Return of Premium life insurance policies are an attractive option to people who want to have coverage: Here is how return of premium policies work. The name of the policy is self explanatory: At the end of the term, the policyholder will receive their premium back in full as long as they don’t have to file a claim during the duration of the policy. While there is not an option to extend the existing policy, there are multiple ways to reinvest the money given back by the policy.
While a return of premium policy isn’t the most sought after type of insurance, it is a viable option for younger people who are less at-risk than the older generation. As with any life insurance policy, the more at-risk you are the less options you have and the more expensive it will be. However, since it is an option that is less available than other life insurance policies, it will be a little more on the pricey side regardless as opposed to a normal term life policy.
Most carriers allow you to reinvest the return of premium policy with them, into a new paid up whole life policy. If the term of the ROP is up, and you’re wanting to reinvest that money back into the life insurance market, this is the perfect option for you. For instance, a healthy male aged 40 with standard underwriting can receive a return of premium for $67,737 after their 30 year policy expires. If they were to convert that into a paid up whole life policy, that would have a value of $123,367.88.
At this time, all return of premium policies carry a thirty year term, as is industry standard that is subject to change over time. Thirty years down the road life circumstances will almost undoubtedly change. The return of premium policy gives the individual an option as to what they want to do with the money they get back. Whether it’s using it as retirement income, reinvesting it in the life insurance marketplace or using it for something else, a return of premium policy gives what everyone wants: flexibility and options. For more information regarding return of premium life insurance, contact our life and financial specialist Enrique Torres at etorres@empowerbrokerage.com.
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