Return of Premium
The Return of Premium is a new element of the term life insurances that makes them impossible to ignore. Many people hesitated to purchase a life insurance for a certain period, following the principle: I’m young; I don’t plan to die in the next ten, fifteen or twenty years. Only the cautious ones applied for such an insurance. Now, taking in consideration the Return of Premium program, the insurance policy has become even more attractive. The number of those that get insured has increased considerably, since this new convention has been released.
The Return of Premium represents the restitution of all the money invested by the policy owner. If you won’t benefit of the policy in the mentioned term, you will get all the money back. This is a great deal and you don’t have anything to lose. If you die within the stated term, your unpaid mortgage or loan will be paid by the insurance company. If not, all the monthly payments will be refunded. You won’t lose the money spent on the monthly premiums, because you lived. This is like a product with many years of warranty: If you don’t use it, you may return it to the seller. However, if you benefit of this protection form, the whole cost of your insurance will increase. If you include the Return of Premium in your contract, your monthly rates will increase with 200$ or even 300$, depending on the conditions of each company. If you live, you will get all the money back, so that is the happy ending. In contrary, your family will receive only the initial sum invested, without the extra money paid for the Return of Premium facility. So, if you pass away during the term of the insurance, the money invested in this term of the life insurance will enter in the possession of the insurance company. The insurer doesn’t have anything to lose in both cases. You have to think carefully before adding this specification to your contract. You may consult a special advisor that will help you get the best life insurance for you. You have to decide whether the Return of Premium program is a good investment or not.
If the purpose of your life insurance is to cover your mortgage, you may go for a Return of Premium. If you manage to pay your mortgage at time, you won’t repine after the money you invested in an insurance.