Return of Premium Life Insurance – ROP
It can be difficult comparing different types of life insurance – whether to buy whole life insurance or term life insurance. Whole life insurance has a cash value, which can be redeemed when the policy matures, but term life offers much lower premiums and is affordable for young families. You can have the best of both worlds with return of premium life insurance. If you survive the term of the policy, the life insurance company returns the premiums paid into the policy, with interest, hence the name Return of Premium Life Insurance, or ROP insurance for short.
How Is It Different From Whole Life Insurance?
Whole life insurance has high premiums when compared to term life policies, but it accrues cash value throughout the term of the policy and is permanent coverage. Once whole life insurance is paid in full, it stays in force until the insured person dies or redeems the policy for its cash value. Return of premium life insurance is not permanent and only pays cash at the end of the term when the policy expires. Premium payments are lower on return of premium term life insurance than they are on whole life.
Pros and Cons of Term Life Insurance
The biggest advantage of return of investment term life insurance is that it can be considered a long term investment. When the policy term expires, the net cost of the policy is zero, since all the premiums are returned with interest. The only time the policyholder actually pays for this life insurance coverage is if the death benefit is claimed during the term of the policy, which makes ROP term life a bargain for most young individuals.
Return of premium life insurance is also a great way to force families to save money in an account they can not touch until the future. When the premiums are returned, the policyholder and their family will have a great nest egg.
Disadvantages
Although return of premium life insurance has lower premiums than whole life, the premiums are higher than those of other term life policies. In fact the premiums are about three times higher than those of traditional term life policies. Families on tight budgets may find other term life options more attractive, since standard term life insurance rates are lower. Also, if the policyholder cancels the insurance before it expires, or fails to make monthly payments, he may lose the premiums he has already paid.
Deciding If ROP Term Life is the Right Life Insurance Policy
Return of premium term life insurance is a better investment for young individuals since the value is in outliving the term of the policy. Although standard term life insurance cannot be considered an investment and may cost thousands of dollars over the term of the policy, affordable monthly payments may be more practical for those with tight budgets. Before deciding which type of life insurance is the best value for you, it’s a good idea to consider all the options.
Return of Premium Life Insurance Quotes
It is possible to get free online life insurance quotes and compare rates for return of premium life insurance. TheLifeInsuranceQuote.com offers multiple instant, online quotes from the best insurance companies, saving you time from going to each individual company’s website.
By entering your 5-digit zip code and a little basic personal information, we provide you affordable life insurance quotes. You can also compare life insurance rates of standard term life policies to ROP policies to see which type of life insurance will best meet your needs.
Enter your zip code now to start your instant, free life insurance quote online and find cheap rates for the coverage you want and need.
