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Return of premium life insurance is a type of the term life insurance policy though it works differently. Term life insurance itself is a type of insurance that works more like an auto policy. In that instance if the person never uses the insurance policy they will get nothing back from the policy. With the return of premium life insurance policy if the policyholder outlives the policy all of the premiums paid during the life of the policy are then returned to the policyholder.

With offering this type of policy the premiums are going to cost more than the normal type of a term life insurance policy. What this extra premium does is allows the insurance company to make more investments with you premium to make money off of your policy even should you outlive it. The investment earnings are what are usually used to pay back the policyholder if the insured outlives the policy.

There are also some optional benefits that are called riders that of are course for an additional cost. The types of things that this rider could cover could be terminal care or partial death benefit payments for a nursing home. Any premium for the riders will just be added to the premium of the policy itself.

A challenge that can come with this type of policy though is if the policy is surrendered. When the policy is surrendered it’s canceled by the policyholder before the term end. Though the terms can vary the normal term is a 10-30 period. There are some policies that are going to allow for a partial premium return and there are other policies that won’t return any of the premiums if the policy is cancelled.

With the rise of healthcare and technology people are starting to live longer and remain much healthier. This will continue to decrease the rates of life insurance. There is some surrendering of life insurance policies for newer policies if the insured is in good health they can get quite a reduction in premium. Though with this type of policy there will run the risk of not recouping any of the benefit from the return of premium before the policy is surrendered and the new policy issued so this is one thing to keep in mind and weigh out.