Term vs Return-of-Premium Term

Does Return-of Premium Term make financial sense?

Return-of-premium term does require higher premiums than level term, but for clients that can afford the extra premium (usually twice the premium for a 30 year plan), it may be worth considering. The effective after tax rate of return can look attractive compared to alternatives. Currently calculated rates of return are running between 3% and 4%, which is not too bad especially when you consider that it is:

  • After tax
  • Guaranteed
  • Doesn’t require large deposits

Take a look at this sample Term vs Return-of-Premium Term analysis

Consider quoting return-of-premium term whenever you get asked for term quotes. Agents should supply comparison that calculates the effective after tax return.