ROP life insurance works by providing life coverage for a certain number of years, then returning the premiums paid in if death has not occurred by the time the term ends. The ROP stands for "Return of Premium".
These policies start out at a higher price than regular Term, and unlike regular Term, the longer terms usually have lower premiums than those policies with shorter terms.
Most will return part of the premiums if the policy is kept at least half of the term, then the amount you would receive increases each year. If you keep the policy for the full term, 100% of the premium is usually refunded (usually, minus the cost of table ratings, flat extras, and riders).
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
ROP means “return of premium.” If the insured survives to the end of the guarantee period, then you get your money back. If you terminate the coverage mid way, then you get some of the money back. A schedule is provided with the policy.
Some people like this deal. Their thinking is, “Life insurance is a great bargain only if you die. But if you outlive the policy, you will have spent money for nothing. So you should get your money back.”
I can see what they mean. It’s kind of like wanting your cake and eating it too. That would certainly work for me. But it boils down to a question of what is the cost of having it both ways.
First of all, you pay a much higher premium for the return of premium guarantee. That makes sense. After all, you are not only asking the carrier to guarantee your premium for a specified amount of years - you are asking them to guarantee your money back as well. You have to pay for that extra layer of insurance.
Is the extra amount you pay competitive? Depends. What if you are a savvy investor and know how to get some good value for your dollar? If it was that important to you to recoup your life insurance expenses, you might be able to put a lot less into the right investment vehicle.
Another point: the return of premium feature is available only with term insurance. The fact is, many people need permanent insurance. The good news is that you can have your cake and eat it too with this product as well!
You can take a universal life product and structure it to guarantee your premium for as long as you want, and at the same time give you a guaranteed cash value equal to your total outlay. The product is that flexible. And if you had the cash, you could do this with a single payment, as opposed to paying year after year.
Best of all, you could plan on holding on to the policy for the rest of your life.
Something to think about when you look at life insurance for a money back guarantee.
Want to keep learning? Check out my blog:
Planrisklive.com
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These policies start out at a higher price than regular Term, and unlike regular Term, the longer terms usually have lower premiums than those policies with shorter terms.
Most will return part of the premiums if the policy is kept at least half of the term, then the amount you would receive increases each year. If you keep the policy for the full term, 100% of the premium is usually refunded (usually, minus the cost of table ratings, flat extras, and riders).
Some people like this deal. Their thinking is, “Life insurance is a great bargain only if you die. But if you outlive the policy, you will have spent money for nothing. So you should get your money back.”
I can see what they mean. It’s kind of like wanting your cake and eating it too. That would certainly work for me. But it boils down to a question of what is the cost of having it both ways.
First of all, you pay a much higher premium for the return of premium guarantee. That makes sense. After all, you are not only asking the carrier to guarantee your premium for a specified amount of years - you are asking them to guarantee your money back as well. You have to pay for that extra layer of insurance.
Is the extra amount you pay competitive? Depends. What if you are a savvy investor and know how to get some good value for your dollar? If it was that important to you to recoup your life insurance expenses, you might be able to put a lot less into the right investment vehicle.
Another point: the return of premium feature is available only with term insurance. The fact is, many people need permanent insurance. The good news is that you can have your cake and eat it too with this product as well!
You can take a universal life product and structure it to guarantee your premium for as long as you want, and at the same time give you a guaranteed cash value equal to your total outlay. The product is that flexible. And if you had the cash, you could do this with a single payment, as opposed to paying year after year.
Best of all, you could plan on holding on to the policy for the rest of your life.
Something to think about when you look at life insurance for a money back guarantee.
Want to keep learning? Check out my blog:
Planrisklive.com