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I'm a pretty young guy, but I've toyed with the idea of life insurance for a little while now. Obviously, you don't need life insurance if you have no one who depends on you.
The main reason to get life insurance at my age is in case something catastrophic happens. You can get life insurance at any age - you can be one year old and get life insurance. Obviously the younger you are the lower the premium payments.
The main argument I have against life insurance, especially term, is that over time I can put that same premium to use in investments
MONEY - Free EBAY, PayPal, Business and Law Forums - Ebay Suspension, PayPal Limited
and end up with a lot more money than even the life insurance payout would be.
But then...as noted above, that is not really the purpose of insurance. Insurance is to cover an unexpected need. If you know there is not going to be any need for a payout, then there is no need for insurance. But how can you know that?
But I believe I found a product that works for me, and I got a small policy ($250K) just last week. It is from Prudential, an A rated company, and is called the Return of Premium policy.
I was first of all rated in the Preferred Plus category because I am a non-smoker and I guess they liked what they saw in my medical tests. All were excellent and those of an athlete with low cholesterol, etc. It is interesting what tests these insurance companies run on your blood and urine - a few quite different from the ones your doctor might run, because the insurance company tests are meant to predict longevity.
Anyway, with a return of premium (ROP) policy at the end of the term if there is no payout, they return the entire amount paid to the policyholder. Now obviously during that time Prudential gets free use of your money, but then $250K insurance at potentially no cost seems like a no brainer.
If you are interested in something like this, let me know. I have a great insurance broker.
Below are some FAQ about such policies:
Life Insurance Return of Premium:
Return of Premium Life Insurance (ROP) FAQ
What is return of premium life insurance?
Return of premium insurance is a term life product where the cumulative premiums paid on the policy during its duration (15, 20 or 30 years) will be paid to you at the end of the level term period. In the event the owner decides to let a policy lapse, some of these products will return a portion of the cumulative premiums if they are kept for at least 6 years,
Companies who offer R.O.P. Insurance are: American General, ReliaStar (ING), Genworth Life, Prudential and John Hancock Life Insurance.
Why should I buy a Return of Premium Term Life Insurance policy?
One of the criticisms of term insurance in the past has been that if the insured person outlives the policy, they have nothing to show for the money that was put into the policy. Return of Premium (ROP) products address this issue by returning the paid premiums to the insured if they outlive the policy.
Another point to note is that ROP products get less expensive as the term goes on. So, if you are interested in a 20 or 30 year term product, we encourage you to explore both conventional term policies and ROP products to compare and decide which product is right for you.
How does a Return of Premium term life insurance policy work?
Is this for real? Yes and in the past year more of the nation’s top insurance companies have begun offering this product. If the policy is kept for the full term, the insured receives all premiums back – guaranteed.
How does a company make money on this? The insurance carriers are continually investing this money and making a profit from the returns on investment.
Does it cost more than regular term life?
20 year $500K ROP on a 40 year old Male - $1,370
20 year $500K Regular Term on a 40 year old Male - $545
20 year $500K ROP on a 40 year old Female - $1,145
20 year $500K Regular Term on a 40 year old Female - $445
30 year $500K ROP on a 40 year old Male - $1,270
30 year $500K Regular Term on a 40 year old Male - $825
30 year $500K ROP on a 40 year old Female - $980
30 year $500K Regular Term on a 40 year old Female - $640
How does it compare?
Compared to Term - The difference between a term policy and ROP is that with term, if the policy term expires and the insured is still living, you can either renew the policy on an annual basis, or you can simply let your coverage lapse if you haven’t converted it to a permanent plan during the life of the policy. With the ROP product, when the policy expires, you will receive back all of the premiums that you paid into the policy.
Compared to Cash Value or Whole Life Insurance – Some ROP products (AIG) actually build cash value. In fact, you can even borrow or take out loans against the cash value of the policy--- similar to a whole life product. If you haven’t built enough cash value and you quit making payments, your policy will convert to a paid-up life policy with a reduced face amount.
Who is the ideal buyer for R.O.P.? The ideal buyer for ROP is the individual looking for the benefits of a term policy but would like to receive something in return if they outlive the policy. As the ING brochure states, “The ROP product allows you to do both: in the best terms, you will receive all of your money back. In the worst terms, you have protected your family financially.”
