Best Return-of-Premium Life Insurance Companies of November 2023

Best Return-of-Premium Life Insurance Companies of November 2023

Life insurance serves as a crucial financial safety net for your family in the event of your passing. However, the idea of making ongoing premium payments for a policy that may not yield any payout can be daunting for your finances. Return of premium (ROP) term life insurance offers a solution by guaranteeing a full refund of all your paid premiums if you outlive the policy term, providing peace of mind for your wallet.

Here is the list of Best Return-of-Premium Life Insurance Companies: 

State Farm

Offers coverage starting at $100,000, allows conversion to permanent life insurance, and offers additional riders for customization.

Cincinnati Life

Available in 20-, 25-, and 30-year terms, connects policyholders with underwriters and offers various riders for customization.

Illinois Mutual

Offers coverage up to $500,000 for ages 18 to 60, provides a quick and seamless online quoting process, and is available in most states except a few.

What is the Return-of-Premium Life Insurance?

Return of premium (ROP) life insurance is a valuable option that refunds all your premiums if you outlive the policy term, providing a financial safety net for the living policyholder.

Several reputable insurance companies offer ROP policies, including AAA Life Insurance, Cincinnati Life, Country Financial, Illinois Mutual, Lincoln Financial, Mutual of Omaha, Pacific Life, and State Farm, each with varying coverage amounts, term lengths, and options to cater to diverse needs. This ensures that individuals seeking the assurance of premium refunds have a range of choices to find the policy that best suits their requirements.

Dive into the world of financial security with the MarketsHost dedicated Insurance section, where we demystify the complexities of protection.

How Does Return of Premium Life Insurance Work?

Return of Premium (ROP) life insurance is a type of term life insurance that provides policyholders with a unique benefit. When you purchase an ROP policy, you pay regular premiums over the policy's term, which could be 10, 20, or 30 years.

Unlike traditional term life insurance, where premiums are typically not refunded if you outlive the policy, ROP life insurance offers a refund of all the premiums you've paid if you are still alive when the policy term ends.

This refund is tax-free and can serve as a financial safety net for policyholders. ROP insurance is often offered as a rider to a standard term life policy, and while it provides valuable benefits, it typically comes with higher premiums compared to traditional term life insurance.

However, it offers peace of mind to policyholders, knowing that they will receive a return of their premiums if they survive the policy term, making it a popular choice for some individuals.

Is Return of Premium Life Insurance Worth It?

Yes, Return of Premium (ROP) Life Insurance can be worth it for some individuals who want a guaranteed refund of their premiums if they outlive the policy. However, it comes with a higher cost compared to regular term life insurance. The main advantage is the assurance of getting your money back, but the downside is that it essentially provides an interest-free loan to the insurer. ROP policies can be considered if you are uncomfortable with the idea of potentially outliving a traditional term life policy.

How Much Does Return of Premium Life Insurance Cost?

The cost of Return of Premium (ROP) Life Insurance is notably higher compared to regular term life insurance. Typically, ROP life insurance can be two to three times more expensive than standard-term life insurance.

This increased cost is due to the added feature of potentially receiving a premium refund if you outlive the policy term. It's important to consider your budget and financial goals when opting for ROP insurance, as the higher premiums provide a form of savings, but you may find more cost-effective ways to invest and grow your money outside of this insurance option.

What Are the Pros and Cons of Return of Premium Life Insurance?

Pros of Return of Premium Life Insurance

• If you keep the insurance until it ends, you get back most or all of the money you paid as premiums.
• The money you get back is tax-free, meaning you don't have to pay taxes on it.
• You know exactly how much money you'll get at the end of the term. It's predictable.

Cons of Return of Premium Life Insurance

• This type of insurance is more expensive than regular insurance because you pay extra for the possibility of getting your money back.
• You don't earn any extra money on what you pay. If you invested elsewhere, you might make more.
•  If you stop the insurance before it ends, you won't get any money back. It only works if you keep it until the end.