Peelseek.com

Imagine getting a money-back offer on your Term Life Insurance – if you don’t use it.  In other words, your family receives a lump sum of money if you die - but if you live… the company returns all of your premiums!

This is what’s known as ‘Recoverable Premium’ insurance- and it’s aimed right at one of the greatest consumer resistance to pure life insurance: "I'm probably not going to die, and my money will have been wasted."

Recoverable Premium insurance, which may be referred to as Return of Premium (ROP) Life Insurance, is designed to allow the client ‘recapture’ premiums for an ‘unused’ insurance policy. Prior to the availability of this option, consumers could only select from term insurance and cash value insurance – and for many, paying for either of these types of policies felt like throwing money away.

(For a brief definition of Term and Cash Value Life insurance – see: Term and Cash Value Life Insurance FAQs)

Recoverable Premium insurance is an effective solution to bring the consumer the best of both worlds. It starts out like Term Life Insurance with one extra promise from the insurer: ‘If you pay your premiums and you live, we'll give you your money back.’

On a typical 20 year Level Term Life Insurance policy the feature could cost about 30% more, but that extra premium will probably earn you an average of 6-7% return over the 20 years -- just enough to earn you back everything you've paid in.

What's in it for the carrier? LOYALTY.

Carriers spend a lot of money to get your policy, and only start making a profit if you stick around for more than five years or so. Recoverable Premium encourages customers to stay for the full 20. For those that cancel along the way, the carrier makes an extra 30% on them and uses some of the profit to pay you a solid return on your money.

So if you know that you are going to be insured for the long haul, then think about tossing in a few extra dollars and getting it all back in the end.