Simply put, life insurance brokers are trying to make money.  They are commission based salesmen and they are always going to push the more expensive options such as whole life insurance and variable annuity life insurance.  You need to resist that sales pitch and choose term life insurance.  Since most people ultimately decide on either term life or whole life insurance, the most important question you should ask yourself is what is the difference between term and whole life insurance?  The answer is that term life is just life insurance that lasts for a certain set number of years, while whole life insurance is life insurance that you need to pay into each year and it contains an investment component as well.  Whole life insurance is going to be much more expensive than term life since it has this investment component, and it is loaded with fees and expenses.  The life insurance brokers make huge commissions off these policies since they make a lot of money for the insurance companies.

Term life is almost always going to be your best bet and now you just need to decide if you want traditional term life insurance or one of the slightly more exotic term life policies such as return of premium term life insurance or joint term life insurance.  All three are good options and you should certainly consult your broker about all three.

Term life insurance is insurance that you purchase for a set number of years, known as the term.  You buy a set amount of insurance, known as the death benefit, and you pay an amount of money each year, known as the premium, each year to keep the policy active.  If you die during the term, the insurance company pays your beneficiaries the death benefit.  If you do not die during the term then the policy expires and both you and the insurance company walk away.

Return of premium term life insurance is slightly more expensive than traditional term life, but it has this twist:  at the end of the term you get back, in one lump sum, every dollar you spent over the term in premiums.  This sounds too good to be true, but it isn’t.  The insurance company would have invested the larger payments over the term and that is what they use to pay you back.  They keep the remaining profits.  This appears to be a win-win for all parties as you don’t feel like you’ve “thrown your money away”, and you still are covered under normal life insurance.

Joint term life insurance is a policy that two people enter into together.  Usually a married couple, these two people are on one policy and if one of them dies during the term the death benefit is paid out to the other.  This is usually a cheaper option than both individuals buying their own term life policy and it helps safeguard a family against one spouse dying.

Related posts:

1. Term Life Insurance vs Whole Life Insurance
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3. Low Cost Term Life Insurance

Life insurance comes in two broad forms: temporary life insurance and permanent life insurance.  Return of premium life insurance is a type of temporary life insurance.  Temporary insurance is otherwise known as “term insurance.”  A return of premium term life insurance policy is characterized by the fact that premiums are paid either over the course of the insurance coverage or at the beginning of the coverage in a lump sum form, but they are then returned to the policy owner after the return of premium term life insurance expires.  Many people feel that this is “free insurance,” and in a sense it is, but people who think this way are ignoring the time value of money.

Inflation will diminish the value of that amount of money in the future.  Therefore, the present value of that money is more valuable than the same amount in the future.

Insurance companies make their money by using this time value principle of money.  They take your money, invest it, keep the profits, and give you back your premium.  They’re the ones who really made money for free.

When looking through return of premium life insurance quotes, you will see they are, on average, less expensive than the average non return of premium life insurance quote would be.  This is because the insurance company only makes money on the investment profits, not the premiums you are paying.  They have to make up the difference in the amount they charge you.  So, don’t be surprised when they are more expensive than non return of premium life insurance.

These policies are really suited for people who really need the money back, and who cannot afford to not get it back.  Otherwise, these persons would be better suited to get a regular term insurance policy or a permanent policy.

One last thing must be noted as some life insurance advice.  Occasionally, policies of any type are surrendered for their cash value, and the policy owner gets back the cash value in the policy.  This is often confused for “return of premium” life insurance, but they are not the same.  The cash value will not equal the entire value of the total premiums, as the premiums also included administrative costs and covered the amount at risk, as well.

To be comprehensive with your life insurance knowledge, you also should know the differences between term life insurance vs whole life insurance.

Other insurance posts you’ll find useful:

Low cost term life insurance

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Related posts:

1. Return Of Premium Term Life Insurance
2. Multiple Term Life Insurance Options
3. Term Life Insurance vs Whole Life Insurance