Term Life Insurance That Pays You For Living: Return Of Premium Policies Explained
In recent years, InsWeb has expanded its Term Life insurance marketplace to include alternate products that each offer their own benefits. One of these unique products is a Return of Premium Term Life insurance policy. Return of Premium (commonly known as ROP) policies, while a bit more costly, offer the benefit of returning your paid premiums if you are still living when the policy term is up. They also provide the same benefits of a term life insurance policy; namely offering you the choice of your term length and policy amount.
Originally, ROP term life insurance was designed only to refund the policyholder at the end of the chosen term (for example, 20 or 30 years) if the policyholder outlived the term. As the product has matured, there are now several variations which allow policyholders to receive partial refunds by canceling the policy several years into the term. For example, if a policyholder chose a 20-year ROP product, they may be able to receive a 50% refund of paid premiums at the end of the 15th policy year. Graduated refunds may be able to be received down to the sixth policy year; no refunds will be returned if the policy is cancelled before the end of the fifth policy year.
ROP term life insurance offers consumers options. Price-wise, it usually falls in the middle of less expensive pure term life insurance products, and more expensive (and often confusing) permanent or whole life insurance products. It offers the same benefits as traditional term life insurance, while offering consumers the added bonus of getting their paid premiums returned to them if they outlive their policies; or receiving partial returns if they find they have a greater need for the money partially through the policy's term.
InsWeb's ROP term life insurance offerings are most competitively priced at a 30-year term, where a healthy 35 year old male can get a $500,000 ROP policy from one of our top companies for as low as $68.72 a month (compared to $44.63 a month for a comparable traditional term life insurance policy). The difference between the 2 premiums is only $24.09 a month; however at the end of the 30-year ROP policy the owner could get back up to $24,739.20! And according to industry averages, this rate would still be significantly lower than purchasing a permanent life insurance policy, and again offers the consumers the benefit of choice offered by term life insurance.