Insurance That Can Refund Your Money

Insurance That Can Refund Your Money https://learningcentre.statefarm.ca/insurance/insurance-that-can-refund-your-money/ bb3 Sep 12, 2013

By Staff Writer

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You carry life insurance to protect the ones you love from financial hardship if you should die. But what if that policy could refund money to you and your family while you're alive?

That's the premise behind Return of Premium life insurance. Here's what to know about this coverage.

What is Return of Premium life insurance?

Return of Premium life insurance is a term policy with a level premium period of either 20 or 30 years. At the end of the term, if the death benefit has not been paid and you’ve made regular premium payments, you’ll be refunded the money you’ve paid over the level premium period less any loan and accrued loan interest on the policy.

The return of premiums typically amount to tens of thousand dollars—and you can use that money however you wish.

What are the benefits?

In addition to the protection that the policy affords your loved ones:

  • You can use the refund any way you choose—to help pay off a mortgage, fund university tuition, boost your retirement savings or something else.1
  • Over the level premium period, your policy will build cash value and you can borrow against that during the initial term period.2
  • The death benefit of your policy is generally income tax-free. The Return of Premium benefit on the base policy is taxable and will have tax implications.
  • If you have one or more other policies with your insurer, adding this coverage may make you eligible for discounts.

What else should you consider?

To keep the policy from lapsing, you'll need to make regular premium payments for 20 to 30 years.

Learn more about the Return of Premium policy from State Farm®, or contact your State Farm agent for details.

The Return of Premium benefit on the base policy is taxable and will have tax implications. See your State Farm agent for details. Any Waiver of Premium for Disability premiums returned as part of the Return of Premium benefit may be taxable.1

Unpaid loans and withdrawals will reduce the guaranteed death benefit, policy cash value and any Return of Premium benefits. Loans also accrue interest.2

State Farm agents do not provide tax or legal advice. Please consult your tax or legal advisor regarding your specific circumstances.

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