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What are some of the basic reasons behind the popularity of Return-of-Premium term life insurance policies?...

What are some of the basic reasons behind the popularity of Return-of-Premium term life insurance policies? As NMSU business students, what other factors would you suggest need to be considered before purchasing such a policy?

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Expert Solution

The return of premium term life insurance policy gives the sense of relief to policyholders that even if they do not die, they will get back the premium paid after the tenure ends

The people feel hestitated to invest in normal term life policy because future is uncertain and you will get the insured amount after death only.

The return of premium gives both options, insured amount in case of death and money back of premium paid if insurer does not die although the insured amount in return of premium is way lesser than normal policy and premium charged is also a bit on higher side

Sine you are NMSU Business students, you need to consider following factors in mind

1. Since premium charged in this policy is higher, it has to be affordable by you

2. Since you are students, you shall opt for plans which allow monthly, annually aor half yearly premium payments instead of one time premium plan

3. The cover amount should be sufficient enough to ensure your family finanacial structure is good even if something happens to you, it is important because if you unfortunately die then insured amount in such policy is way lesser than normal term policy

The good thing in this policy is if you decide to surrender in mid way of tenure then you can get money-back of premium paid which normal policy does not allow

So it basically boils down to what you are looking for.

I would suggest since you have no dependents right now, take it after you start earning good or after your marriage or child and till then you can invest in various unit plans


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