When many consumers try to buy life insurance, they have a hard time deciding between whole and term life. This is not a simple decision, and you must consider the pros and cons of each.
We know that term is usually cheaper. That is because it does expire after a time period, and because it does not normally grow any cash value. It is considered pure insurance.
Whole life can be attractive because it covers the insured person as long as it is kept in force. It can also grow cash value. This can be used to get paid if you decide to surrender the policy. It can also be used to get paid for a life settlement transaction.
Like most other financial decisions, this one is not so simple. Some insurers offer an ROP (Return of Premium) rider which makes term policies work better for some clients. This additional rider has the benefit of refunding premiums if the insured person survives their policy.
How does this work? Well let us say that Ms. Davis purchases a 20 year term policy with a $100,000 death benefit. If she keeps her policy in force for the whole 20 years, and she survives it, she never got any real cash benefit out of it.
If she had chosen to spend a little more, and had taken the option of an ROP rider, she would also get a nice check back from her insurer. She would get the refund of all the premiums she paid.
You understand that if Ms. Davis were to pass away, and her death benefit was paid out, the premiums would not be returned.
Still, this makes term with ROP attractive to many people. They get the lower term premiums, but with just a little more added to their premium, they can get their money back at the end. I still cannot tell you if this is the choice you should make. Your own situation is unique. But I think that many people would take this option if they knew about it.
Visit us to look for term life with ROP in your city or town. We want to help you feel good about your decision, and find the best life insurance type for you.
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