There exists a great debate among so-called financial experts with respect to what type of life insurance policy is best.  On one hand, you have the camp that believes in the value of a properly funded “permanent” life insurance contract (i.e. whole life or universal life).  The other camp feels that you should purchase term insurance and invest the difference into some financial product.  Regardless of which camp you fall into, the life insurance industry created a Term Life Insurance product that included a “rider” that allowed you to receive all of your premiums paid into a term life insurance product back at the end of that policy’s term.

Let’s assume that you go to your agent and needed to purchase life insurance.  After you and the agent completed a Life Insurance Review (hopefully), you determined that you needed an additional $200,000 worth of protection.  After looking at whole life & universal life, you determined those two options to be out of your budget.  Your agent then showed you a Term product which was much cheaper.  However, you did not like the idea of paying for something, which if you did not die during the policy’s term would just vanish.  Your agent then showed you that you could amend that term product, for an additional premium, with a rider which would return every premium dollar you had paid into the policy should you not die during the policy’s term.  That is a win/win for everyone!

Well, if you like the idea of that “win/win” scenario, you better act fast.  The rules that regulate life insurance contracts are changing on January 1st,  2010.  Actuarial Guideline 45 applies to individual life insurance products that offer endowment benefits prior to the expiration date of the life insurance coverage (most ROP products offer the clients a partial return of their premiums paid should the insured cancel the contract before the end of the Term).  The new rules make these Return of Premium products too costly for Life Insurance Carriers to profitably sell.

While many companies will continue to sell these Return of Premium Policies, they will have to increase the cost of the actual rider.  This increase will, more than likely, cause many individuals to stay away from these products as the “cost / benefit”  analysis will be drastically reduced.  Further, many carriers are completely stopping the sell of their Return of Premium Policies.  Unfortunately, the real losers in this increased regulation (from the government) of the life insurance industry is the consumer.

About The Author:  Jack Wingate is the co-founder, and President of ALLCHOICE Insurance in Greensboro, NC.  For more information about Jack Wingate, ALLCHOICE Insurance, or Life Insurance please visit:

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