However, if you survive the policy term, the insurance company returns the premiums you paid over the term of the policy. This feature makes it different from traditional life insurance policies where premiums are not returned if the insured person outlives the policy term.
Here's how a life insurance policy that returns your premium typically works:
Policy Term: You choose a specific term for the policy, such as 10, 20, or 30 years. This represents the duration for which the policy will remain in force.
Premium Payments: You pay regular premiums throughout the policy term. These premiums are typically higher compared to traditional life insurance policies because of the return of premium feature.
Death Benefit: If you pass away during the policy term, the insurance company pays a death benefit to your beneficiaries. The death benefit is the amount of money you chose when purchasing the policy and is generally tax-free for your beneficiaries.
Return of Premium: If you survive the policy term and the policy remains in force until the end of the term, the insurance company returns the total amount of premiums you paid over the term. This refund is usually tax-free and can be a significant financial benefit.
Policy Expiration: Once the policy term ends, the coverage terminates, and you no longer have life insurance protection. However, you will have received a refund of the premiums you paid over the term.
It's important to note that the premium refund is typically dependent on you keeping the policy in force until the end of the term. If you cancel the policy before the term expires, you may not receive the full premium refund or any refund at all, depending on the terms of the policy.
Life insurance that returns your premium can be an attractive option for individuals who want both life insurance coverage and the potential to get their premiums back if they outlive the policy term.
However, it's essential to carefully evaluate the costs and benefits of such policies compared to other life insurance options to determine if it aligns with your financial goals and needs. Get a life insurance quote.