The Recent Evolution of Term Insurance

THIS IS NOT YOUR FATHER'S TERM INSURANCE POLICY....

Term insurance has come a long way, and many companies offer creative and flexible products that make the decision to buy insurance much easier. One of those features is called Return of Premium (ROP). This feature allows the consumer to have the coverage they want and at the end of the term, they can be paid back a percentage of the total premiums paid. In some cases, they can even be paid back ALL of their premiums. This satisfies two needs for consumers: it provides the desired and needed coverage while at the same time acts as a secret tax-free savings plan. 

In some cases, when the term has ended, the consumer may even convert the policy into a permanent, paid up life insurance policy.  One of the best benefits of the “modern” term policy is the conversion feature. This allows a person to get some term insurance, “lock” in their health rating, and when financial or personal circumstances change, the policy holder can “convert” the term policy to a permanent policy and keep their original health rating. No lab work (blood, urine), medical exam, or underwriting will be required. This feature alone is the main reason a younger healthy person should get a term policy in place that they own as an individual (not related to their work plans). This way, they lock in their health rating. This is invaluable as we all get older and health issues from mild to major creep up on us. So just for the conversion feature alone, we all can benefit from having at least a term policy.

There are pros and cons to an ROP policy. Everyone has different risk tolerances. ROP policies do cost more than straight term life but are much less expensive than Whole Life.  A consumer can get much better returns with the money NOT used for the ROP policy by investing in the stock market; however, the stock market is riskier and not guaranteed.  So, if a consumer is already invested heavily in the stock market then an ROP policy might be good option because it will provide diversification. It’s really difficult to say that an ROP policy is the best choice for everyone because everyone has their own unique circumstances to contend with.  I believe, however, the main benefit of the ROP is getting people off the fence so that they will actually buy a policy. No investment is perfect, but you can't put a price tag on the peace of mind that comes from having an Insurance policy.

With these newly added features to the term insurance policy, consumers have more motivation to obtain coverage with the understanding that all of their money isn’t going out the window, while at the same time providing some security to loved ones so they can grieve without any financial stress. Try asking your auto insurer for ROP if you never get into an accident! It’s not going to happen. With Life Insurance ROP you can get a refund. It’s called Return of Premium. Contact me so we can determine how much coverage you can qualify for.