Return of Premium (ROP) term life combines regular term life insurance with a return of premium feature. You choose the term: 20, 25 or 30 years. At the end of the term, you get all of the premiums you paid back, as long as you made all payments and the policy didn’t lapse. Some companies even offer partial premium return if you cancel your policy prior to the end of the term.
What’s the catch?
It’ll cost you more than regular term life will. Life insurance companies charge a higher rate for ROP policies. They invest the difference and use the earnings to help pay back your premiums at the end of the policy term.
How much more are we talking?
It all comes down to the interest you can earn. Remember, you’re paying more than regular term life costs. In exchange, you get all of your money back. But is that return better than the return you could earn on your own? In other words, can you do better investing that extra cost each month?
Luckily, we have a handy Return of Premium term life calculator to help you decide. In some cases, it makes sense. In others, not so much. Use our calculator to see for yourself.