How Does Return Of Premium Life Insurance Work

Return of premium life insurance is a relatively new product in the life insurance market, and Forbes even did a write up about this type of policy. But how does this coverage work and what benefits will you get from it? With traditional term life insurance policies you pay your premiums on time, and if you expire while the term chosen is in effect your beneficiaries will receive the death benefit of the policy. If you are still alive when the term of the policy ends, then your premiums are gone and you no longer have life insurance coverage. Return of premium life insurance changes this equation completely. With return of premium policies you will pay a higher premium, but if you do not collect the death benefit during the term than you may receive some money back when the term expires and your policy is no longer in effect. You will not receive all of the premiums that you have paid in, but you will get some financial benefit to offset the fact that no death benefit was paid. With these policies it is important that the premiums are paid on time so that the policy does not lapse, otherwise you will not get anything back.

Return of premium life insurance has both benefits and disadvantages. Because of the higher premiums paid, you may be able to get a permanent policy such as whole life or universal life coverage for close to the same cost. Return of premium policies do not accumulate a cash value, and the premium portion is not returned until the term of the coverage has ended. If you are going to purchase a term life policy anyway, choosing return of premium life insurance may give you additional benefits that the usual term policy will not. In many cases the premium amount returned can help you purchase a new term policy so that you have life insurance coverage again and are not left without financial protection. This coverage may or may not be right for you, depending on your specific situation, but it should be considered during your evaluation.

If you choose a return of premium life insurance policy, you can still save money on the premiums that you pay. You can receive free online life insurance quotes so that you can compare these policy premiums and the company that is offering the coverage. Not all life insurance companies and policies are equal, and comparing companies and quotes will help you choose the ones that fit well with your coverage needs at a lower cost. A return of premium life insurance policy may cost a little more while you are paying the premiums, but when the term is over if you have not passed away you will get a refund of part of the money you have paid in. You need to determine whether the higher premium prices are worth the refund you will get at the end of the policy, or if you would be better off saving or investing the difference in premium costs instead.