Term Life vs. Return Of Premium

Those in search of the perfect life insurance coverage have many options to choose from, and it is important for would be policyholders to shop carefully for the coverage they need. From term life to whole life and universal life, there are many different kinds of policies to choose from. Sorting through all this clutter to find the best possible life insurance coverage for the money can be quite a challenge, even for the experienced life insurance shopper.

One of the most popular, and most affordable, types of life insurance coverage is also the simplest. Unlike other types of life insurance coverage, term life insurance is designed to provide a death benefit – and only a death benefit – to the beneficiaries named in that policy. There is no cash value, there is no investment component and the policy pays off only upon the death of the insured.

Another thing to keep in mind when shopping for term life insurance is that the policy is in effect for only a specified period of time – known of course as the term. If that term expires with the insured still alive it is worthless. Even though the policy can be renewed, there is no return of premiums paid and no death benefit. It is up to the insured to renew the term life insurance policy before it expires in order to avoid a gap in coverage. Allowing the life insurance coverage to lapse could leave the beneficiaries high and dry, and it is important for term life holders to understand the importance of renewing their policies on time.

Those who worry about wasted premiums and possible lapsed coverage may want to look at a different type of life insurance coverage. This life insurance coverage is known as return of premium life insurance, and as the name implies the premiums paid can be returned to the insured at a specified point in time. This return of premium feature allows individuals to enjoy the value of the policy while they are still alive, and this feature is a popular one with many shoppers.

Of course it is important to balance the costs of this type of coverage against the benefits of these returned premiums. Term life insurance is generally the least expensive type of coverage, so a return of premium policy will likely cost more. It is a good idea to add up all the premiums of a return of premium life insurance policy and compare them to the premiums for the same amount of term life coverage. This type of comparison is the best way to make sure you are getting the best life insurance coverage for your hard earned money.

Shopping for a life insurance policy can be a difficult, time consuming and sometimes expensive proposition. It is important for anyone in need of life insurance coverage to shop around as much as possible. Shopping around is the best way to get the highest amount of life insurance coverage for the least amount of money.