Buying return of premium life insurance?

[Goldy1]

Me and my husband are expecting our first child. He got laid off recently(thank goodness we planned so we have our safety net)

So gone is the group life insurance we bought for about 10 bucks a week through his work. Now we need it more.

We are quite healthy and in the middle of getting a quote health exam on term insurance. (all the finance books said buy term, invest the difference)

I am looking into return of premium 30 yr term plan with AAA. It will cost about double compared to NON return of premium or regulat term issurance.

If we don't use the insurance(we are healthy but you never know), at the end of the 30 years when we are in our 60's we will get all the money we paid into premiums back as long as we never drop the policy. I think it sounds good. Thoughts??

[maat55]

I just read about it at Bankrate.com and it seems like a good product. I do question your price quote, the article showed prices around 20% higher.

[MoneyTrev]

Good luck with your first child.

It is definitely an advantage to lock in your health insurance for long amount of times.

[disneysteve]

I am looking into return of premium 30 yr term plan with AAA. It will cost about double compared to NON return of premium or regulat term issurance.

Why not pay half as much and invest the extra? In 30 years, you'll have a nice amount of money built up. It may or may not equal what you would have gotten back, but it is guaranteed to be there no matter what happens, even if you need it in less than 30 years. There is a pretty good chance that you may not keep the policy for 30 years. I'm 44 years old and I've changed my life insurance policy 3 times already. Why? Because the amount of insurance I needed changed and term rates have been steadily falling. I was able to save money by changing policies with the same company. Actually, I'm planning to change again soon as rates have dropped even more.

I would not pay extra for something that might possibly (but probably won't) happen 30 years from now.

[Goldy1]

WE had the medical exams today so I am still deciding. If I get 100K of ROP term it is double, and if I get 30 year ROP term it is about 40% more.

I might be looking at about $80 a month for me and my husband if we but 250K ROP term for 30 year plan. I will know for sure after the exam results are done, but we are pretty healthy.

Also mortgage will be paid off in less than 5 years if we make minimum payments so I basically need thi sinsurance b/c a child is on the way to replace lost income in the event it is needed.

You have to keep the insurance pretty much the whole 30 yrs if you want to get all th emoney back. There is a table and you will really overpay b/c you get pretty much nothing back the first quater/half of the contract.

Why not invest the difference? Market might not be good. I guess it's more emotional to think "hey I am paying the premium I probably won't use but I Get it back" (albeit no inteest or compund interest)

[ScrimpAndSave]

Investing the difference doesn't mean investing in risky stocks...

[disneysteve]

Also mortgage will be paid off in less than 5 years if we make minimum payments so I basically need thi sinsurance b/c a child is on the way to replace lost income in the event it is needed.

You have to keep the insurance pretty much the whole 30 yrs if you want to get all th emoney back.

Why not invest the difference? Market might not be good.

Investing the difference doesn't mean investing in risky stocks...

I think it is unlikely that your insurance needs will remain stable for 30 years or that this particular policy will continue to meet your needs for 30 years. Don't you think the insurance company realizes that, too? Insurance companies love to push plans that make them money. This is just another example of that.

When I said invest the difference, I didn't say how to invest it. You could buy savings bonds or put the money in a high-yield money market or stuff it under your mattress. I think all would be better options than giving it to the insurance company.