How to get life insurance for free.
Life insurance is a necessity for those with loved ones and family that rely on their income to survive. If you want to protect your family and ensure that they’re taken care of financially, life insurance is the solution.
The downside, of course, to having anything is paying for it, and life insurance premiums are no different. Although affordable life insurance options are definitely out there, especially when you’re young and/or in good health, those premiums need to be paid every month on an ongoing basis to keep that valuable coverage in place. If you stop paying your premiums, your coverage will go away.
So there’s no way around paying your premiums, right?
Well, yes, that’s right. You have to pay your premiums, no way around that. But there is a strategy you can employ to essentially get life insurance for free using Return of Premium.
RETURN OF PREMIUM POLICIES
Pay higher premiums now, but get all your moneyback later.
These policies are becoming less commonplace in the market, but there are still some to be found out there.
A policy with a Return of Premium option gives the owner the opportunity to get all of the premiums they’ve paid into the policy back after a certain period of time. The Return of Premium feature may come in the form of a rider, as a natural result of overfunded policy design on permanent policy, or built into the product itself.
Generally, a product with Return of Premium capability is going to cost more per month, but you would be paying that increased rate every month with the understanding that you would get all of that increased premium back in your pocket sometime later. Once you exercise the Return of Premium feature, the coverage ends and you’d be fully refunded, but without coverage going forward.
For example, if you decided to go with a regular 20-Year $500,000 Term policy, you might pay $50 per month in premium. You’d pay that premium every month for 20 years, and when that Term period expired, you’d be out a total of $12,000 in premium paid over 20 years. That money would be spent and gone, and your coverage would be over.
Alternately, if you chose to instead be covered with Guaranteed Universal Life policy with a Return of Premium option, you may pay $100/mo in premium for the same $500,000 in coverage. At the end of 20 years, you will have paid $24,000 into the policy, double the premium of the Term product – however, since this is a Return of Premium product, you could then exercise your option to get the entire $24,000 back. You get all your premiums back, coverage ends there, and you essentially just received free life insurance coverage for the past 20 years!
If you’re interested in looking into a Return of Premium policy design, the friendly folks at Alliance Group can connect you with one of our partners in your area who can help.