Co-Founder, Coastal Financial Partners Group, California
Return of premium as a concept varies depending on the type of life insurance product with which it is associated. Return of premium term policies, once very popular, provide that the sum of the premiums paid over the level term period are provided as a cash value in some manner at the end of the term period - usually 30 years or less. In recent years, the premiums for these products have become quite expensive so they have fallen out of favor.
When return of premium is associated with universal life insurance products, it is generally considered to be "death benefit option 3". In other words, the death benefit payable is always the initial specified amount plus the premiums paid to date. No all universal life products offer this feature.
There are a few newer universal life products that are priced closer to term than permanent insurance but give some percentage of the premiums paid at key future milestones such as year 20 or 30 in as an optional cash surrender value.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Life insurance is mathematics. If people object to paying the premium, by increasing the premium you can collect enough extra money that with compound interest you can return the deposits in full at a future time. The value is all in the eyes of the customer.
Term life insurance "return of premium" (ROP) policies will return all the premiums you paid in if you keep your policy until the term ends. There often is a point about halfway through the policy where the insurance company would return a percentage of premiums paid, if you dropped the policy at that time. This percentage gets higher until the end of the term.
Premiums are higher for this type of policy, and if death occurred while the term policy was still in effect, the regular death benefit would be paid. The value to this type of policy is if you outlive the term. The return is tax free and can be a good choice for people who want to get something back from what they paid in.
.JPG){kind=avatar}
When return of premium is associated with universal life insurance products, it is generally considered to be "death benefit option 3". In other words, the death benefit payable is always the initial specified amount plus the premiums paid to date. No all universal life products offer this feature.
There are a few newer universal life products that are priced closer to term than permanent insurance but give some percentage of the premiums paid at key future milestones such as year 20 or 30 in as an optional cash surrender value.
Premiums are higher for this type of policy, and if death occurred while the term policy was still in effect, the regular death benefit would be paid. The value to this type of policy is if you outlive the term. The return is tax free and can be a good choice for people who want to get something back from what they paid in.