The phrase “no-cost life insurance” is a little misleading. “No-cost” doesn’t mean a free pass on life insurance; rather, it refers to your ability to be paid in full if you outlive your policy. Another term for this type of policy is “return of premium (ROP) term life insurance.” With this particular insurance, your premiums will be repaid to you, either partially or in full, if no death benefit has been paid by the end of your insurance term.With traditional life insurance, you buy a coverage term, such as 15, 20, or 30 years, and pay a fixed annual price. If you outlive those terms, your policy expires, and you receive nothing even though you paid for the “chance” that you might die. In contrast, ROP policies, also available in 15-, 20-, or 30-year coverage terms, return 100 percent of your premium – tax-free – or part of your premium at the end of your term if no death benefit has been paid.
ROP term life insurance policies tend to be more expensive than traditional term life policies. The cost varies among insurers and depends on your age and the length of term. Generally, the shorter the term, the more expensive the policy will be in comparison to a traditional term policy. For example, a 30-year ROP policy can sometimes cost 40 to 50 percent more than a regular 30-year term policy. As the term shortens, the price increases; a 15-year ROP term often costs many multiples of a comparable, traditional 15-year term policy. For this reason, some consumers choose to purchase traditional life insurance, and they invest the difference in what they would have paid for a similar ROP policy. Other consumers, though, feel more comfortable with an ROP policy and are willing to pay a little bit more in order to have that extra security.
ROP term life policies are extremely attractive to people who think they will outlive their policies or feel they are wasting money on a traditional life insurance policy. Choosing an ROP term life policy is a way to hedge all of your bets, regardless of what happens in the future. To put it another way, ROP term life policies offer you protection if needed and repay you money if you don’t need it. It’s a win-win for everyone, especially for you and your loved ones.
Would you like to learn more about ROP term life insurance? Are you wondering which type of insurance is right for you? Call 915.996.9799 to speak with one of our agents today.