A return of premium life insurance policy (ROP) is essentially a term life insurance with a special feature: you get all the premium money you spend on your term life insurance policy paid back to you at the end of the term. And, best of all, the premium money refunded to you is not taxable.
If you’re evaluating term life insurance premium policies, be sure to look at return of premium term insurance to see if it’s right for you. A Benchmark Broker agent who specializes in life insurance can help you learn everything you need to know about various life insurance options.
3 Key Reasons People Buy ROP Life Insurance
- They feel confident they will outlive the term of the policy
- They want to get their investment back instead of paying in and receiving no benefit
- They want to feel pride in outliving the policy, vs. despair that they bought it for nothing
How Is Return of Premium Term Insurance Different?
A regular term life insurance policy and a return of premium life insurance policy are similar in that they both cover you for the term you choose and provide death benefits upon your passing.
Return of premium term insurance is different from regular term life insurance in a few significant ways. With a regular term life policy you pay the premium for the life of the term, and if you survive the term, neither you nor your beneficiaries get any of your investment back.
With a ROP term insurance policy, however, if you survive to the end of the term, you get 100 percent of all the money spent on premiums refunded back to you. You get back only what you spend on your premiums, without interest. But you don’t pay taxes on the funds you receive back, either. It’s kind of like paying rent over many years and then receiving your rent money back when you move out.