Until lately, I assumed that Return of Premium Life Insurance was a product for those who do not know how to invest their money.  When I compare Return of Premium Life Insurance with the more popular term life insurance, Return of Premium has more to offer.

Compare Return of Premium Life Insurance to Term Life Insurance:

Return of Premium Life Insurance is a term life insurance policy that has an extra monetary incentive. The policyholder is given the entirety of his or her premiums paid if the insured does not die during the policy term of coverage. However, if they do, the death benefit is paid as normal.

Some may identify this as a zero cost purchase, but others would not the sacrifice: the insured will not have access or the use of their premiums for the next 20 or 30 years, depending on their term agreement.  Sounds like a bad savings plan. You get out what you put in. However, this is also the benefit of such a policy, instead of investing in a regular term life policy and only benefiting if the death benefit is used. This way, you are both covered and reimbursed.

The downside to ROP on the other hand is that ROP Life Insurance rates are considerably higher than ordinary term life insurance rates. I assumed that there would be an obvious difference of the two; after all, there is an added benefit to investing in an ROP policy.  However, it was time I compared ROP insurance rates with term insurance first hand.

Comparing the Ability to Compare Rates:

Thanks to the convenience of the internet, searching for facts and tools can be effortless.  Even a task as daunting as comparing term life insurance rates can be completed with the simple click of the mouse. Individuals can now instantly receive term life insurance quotes from multiple carriers using a free quote engines found on the internet, but comparing ROP life insurance rates is not as simple:

Using a standard internet insurance quoter, I was able to find term life insurance quotes from five carriers but turned up only one ROP life insurance quote! Collecting enough quotes to compare ROP Life Insurance in order to compare rates could take a very long time, using this approach.  It may be gaining popularity, but it certainly is not popular enough for carriers to have quoters that include it.

The Final Thought on Return of Premium Life Insurance Rates:

After continuing my research, I determined that Return of Premium Life Insurance rates run about 50% more than term life insurance rates do.  This was a common estimate found in most of my research. When comparing my own, I found an average of $404/yr against $665/yr.  That is an extra 65% for ROP Life Insurance.

Yes, the cost of ROP insurance is higher, but it makes up for it in the end. You are paying 65% more, but you are getting 100% back. The math is simple when you look at it that way.