Should I Get Return of Premium Term Insurance?
If you are asking yourself “should I get return of premium term insurance” then
you need to look in the mirror and scream“Yes!”
premium term insurance is a no fail investment. Why do I say that? Because you can essentially get your
term life insurance for
Let’s face it- almost everyone needs life insurance, whether it’s for real financial reasons or purely for peace of mind.
And life insurance costs
money. You pay a premium to the insurance company every month in return for security for your loved
Only 1% Of Term Life Policies Ever Pays
Did you read that? Only 1% of term life insurance policies ever pay
out, so most people pay for 10, 20, even 30 years and never actually need the death
benefit. But with return of premium
term life insurance, you get all your money back at the end of the term. Since only 1% of term life
policies ever have a death benefit claim, then there is a 99% chance that you will get all of your money back. That
means that you can get life insurance coverage for 10, 20, or
30 years for free.
What Will I Get Back?
Let’s say you buy a 15 return of premium term life insurance policy to protect your
spouse and children in case anything happens to you. Let’s assume that your premiums are $75 per month. After 15
years, you would have paid $13,500 in premiums ($75 x 12 months x 15 years). The insurance company will then send
you a check for $13,500 and you will not owe any taxes on this money.
What You Should Do With the Money?
Most people use the lump sum to buy another life insurance policy. You can take the lump sum and use it as a single payment on a
whole life policy. Then you would have
a paid up whole life insurance policy that will last you for your lifetime. Pretty neat huh? Other people might
choose to put the lump sum towards their mortgage or other expenses that they have. What you do with the money is
up to you, but the whole point is that you get all your money back.
Wouldn’t it be nice if everything worked that way?
So when people ask me if they should buy return of premium term insurance, I
always say yes, if you can afford the premium.
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