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Approximately 90% of people who purchase traditional term insurance do not die during the period of coverage. A fairly new product designed to keep you from "throwing away your premium dollars" is return of premium insurance.
Request Return of Premium Insurance Quotes.
With return of premium insurance, you get the protection you want for 15, 20 or 30 years. You also are guaranteed to get back all of the premiums you have paid during that coverage period (less any premiums for extras such as waiver of premium or disability income riders).
Premiums for return of premium insurance are more than traditional term. You receive a partial return of premium for policies canceled before the end of the coverage period...usually beginning in year 6. The longer you keep the policy, the higher the amount you get back.
If you outlive your coverage period, you are guaranteed to receive all premiums paid back on a tax-free basis. This translates to an after-tax investment return of 5% to 9%, depending upon your age.
Companies are offering return of premium insurance in order to retain your business. The costs of acquiring and processing your business (policy) is not recovered by carriers until the fourth year or longer. Return of premium insurance is win-win for you and the companies.
Examples
Male - Age 35, Preferred Non-Smoker ---$500,000 of 30 Year Term
| Option 1
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Option 2
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| Purchase 30 year Return of Premium Insurance
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Purchase traditional 30 year Term & invest the difference
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| Annual Premium = $970
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Annual Premium = $665
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| Return of Premium after 30 years = $29,100
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"The Difference" annually = $305
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You would need a 7.06% after-tax return on your $305 annual "investment" in order to grow to $29,100 in 30 years.
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Male - Age 40, Preferred Non-Smoker ---$500,000 of 30 Year Term
| Option 1
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Option 2
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| Purchase 30 year Return of Premium Insurance
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Purchase traditional 30 year Term & invest the difference
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| Annual Premium = $1,350
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Annual Premium = $910
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| Return of Premium after 30 years = $40,500
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"The Difference" annually = $440
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You would need a 6.86% after-tax return on your $440 annual "investment" in order to grow to $40,500 in 30 years.
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Male - Age 45, Preferred Non-Smoker ---$500,000 of 30 Year Term
| Option 1
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Option 2
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| Purchase 30 year Return of Premium Insurance
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Purchase traditional 30 year Term & invest the difference
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| Annual Premium = $1,965
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Annual Premium = $1,475
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| Return of Premium after 30 years = $58,950
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"The Difference" annually = $490
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You would need a 8.33% after-tax return on your $490 annual "investment" in order to grow to $58,950 in 30 years.
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Note: The above examples are for illustrative purposes only for specific ages and rate classes as of April, 2006. They do not necessarilly reflect your costs or guarantees. Please contact us for a quote specific to your situation.
Request Return of Premium Insurance Quotes.
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Licensed to sell return of premium insurance in:
Ohio License #104233, Florida License #D072714, California License #0C94325,
Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin
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