Do Return of Premium Term Life Insurance policies make financial sense?
Return of Premium policies are not sold as investments, however, the return from sticking with one may not be all that bad – and, in fact, may be exceptional by current standards. By counting the extra premiums paid (those amounts in excess of the cost of a basic no-refund term life insurance policy) as the amount invested and the overall premiums paid back as the investment payoff, annual tax free returns of roughly 5 to 9 percent resulted on a sampling of policies–the longer the policy’s life and therefore the smaller the extra premium, the better the return. If you invest this way on your own, the net gain may be taxable; wrapping this up in an insurance policy makes the total payback a refund of the premiums you paid, and thus not taxable. When considering a return of premium policy, compare the extra cost of any insurer’s Return of Premium policy not just to its own traditional term but also to regular term policies offered by competitors. If you can buy the amount of insurance y
