Tuesday, October 16, 2007

Term Life Insurance with Money Back

Return-of-Premium (ROP) term life insurance has become very popular. It’s no wonder. You can get all your premium payments back if you’re alive and well at the end of the policy term.

By Mary Pollman – SelectQuote

Ah, simplicity. That’s one of the things to love about Term Life Insurance. It always a little sad when an insurance company turns a straightforward term life insurance policy turn into a patchwork of special features and odd contingencies – “The policy does this if you get disabled; this if you die in an accident; this if you die but not in an accident, this if your spouse dies first . . . “
But biased as we are toward simplicity, there is a variation on the basic level-premium term formula that’s very attractive. It’s Return-of-Premium (ROP) term.

And it’s really simple.

How a Return-of-Premium policy works
If you buy a basic, non-ROP 30-year term life insurance policy, you pay the same amount every year for 30 years. When 30 years is over, your bet with the life insurance company is up – and though you win (in a manner of speaking), they keep the money.

If you buy a return-of-premium 30-year term life insurance policy, same thing. Except that you get your money back.

You will pay more for return-of-premium policies. And you don’t get your money back with interest. The interest is what the life insurance company gets out of the deal – for having taken a risk with you for 15, 20 or 30 years. It seems pretty fair.

Most ROP plans are structured so that you not only get back your money at the end of the term, you can get some of it back if you surrender the policy early. There will be rules about how the early refunds work, so be sure to read the fine print.

ROP makes a big decision a little easier
If you’re hesitating about buying life insurance, even though you know you need it, an ROP policy may make the decision easier. For example, you may not be 100% convinced you need a life insurance policy for 30 long years, but if you know you’ll be getting all your money back, it’s easier to go ahead and do it.

It’s important to be comfortable about the insurance company’s longevity when you’re buying this kind of policy – but then that’s paramount with any life insurance policy.

About the author. Mary Pollman, CLU, has been writing about life insurance, long-term care insurance and annuities for more than 20 years. She has contributed to insurance publications, websites, consumer product literature and agent training. Mary held senior management positions in communications and marketing with two life insurance companies. She is an editorial advisor to SelectQuote.

ROP or not ROP. For many term life insurance buyers, that is the question. A SelectQuote Licensed Expert can help you find the answer. They can show you options for term life insurance policies with and without return-of-premium. All from companies with high ratings. Quotes are free. Call toll-free 1-888-739-7965. Or go to our website,
www.selectquote.com/home9 .

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