Understanding Term Life Insurance
Term life insurance is coverage that lasts for a set number of years, the "term." If you pass away during that term, your beneficiaries receive a tax-free death benefit. If you outlive the term, coverage simply ends unless you renew, convert, purchase a new policy, or have a return of premium policy.
Because it doesn't build cash value like permanent insurance, term life is the most affordable way to get a meaningful plan of protection for those who financially depend on you.
It's designed to protect your family during the years your financial obligations, like a mortgage, income replacement, or your kids' education, are at their highest.
No Exam Term Life
Best for short-term needs, covering a specific loan, a few years until a pension kicks in, or bridging a gap until other coverage takes effect. Lowest premium of the group, but the shortest protection window.
10-Year Term Life
Best for short-term needs, covering a specific loan, a few years until a pension kicks in, or bridging a gap until other coverage takes effect. Lowest premium of the group, but the shortest protection window.
15-Year Term Life
A middle ground for people with a shorter mortgage or who expect major financial obligations to ease up in the next decade and a half.
20-Year Term Life
Best for short-term needs, covering a specific loan, a few years until a pension kicks in, or bridging a gap until other coverage takes effect. Lowest premium of the group, but the shortest protection window.
30-Year Term Life
Best for short-term needs, covering a specific loan, a few years until a pension kicks in, or bridging a gap until other coverage takes effect. Lowest premium of the group, but the shortest protection window.
40-Year Term Life
A middle ground for people with a shorter mortgage or who expect major financial obligations to ease up in the next decade and a half.
What is Return of Premium Term Life
Return of Premium (ROP) term life insurance works just like standard term coverage, with one key difference: if you outlive the term, you get back the premiums you paid, income-tax-free. It's a way to add a savings-like feature to term insurance for people who don't want to feel like they "lost" money if they never file a claim.
A few things to know about ROP policies:
- Premiums are noticeably higher than a comparable level term policy, since the insurer needs to eventually pay that money back.
- The refund is only paid if the policy stays in force for the full term and premiums are paid as scheduled; canceling early typically returns little or nothing.
- Because the return isn't invested on your behalf in the way a savings or investment account would be, it's worth comparing the total premiums paid over the term against what you might earn by buying cheaper level term and investing the difference.
- ROP can still make sense for people who want the certainty of getting money back and who value that peace of mind over maximizing potential returns.