Return of Premium Life Insurance Pros and Cons

When you are considering your life insurance options, there is a lot to keep in mind. There are many different types of life insurance available, and not all of them are the same. When you get life insurance, it is important to do your research and make sure you know which type and policy best fit your needs. 

Life insurance is very specific and personal to your health, lifestyle and more. This means that there is no best fit for all people. Everyone will need a different type of life insurance, depending on their needs. You might be getting life insurance for a specific reason, which can be best fulfilled by a certain type of life insurance. 

As you begin your search, you may find the return of premium life insurance. This is one of your options for life insurance. Take a look at what return of premium life insurance has to offer to see if it might be the right fit for your needs. 

What it is

Often, people who are insured wish that they could receive something if they do not die while their policy is active. With most types of life insurance, the policy is only paid out in the case of death. When this happens, the insured does not get anything, but their family receives the death benefit. If the insured survives beyond the policy, they do not typically get anything in return. Some people feel like they paid their premiums for no reason and ended up without any benefits. Of course, they had the peace of mind that their families would be provided for in case of death. 

One of the main reasons that people end up choosing return of premium life insurance is because they get their premiums back if they survive beyond the policy. Return of premium works in two ways. 

First, it gives you the protection you want in case you pass away. If you pass away while the policy is in effect, your family still gets the death benefit and the protection you had planned to give them. This works exactly like other types of insurance. You do not have to worry about your family having a major financial burden to deal with at the time of your death. 

Second, you get a return on your premiums if you survive beyond the policy. Those monthly premiums are returned to you because your death benefit was not paid out. You will get the amount you paid in premiums throughout the policy’s duration back. 

For most people, this sounds like a great deal. Their family is protected in case of death, but they also get their premiums back if they outlive the policy. In this case, the insured does not feel like they paid the premiums for nothing. They get something from paying the premiums whether they survive or not. 

If you had a 10-year policy and paid $100 per month, you will get $12,000 back in returns. This is a nice feature to have because it will seem like you did not just pay for life insurance for nothing. You will actually get something out of your policy if you survive, which is not a typical option with life insurance. This is a major reason that people choose to get return of premium life insurance. They feel like they are getting something more out of their policy. 

In most cases, you will get 100% of your premiums back if you outlive the policy. It is important to note that you may not get 100% of what you paid back. This is in the case of riders and other add-ons you might have paid for. The return of premium only applies to the monthly premiums you paid. 

To find out more about what you will get back from return of premium life insurance, you should check with your agent. This will ensure that you fully understand how the policy works too. Certain policies and companies may have different structures when it comes to return of premium life insurance. As mentioned, you should do your research to make sure this type of life insurance will work for you. 

While this may sound like a great option for you to keep in mind, it is important to remember that this is not the best choice for everyone. Remember that every person has different needs when it comes to life insurance, so you should look at the pros and cons and make sure you know what works best for your needs. 

The Pros and Cons of Return of Premium Life Insurance

As with any major decision, it is necessary to weigh the pros and cons as you do your research. The same is true of life insurance products. Because not all life insurance products are created equal, you need to make sure you understand what they all have to offer. Looking at the pros and cons is a good place to start. This can also help you to make comparisons between different types of life insurance. 

Every type of life insurance comes with its own list of pros and cons that you will have to think about. It is important to realize that not every pro and con applies to every person. Depending on your particular needs, some pros and cons may be applicable while others are not. 

Pros

You get a return of your premiums paid

This is the most obvious pro that comes along with return of premium life insurance. With return of premium life insurance, you get something out of your policy, even if you outlive the policy. This is a major benefit over other types of life insurance. Most types of life insurance do not offer this, which makes it a good reason to consider return of premium life insurance. 

You can use it as a forced savings option

With return of premium life insurance, you are forced to save money. This money is then paid out later if you outlive the policy. This is a good way for you to save up money if you do not want to save another way. At the end of the policy, you get those premiums back. Then, you can use the return for whatever you need the savings for.

Your returns are tax-free

Once you outlive the policy, you get the premiums you paid in full. You do not have to worry about paying taxes on those premiums. This helps you to know exactly what to expect to get from your return of premium life insurance. You will get all of the premiums back that you paid throughout the duration of your policy. Taxes do not need to be taken into consideration. 

You get the life insurance protection you and your family need 

The main reason people choose to get life insurance is to protect your family in case you pass away. This means that your family will receive the death benefit if you pass away. This eliminates the financial burden that may come with your death. They can take their time to grieve and not worry about paying the bills, medical expenses, and more. 

Return of premium life insurance is less expensive than whole life insurance

Whole life insurance can be a good option, but it is very expensive. This makes return of premium life insurance a great alternative. Because it is more affordable, it is easier for more people to access it. Then, they can get the coverage they need. 

Cons

Not a lot of companies offer return of premium life insurance

You may have a difficult time finding a return of premium life insurance policy when you begin comparing companies. If you are interested in return of premium life insurance, you may be left with few options and you might not be able to make a lot of comparisons. This is important to consider as you look for return of premium policies. There may be specific coverage lengths or policy minimums that make it difficult to get the policy you are looking for. 

Return of premium life insurance costs more than term life insurance and other affordable options

You do get something more out of a return of premium policy, but you will be paying for it. If you outlive the policy, this is not necessarily a bad thing. Just keep in mind that it will cost more than term life insurance. Not everyone can afford return of premium life insurance, even with its benefits. 

It is not the best option as a savings component

Though return of premium life insurance can be used for savings, you may be better off using another type of savings account. In many cases, the best choice would be to get an inexpensive term life policy. Then, you can invest your savings. This is a good way to save up the money you need without spending too much on your life insurance policy. 

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The good news for you is you’re in the right place. We can help you compare rates of all the return of premium products out there. We do the shopping on your behalf, and it doesn’t cost you a penny more. Use the quoter on this page or give us a call today!