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Cash Back Premium Life Insurance

Cash back premium insurance, which is also referred to as Return of Premium ( ROP) Life Insurance, is one of the newest forms of insurance programs to hit the market. Prior to the introduction of this new form of insurance, consumers could only select from term insurance and cash value insurance. For many, paying toward these types of policies felt like throwing money away since there was no guarantee of a beneficiary ever collecting on the policy.

What is Cash Back Insurance?  

With a Money Back Life Insurance policy, you actually get all of the money you paid in premiums back when your policy expires. Therefore, if you do not die during the term of the insurance, you ultimately pay nothing toward having the insurance policy in place. The money that you sent to the insurance company is returned to you without taking taxes out. In that way, it almost serves as a savings program that ensures you have a nice nest egg built up when your insurance policy expires.

Why Do Insurance Companies Offer These Programs?

Believe it or not, insurance companies still make money from insurance policies with cash back programs. This is because they charge more for the premiums than what you would expect to pay for a term insurance policy. Often, a cash back policy will cost 10 20 even up to to 50 % more than other insurance policies. With this extra money, the insurance company is able to invest the cash and make money. Therefore, by the time your policy expires, the insurance company has made money with your money and is able to give you back your premium payments while still making a profit.

These cash back programs are also a great way to build customer loyalty. With a typical term policy, the customer would need to stick with the policy for at least five years before making any money off of the policy. By offering ROP policies, customers are more likely to stay with the company for a longer period of time.

Who Would Want to Invest in Return of Premium?

Money return insurance is a great idea for anyone that plans to keep their insurance policy for more than five years. In general, a thirty year policy will cost you less than a shorter one because your funds will have more time to grow. In addition, you will be able to pay less on a policy if it is for a longer term. For example, while a 35-year-old male in good health might pay $295 for a $500,000 insurance policy, he might pay $970 per year on a thirty year policy. That same policy will cost $1,175 for a twenty year policy while a fifteen year policy will cost $1,645.

Therefore, before you invest in a R.O.P insurance policy, you should look into all of the options and determine which one will provide you with the most coverage for the best cost – as well as which one will give you the best return in the end.