life insurance needs HERE.