When you buy life insurance, you have little hope of seeing your money again. In most cases, it will end up going to your heirs once you have passed on. There is another option, however. You can choose a Return of Premium Life insurance policy that returns your premiums to you. This is a term life policy that will return your premiums to you if you would happen to outlive the maturity date of the policy. Most people want to know what's the catch to this type of insurance. There really isn't one, but there are a few drawbacks.
With a Return of Premium life insurance policy, you will receive all of the premiums you paid into the policy once it has reached the maturity date. All you have to do is outlive your policy. This will provide you with a tax-free windfall that you will be able to enjoy if you are still able. A Return of Premium policy has both pros and cons, so it's important to learn everything about them before signing on the dotted line.
There are two strong pros of having this type of policy. First, you benefit from having all or most of your premiums returned to you. Second, the money you get back is tax-free. The two stipulations include outliving the maturity date of the policy and not allowing the policy to lapse during the time you had it in place. This is beneficial for many people who no longer need a large payout and could possibly use the extra income. Receiving all of your premiums back is a bonus, but it may not be as lucrative as you think it is.
The cons of this type of policy are often why many people choose not to sign up for them. The premiums are higher than for more traditional term policies. One of the big sticking points is that you only get the premiums back. You don't get any interest. If the policy is allowed to lapse for any reason, you won't get your money back. Another drawback is that many insurance companies don't offer this type of insurance. Before you decide on a Premium of Life insurance policy, you should go over all of your options and talk to an agent to find out what's best for you.
To determine your overall cost, it's important to know your options and how much life insurance you will need over time. For some, this policy will do very well for them. For others, it could be rather costly. It will all be determined by what goals you have set for yourself financially and where you expect yourself to be when the policy finally matures. It may be a good idea to contact a financial adviser specializing in financial or retirement planning.
If you are in the market for a term life insurance policy, contact our insurance experts at EastEnd Insurance Agency. We can discuss the available term insurance options with you, including the pros and cons of a Return of Premium Term life policy. We can help you decide whether the plan will be a viable one for you or not.