Term insurance, as the industry has always known it, is life insurance that is pure protection. A client doesn’t pay for cash values–just the promise of a death benefit.
In the last decade, term insurance rates in the United States have dropped dramatically as a result of significant competition between carriers. Today, competitive term rates are a must if an insurer is to remain the company of choice for brokerage distribution and career companies.
At the same time, consumers are struggling with saving and with decisions about where and how to spend their hard earned dollars to plan for the future. Nobody likes spending money on something they hope they never have to use. That’s one reason why people hesitate to purchase life insurance.
So, when faced with the dynamic of commodity product plus consumer hesitancy, insurance companies have to find creative solutions that meet the needs of producers and consumers.
That’s also why a number of companies are now offering a life insurance policy that can reward the client for staying alive.
A life insurance policy that offers a return of the premiums can provide the best of both worlds when it comes to affordability and flexibility–the customer gets valuable death benefit protection plus a surprising money-back guarantee.
Who might appreciate a product like this? Here are some examples of scenarios where a term policy that returns the premiums might fill a need that a regular term policy could not:
o A business owner who wants to insure a key employee and use the premium refund benefit as a retirement bonus.
o A homeowner who refinances and has a future balloon payment.
o A divorcee who is required to purchase life insurance as part of a court decree.
The situations where a return of premium term policy can appeal to consumers have a few common characteristics. They are:
o A temporary need where the need or obligation will end at a predictable time.
o People with the health confidence that they will be alive when the premium refund benefit is payable.