Return Of Premium Term Life Insurance – Is It Worth The Cost?

2007-03-08 10:33:40

( Insurance )



When you are young and unmarried, you probably would not think of insurance coverage. But when you get married and start raising a family, or at least have some loved one depending on you, you begin thinking of providing for their financial comfort – even if you are no longer around. In other words, you will want some life insurance cover. The solution is term life insurance since it gives you valuable coverage for an inexpensive premium.

For most young families on limited budget, the main consideration is the affordability of the term life insurance premium. You may want to get a whole life insurance policy to avail of the investment package it carries but you cannot afford to pay the premium.

When you get term life insurance, you may like to avail of the return of premium term life insurance as well. The return of premium term life insurance is provided in full if the insured survives to the end of the contract term and the contract remains in force in effect, although the benefit may be reduced by amounts paid under the contract. This return of premium term life insurance is particularly designed for the mortgage market.

It must be stressed that this return of premium is actually a rider. You are actually paying for a rider that contains additional term insurance coverage equivalent to the total premiums paid at any time during the effective period of coverage. Technically speaking, it does not really return premiums, but pays the beneficiary an additional amount equivalent to the total premiums paid until the date of death.

With the additional benefit, you may pay for higher cost than the normal term life insurance premium. However, you are guaranteed that should anything happen to you within the term of the policy, not only the death benefits will be given to the beneficiaries but also the return of premium benefits. In this case, it protects those you love from the loss of your financial contribution.


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