term life insurance that guarantees your money back even if you don’t die. That’s right, at the end of the level term period usually thirty years if you haven’t yet died, you get a check for every penny you paid in over the entire thirty years and that check comes to your income tax-free. There aren’t many life insurance products that are this simple.oday I’m gonna talk about a type of
Understanding Return of Premium Life Insurance
We all teach our kids to put money in their piggy banks. Why? Because it’s smart to save money and it’s fun to crack it open one day and count all that money. So let’s say, we set up a plan where you put say five dollars a day into an adult-sized piggy bank. Obviously, the amount will vary based on your age, your health, and how big a policy you want. But in this example, a healthy 35-year-old male as soon as you start doing that, the life insurance company sets up an account with 1 million dollars in it. If you die any time during the 30 year period, your family would get a million bucks tax-free and the insurance company would get whatever is in the piggy bank. If you die (say in a year) the insurance company would end up getting only a total of about $1,800. If you die in ten years, they get about eighteen thousand dollars but your family would get a million. But if you’re still kicking in 30 years, you simply keep everything that’s in the piggy bank. By then, at five dollars a day it will have grown to nearly fifty-five thousand dollars.
A pretty simple concept if you ask me. The odds are you will still be here in 30 years. If you are, what’s better? A regular term plan that after thirty years if you don’t die they keep all your money and you get a sharp stick in the eye, or one that gives you all your money back.
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ROP Term Plans
In case you’re curious. I bought three ROP term plans over ten years ago. The ROP term really hit the market right around 2000 2001. Also, ROP plans are available all the way through age 50 which is actually really nice. So you might be asking if these ROP plans are so great, why isn’t everyone buying them? The reason is that they cost a little more than regular term plans that don’t give you your money back at the end of the term if you don’t die. But to me, it’s worth it. If you’re thinking, there’s got to be a catch. You’re right. There is if, you bail out early and drop the policy before you die and before the 30 years is up, you don’t get all your money back. So we don’t recommend these plans to folks that aren’t pretty sure they can afford to keep the policy in force for the full 30 years.
I hope this was helpful and if you’d like to learn more or want to get more information, read my another article.