Term Life Insurance Articles
Getting Your Premiums Back: Return Premium Term Life Insurance
2009-12-01
Term life insurance is a very responsible buy for anyone, especially if you're the primary breadwinner for your family with lots of people depending on your income. A term life insurance policy is a way to ensure that if you die, your family is taken care of financially while they get back on their feet. However, there is one element of a term life insurance policy that doesn't seem super responsible. Any premiums paid into a term policy are forfeited if the policyholder should live past the term of the policy. This makes paying your term life insurance premiums feel a bit like gambling. If you outlive your policy, all of the premiums were basically wasted (although they did provide you with some mental security during the term).
Luckily, some life insurance companies have answered this objection to term life policies by providing new return premium life insurance. As the name implies, a return premium policy pays back the policyholder with all of the money that was paid into the policy at the end of the term. The premiums returned to the customer are tax-free. Insurers make money by investing the premiums while they have them, so it becomes a win-win situation for all parties involved. Large benefits are still paid out if the policyholder dies, as well. This makes return premium term life insurance a very safe form of insurance, and it's still less expensive than many insurance types (although premiums are usually higher than they might be for a traditional term life insurance policy).
The major disadvantage to return premium term life insurance policies, other than their higher premiums, is that no interest is provided when the premiums are paid back. This makes it a poor straight investment. However, you should remember that it's a life insurance policy and is there mainly to provide you with security and peace of mind, not financial gain. Also, if you close out a return premium policy before the end of its term, you're only entitled to a portion of the premiums that you'd paid into the policy. If you elect to use this form of insurance, you should carefully study all of the documentation your insurance company provides for you, and be sure to keep your account in good standing.
If you're considering a term life insurance policy, return premium insurance should certainly be on your list of subjects to research. Make sure that you're buying a policy that you can afford, and read all of the fine print in your contract. It can be a great, safe way to invest in your family's future, and has some significant advantages over other insurance forms, particularly for younger insurance buyers.
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Term life insurance is a very responsible buy for anyone, especially if you're the primary breadwinner for your family with lots of people depending on your income. A term life insurance policy is a way to ensure that if you die, your family is taken care of financially while they get back on their feet. However, there is one element of a term life insurance policy that doesn't seem super responsible. Any premiums paid into a term policy are forfeited if the policyholder should live past the term of the policy. This makes paying your term life insurance premiums feel a bit like gambling. If you outlive your policy, all of the premiums were basically wasted (although they did provide you with some mental security during the term).
Luckily, some life insurance companies have answered this objection to term life policies by providing new return premium life insurance. As the name implies, a return premium policy pays back the policyholder with all of the money that was paid into the policy at the end of the term. The premiums returned to the customer are tax-free. Insurers make money by investing the premiums while they have them, so it becomes a win-win situation for all parties involved. Large benefits are still paid out if the policyholder dies, as well. This makes return premium term life insurance a very safe form of insurance, and it's still less expensive than many insurance types (although premiums are usually higher than they might be for a traditional term life insurance policy).
The major disadvantage to return premium term life insurance policies, other than their higher premiums, is that no interest is provided when the premiums are paid back. This makes it a poor straight investment. However, you should remember that it's a life insurance policy and is there mainly to provide you with security and peace of mind, not financial gain. Also, if you close out a return premium policy before the end of its term, you're only entitled to a portion of the premiums that you'd paid into the policy. If you elect to use this form of insurance, you should carefully study all of the documentation your insurance company provides for you, and be sure to keep your account in good standing.
If you're considering a term life insurance policy, return premium insurance should certainly be on your list of subjects to research. Make sure that you're buying a policy that you can afford, and read all of the fine print in your contract. It can be a great, safe way to invest in your family's future, and has some significant advantages over other insurance forms, particularly for younger insurance buyers.
