Return of Premium (ROP) term life insurance is a revolutionary product that combines the advantages of traditional term life insurance such as affordable, guaranteed level-premium periods (10, 20 or 30 years), with a return of premium feature. At the end of the level-premium period, 100% of the premiums paid will be returned to you! How is this possible? The insurance companies that offer this product charge slightly more for it than for non-ROP term insurance. During the level-premium period, the insurance company is able to invest portions of the premium for capital growth. As a result they are able to return your premiums to you at the end of the level-premium period.
If you are between the ages of 30 to 50 this type of insurance can be very attractive. It offers a better premium the longer the term of the policy, and ensures protection through your peak earning years. At the end the large lump sum payment can then be rolled over into permanent insurance, a burial policy, annuities or whatever your like as your insurance needs now have changed with the onset of your retirement years.
Many people like the idea of (ROP) insurance as they feel as they are basically getting free” insurance, and receiving their money in a nice lump sum at the end.
Show below is a typical graph of the rates of return, or cash build up a typical (ROP) term policy.