Term Life Insurance Articles
Benefits of Return of Premium Riders for Term Life Insurance
2010-08-08
One of the major disadvantages of term life insurance as compared to other forms of life insurance is the loss of a policy holder's premiums at the end of the policy's life. Assuming that the policy holder does not die, all premiums paid into the policy go to the insurance provider. This can seem like a bad deal, but it's the reason that term life insurance quotes tend to be so low. However, some companies offer a term life return premium rider. This either allows policy holders to receive all premiums paid into a policy at the end of its term, or premiums paid into the policy are applied to another new policy--effectively extending the value of the term life insurance contract. There are a few important things to know about the benefits of this special return of premium rider.
First of all, return of premium riders adds an investment aspect to a typical term life insurance policy. They minimize risk from a policy holder's point of view, and term life insurance quotes for policies with these riders are still lower than those for some other types of life insurance (for instance, universal life insurance). Return of premium policies is a sort of "best of both worlds," and although they increase the cost of a policy, they're well worth the expense for buyers who can afford them. Return of premium policies is especially beneficial for buyers who use them as part of an overall financial strategy. When coupled with a long term investment like a 401k or an IRA, a return of premium term life insurance policy can help ensure a family's financial stability up to and through the policy holder's retirement. They're a smart way to control a policy's risks without losing the relatively high benefits offered by typical term life insurance policies.
Unfortunately, new insurance laws have made return of premium riders less common as a term life insurance option, but they're still offered by many insurance companies. If you're interested in a return of premium policy, be sure to look at a range of term life insurance quotes to determine whether you can feasibly afford the option, and make your policy premium payments on time to avoid negating the option. Ask your insurance agent about any special conditions for the rider. You'll probably be inflating the price of your term life insurance substantially by electing for a term life return premium policy, so you'll want to make sure to do it right--know how your policy works and what you'll need to do to see a return.
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One of the major disadvantages of term life insurance as compared to other forms of life insurance is the loss of a policy holder's premiums at the end of the policy's life. Assuming that the policy holder does not die, all premiums paid into the policy go to the insurance provider. This can seem like a bad deal, but it's the reason that term life insurance quotes tend to be so low. However, some companies offer a term life return premium rider. This either allows policy holders to receive all premiums paid into a policy at the end of its term, or premiums paid into the policy are applied to another new policy--effectively extending the value of the term life insurance contract. There are a few important things to know about the benefits of this special return of premium rider.
First of all, return of premium riders adds an investment aspect to a typical term life insurance policy. They minimize risk from a policy holder's point of view, and term life insurance quotes for policies with these riders are still lower than those for some other types of life insurance (for instance, universal life insurance). Return of premium policies is a sort of "best of both worlds," and although they increase the cost of a policy, they're well worth the expense for buyers who can afford them. Return of premium policies is especially beneficial for buyers who use them as part of an overall financial strategy. When coupled with a long term investment like a 401k or an IRA, a return of premium term life insurance policy can help ensure a family's financial stability up to and through the policy holder's retirement. They're a smart way to control a policy's risks without losing the relatively high benefits offered by typical term life insurance policies.
Unfortunately, new insurance laws have made return of premium riders less common as a term life insurance option, but they're still offered by many insurance companies. If you're interested in a return of premium policy, be sure to look at a range of term life insurance quotes to determine whether you can feasibly afford the option, and make your policy premium payments on time to avoid negating the option. Ask your insurance agent about any special conditions for the rider. You'll probably be inflating the price of your term life insurance substantially by electing for a term life return premium policy, so you'll want to make sure to do it right--know how your policy works and what you'll need to do to see a return.
