Term Life - Return of Premium
Term Life - Return of Premium
Anyone hear of this and how does it work besides the obvious title?
New! Return of Premium
Payback 100% of paid premiums when yououtlive initial rate guarantee period
New! Return of Premium
Payback 100% of paid premiums when yououtlive initial rate guarantee period
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
Re: Term Life - Return of Premium
I'm pretty sure whitecoatinvestor.com has a blog on it
IF you pay all the premiums on time without fail then at the end of the term you get your money back. This looks good who don't understand the time value of money. The premium is not the same as your regular term. Its much higher. You pay for your term insurance by the interest they make on the money and the fact that some people aren't on time for a payment or lapse bc it is higher than regular term. There is no magic here. You are still paying for there term insurance and possibly a lot more if you aren't careful and don't realize what you could have done with investing that money.
IF you pay all the premiums on time without fail then at the end of the term you get your money back. This looks good who don't understand the time value of money. The premium is not the same as your regular term. Its much higher. You pay for your term insurance by the interest they make on the money and the fact that some people aren't on time for a payment or lapse bc it is higher than regular term. There is no magic here. You are still paying for there term insurance and possibly a lot more if you aren't careful and don't realize what you could have done with investing that money.
Re: Term Life - Return of Premium
If it is cost competitive with a traditional term life policy, fine. If it costs more, stay with regular old, tried and true, term life insurance from a solid company.airahcaz wrote:Anyone hear of this and how does it work besides the obvious title?
New! Return of Premium
Payback 100% of paid premiums when yououtlive initial rate guarantee period
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Re: Term Life - Return of Premium
Sounds like a new coat of paint (deception) on some variant of whole life.
Re: Term Life - Return of Premium
It isn't whole life. It is its own thing. Many folks never make it to all payments on time bc they forget to pay on time, don't have the funds, need a different insurance policy bc of other changes. The sucker part is thinking its free insurance. Nothing is given away for free with this. In this low rate environment, its even typically a worse deal.
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Re: Term Life - Return of Premium
It is not whole life. I did get quotes when I was looking for term life as well. For example, if for say 500K and 30 year term life, the monthly premium is $25.
If we pay $25 per month for 30 years and we dont use it, then we get nothing in return.
The return of premium quote was at $45 per month.
If we pay $45 per month for 30 years and we dont use it, they said they will return the $45*12*30 back to us.
I was not interested and went for basis term life.
If we pay $25 per month for 30 years and we dont use it, then we get nothing in return.
The return of premium quote was at $45 per month.
If we pay $45 per month for 30 years and we dont use it, they said they will return the $45*12*30 back to us.
I was not interested and went for basis term life.
Re: Term Life - Return of Premium
Make sure to pay annual. The monthly rates have an insane APR similar to that of credit cards.niceguy7376 wrote:It is not whole life. I did get quotes when I was looking for term life as well. For example, if for say 500K and 30 year term life, the monthly premium is $25.
If we pay $25 per month for 30 years and we dont use it, then we get nothing in return.
The return of premium quote was at $45 per month.
If we pay $45 per month for 30 years and we dont use it, they said they will return the $45*12*30 back to us.
I was not interested and went for basis term life.
Re: Term Life - Return of Premium
Are these actual quotes?niceguy7376 wrote:It is not whole life. I did get quotes when I was looking for term life as well. For example, if for say 500K and 30 year term life, the monthly premium is $25.
If we pay $25 per month for 30 years and we dont use it, then we get nothing in return.
The return of premium quote was at $45 per month.
If we pay $45 per month for 30 years and we dont use it, they said they will return the $45*12*30 back to us.
I was not interested and went for basis term life.
$45x12monthsx30 years = $16,200
Plugging these numbers into a financial calculator, the extra $20 per month has to earn 4.8% per year to equal $16,200 after 30 years. Which is very doable on your own. And you avoid the risk of missing one single on-time payment to the insurance company and receiving nothing at the end.
Re: Term Life - Return of Premium
wolfeman wrote:Are these actual quotes?niceguy7376 wrote:It is not whole life. I did get quotes when I was looking for term life as well. For example, if for say 500K and 30 year term life, the monthly premium is $25.
If we pay $25 per month for 30 years and we dont use it, then we get nothing in return.
The return of premium quote was at $45 per month.
If we pay $45 per month for 30 years and we dont use it, they said they will return the $45*12*30 back to us.
I was not interested and went for basis term life.
$45x12monthsx30 years = $16,200
Plugging these numbers into a financial calculator, the extra $20 per month has to earn 4.8% per year to equal $16,200 after 30 years. Which is very doable on your own. And you avoid the risk of missing one single on-time payment to the insurance company and receiving nothing at the end.
You will find the quotes are even now lower given the low interest rate environment.
Re: Term Life - Return of Premium
Also keep in mind the companies that do this aren't exactly offering the cheapest term so comparing it to their straight term product isn't a good comparison
http://whitecoatinvestor.com/return-of- ... qa-series/
http://whitecoatinvestor.com/return-of- ... qa-series/
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Re: Term Life - Return of Premium
My term life quotes were done 4 years back. They are not actual quotes but just provided as an example of what i remember then.
Also, I went for the annual payment plan. Ins companies provide the monthly premium plan so that some people would not be shocked at premiums when looked at monthly basis than at yearly basis.
Also, I went for the annual payment plan. Ins companies provide the monthly premium plan so that some people would not be shocked at premiums when looked at monthly basis than at yearly basis.
Re: Term Life - Return of Premium
Exactly its just like car buying. They tell you what you can afford a month but don't tell you how much more this affordable plan costs you.niceguy7376 wrote:My term life quotes were done 4 years back. They are not actual quotes but just provided as an example of what i remember then.
Also, I went for the annual payment plan. Ins companies provide the monthly premium plan so that some people would not be shocked at premiums when looked at monthly basis than at yearly basis.
Re: Term Life - Return of Premium
It sure looks like whole life to me. It has a savings account built in. Its just that the return is 0 % on the savings part, and there is a severe penalty (100 %) for lapse. In return, the cost is not as high as "whole whole" life. It could be called "Half-Life".
Re: Term Life - Return of Premium
If you are going to say that then term is just whole life with a zero percent term after you take into consideration the cost of the insurance (COI is also deducted from WL "savings").bberris wrote:It sure looks like whole life to me. It has a savings account built in. Its just that the return is 0 % on the savings part, and there is a severe penalty (100 %) for lapse. In return, the cost is not as high as "whole whole" life. It could be called "Half-Life".
One can call it whatever but you can't keep it in force your entire life so id align it more with term personally.