The main reason to get life insurance at my age is in case something catastrophic happens. You can get life insurance at any age - you can be one year old and get life insurance. Obviously the younger you are the lower the premium payments.
The main argument I have against life insurance, especially term, is that over time I can put that same premium to use in investments
MONEY - Free EBAY, PayPal, Business and Law Forums - Ebay Suspension, PayPal Limited
and end up with a lot more money than even the life insurance payout would be.
But then...as noted above, that is not really the purpose of insurance. Insurance is to cover an unexpected need. If you know there is not going to be any need for a payout, then there is no need for insurance. But how can you know that?
But I believe I found a product that works for me, and I got a small policy ($250K) just last week. It is from Prudential, an A rated company, and is called the Return of Premium policy.
I was first of all rated in the Preferred Plus category because I am a non-smoker and I guess they liked what they saw in my medical tests. All were excellent and those of an athlete with low cholesterol, etc. It is interesting what tests these insurance companies run on your blood and urine - a few quite different from the ones your doctor might run, because the insurance company tests are meant to predict longevity.
Anyway, with a return of premium (ROP) policy at the end of the term if there is no payout, they return the entire amount paid to the policyholder. Now obviously during that time Prudential gets free use of your money, but then $250K insurance at potentially no cost seems like a no brainer.
If you are interested in something like this, let me know. I have a great insurance broker.
Below are some FAQ about such policies:
Life Insurance Return of Premium:
Return of Premium Life Insurance (ROP) FAQ
What is return of premium life insurance?
Return of premium insurance is a term life product where the cumulative premiums paid on the policy during its duration (15, 20 or 30 years) will be paid to you at the end of the level term period. In the event the owner decides to let a policy lapse, some of these products will return a portion of the cumulative premiums if they are kept for at least 6 years,
Companies who offer R.O.P. Insurance are: American General, ReliaStar (ING), Genworth Life, Prudential and John Hancock Life Insurance.
Why should I buy a Return of Premium Term Life Insurance policy?
One of the criticisms of term insurance in the past has been that if the insured person outlives the policy, they have nothing to show for the money that was put into the policy. Return of Premium (ROP) products address this issue by returning the paid premiums to the insured if they outlive the policy.
Another point to note is that ROP products get less expensive as the term goes on. So, if you are interested in a 20 or 30 year term product, we encourage you to explore both conventional term policies and ROP products to compare and decide which product is right for you.
How does a Return of Premium term life insurance policy work?
Is this for real? Yes and in the past year more of the nation’s top insurance companies have begun offering this product. If the policy is kept for the full term, the insured receives all premiums back – guaranteed.
How does a company make money on this? The insurance carriers are continually investing this money and making a profit from the returns on investment.
Does it cost more than regular term life?
20 year $500K ROP on a 40 year old Male - $1,370
20 year $500K Regular Term on a 40 year old Male - $545
20 year $500K ROP on a 40 year old Female - $1,145
20 year $500K Regular Term on a 40 year old Female - $445
30 year $500K ROP on a 40 year old Male - $1,270
30 year $500K Regular Term on a 40 year old Male - $825
30 year $500K ROP on a 40 year old Female - $980
30 year $500K Regular Term on a 40 year old Female - $640
How does it compare?
Compared to Term - The difference between a term policy and ROP is that with term, if the policy term expires and the insured is still living, you can either renew the policy on an annual basis, or you can simply let your coverage lapse if you haven’t converted it to a permanent plan during the life of the policy. With the ROP product, when the policy expires, you will receive back all of the premiums that you paid into the policy.
Compared to Cash Value or Whole Life Insurance – Some ROP products (AIG) actually build cash value. In fact, you can even borrow or take out loans against the cash value of the policy--- similar to a whole life product. If you haven’t built enough cash value and you quit making payments, your policy will convert to a paid-up life policy with a reduced face amount.
Who is the ideal buyer for R.O.P.? The ideal buyer for ROP is the individual looking for the benefits of a term policy but would like to receive something in return if they outlive the policy. As the ING brochure states, “The ROP product allows you to do both: in the best terms, you will receive all of your money back. In the worst terms, you have protected your family financially.”