Return of Premium Term
Does it bother you that you'll pay for all those years of term life insurance and if you survive you have no life insurance, and the money you paid for it, is gone too? We know the family needs protecting, so we just go with the best option available. Return of premium does cost more because not only does the insurance company guarantee a payout at time of death, they have
to refund the premiums if you survive. ROP is replaced less than regular term life insurance, so there's a higher probability of payout for the insurer, thus higher expenses to the insurance carrier.
So, is it worth it? The extra premium equates this way. Take the cost of non-ROP term and invest
it at about a 8% return. That's about how much ROP costs. Can you, would you "invest the rest" and get a consistent 8% over the length of term? Do you have the discipline to manage this?
If not then return of premium is for you.
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