What is return-of-premium life insurance? – Forbes Advisor

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Life insurance is an essential tool in protecting loved ones against financial loss. But you may not like the idea of ​​making years of payments on a policy that never results in a payout (good news for you, not so much for your wallet).

Fortunately, one type of life insurance policy eliminates that possibility. Return-of-premium (ROP) term life insurance reimburses all the premiums you’ve paid if you’re still alive when the policy term ends.

Here are some factors to consider before committing to this type of life insurance policy.

How life insurance with return of premiums works

Return-of-premium life insurance is typically a type of term life insurance, meaning it sets a rate for the level term period, such as 10, 20, or 30 years. When the level term period ends, you can generally renew the policy every year, but at higher rates.

With a typical term life insurance policy, you pay regular premiums for as long as your coverage is in force. If you die during that time, your beneficiaries receive a life insurance payment known as a death benefit. If you are still alive when the tier term ends and you have not renewed the policy, there is no payment.

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