You know you need life insurance to protect family’s financial future, but you only want coverage for a certain number of years. The good news is you have options.
Life insurance isn’t one-size-fits-all. When it comes to finding the best fit there are different types of policies, add-on features, term lengths and more. With all the different options, deciding which policy to purchase can feel daunting and you don’t want to overlook a coverage type. So, how do you decide? Work with your local Farm Bureau agent to discuss your individual needs and goals. Together, you’ll find a policy that best fits your current and long-term goals.
You’ve heard of term life insurance, but have you heard of Return of Premium (ROP) Term Life? This type of term coverage offers a unique structure. Let’s take a closer look at Return of Premium.
What Is Return of Premium Life Insurance?
Return of Premium life insurance is a type of term life insurance that offers you coverage for a set number of years — but with an added bonus. With Return of Premium Life insurance, you gain coverage for a term of 20 or 30 years for a level premium payment. The minimum face value amount we offer is $100,000. And if you outlive the level premium payment period, the base policy premiums you paid will be returned to you at the end of the term.¹ And if your needs change prior to the end of the level term, you will receive a portion of the base premium back if you cancel the policy early.
Return of Premium Policy Life Insurance Pros and Cons
If you love the idea of having life insurance, but don’t love the idea of spending money on a term policy you may never use, ROP may be the policy for you. Here are the pros and cons of a Return of Premium policy.
Pro: Lump-sum Payment
The lump-sum payment is tax-free and can be used however you choose. With a traditional term life insurance policy, if you outlive the term, no money is returned.
Pro: Traditional Benefits
If you do pass away during the coverage period, your beneficiaries will receive the death benefit — no premium will be returned.
Pro: Option to Convert
Once you purchase a ROP policy, if you decide down the road you want to convert to a permanent policy like whole life coverage, you may be able to do so.
Con: Higher Cost
It is important to understand that the cost of a traditional term policy is generally less expensive than the payment for a Return of Premium policy.
Find the Right Fit
¹The amount of the lump-sum payment (endowment benefit) is equal to the number of years in the initial level premium period times the base policy premium (excluding any substandard premium, modal expense factors and premiums for riders).