You carry life insurance to protect the ones you love from financial hardship if you should die. But what if that policy could refund money to you and your family while you're alive?
That's the premise behind Return of Premium life insurance. Here's what to know about this coverage.
What is Return of Premium life insurance?
Return of Premium life insurance is a term policy with a level premium period of either 20 or 30 years. At the end of the term, if the death benefit has not been paid and you’ve made regular premium payments, you’ll be refunded the money you’ve paid over the level premium period less any loan and accrued loan interest on the policy.
The return of premiums typically amount to tens of thousand dollars—and you can use that money however you wish.
What are the benefits?
In addition to the protection that the policy affords your loved ones:
- The money you get back from a Return of Premium policy is generally tax-free.
- You can use the refund any way you choose—to help pay off a mortgage, fund college tuition, boost your retirement savings or something else.
- Over the level premium period, your policy will build cash value and you can borrow against that during the initial term period. 1
- The death benefit of your policy is generally income tax-free.
- If you have one or more other policies with your insurer, adding this coverage may make you eligible for discounts.
What else should you consider?
To keep the policy from lapsing, you'll need to make regular premium payments for 20 to 30 years.
1 Unpaid loans and withdrawals will reduce the guaranteed death benefit, and policy cash value and any Return of Premium benefits. Loans also accrue interest.
State Farm® agents do not provide tax or legal advice. Please consult your tax or legal advisor regarding your specific circumstances.
Adjustable Premium Level Term Life Insurance policy series 08025 in all states except MT, NY, WI; 08075 in MT, A08025 in NY & WI.
Insurance policies and/or associated riders and features may not be available in all states, and policy terms and conditions may vary by state.
This is only a general description of coverage. A complete statement of coverage is found only in the policy.
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