There are various types of term life insurance, and return of premium is a type that guarantees that the policyholder will receive their death benefit or a full refund of all premiums paid. This type of coverage is offered as an alternative for those who favor term life insurance, but don’t want to lose thousands if they live longer than the policy term. In this article, the reader can learn about this type of Life Insurance in Elyria OH, and the information can help them make an informed decision.
How Return of Premium Coverage Works
When a person buys term life coverage, they do so for a certain period, usually between five and 30 years. During that time, the policyholder pays a premium each month; the premium is typically based on the customer’s health, age and level of coverage purchased.
If the policyholder passes away during the term, the beneficiary receives a death benefit, which is a fixed amount equal to the coverage bought. In some instances, the death benefit is collectible as soon as the policy is bought, but in others, beneficiaries must wait at least two years to collect the benefit amount. A policyholder’s death must be accidental or from natural causes, and beneficiaries won’t be paid if the policyholder commits suicide.
Is This Type of Coverage Right for All People?
Premiums for return of premium coverage are typically higher than those for regular term life insurance. However, many customers opt for such plans because they are guaranteed to receive at least the amount paid. Unfortunately, money spent on premiums does not collect interest. Although return of premium coverage allows the policyholder or their beneficiaries to get back what was paid in premiums, it’s usually a break-even proposition. In fact, many customers end up losing some money because of inflation. Customers should carefully compare their options, to determine how much they could make by opting for a regular term life policy over a return of premium policy.
Return of premium policies often have certain limitations, but they do have advantages to consider. An agent selling Life Insurance in Elyria OH can help clients evaluate their coverage options, and or their Facebook page can recommend the right policy for the individual’s needs.
