The Walters Agency Podcast

Timothy Walters Explains The Return Of Premium Life Insurance

• Timothy Walters • Episode 18

Share episode

What Is Premium Life Insurance?

Think life insurance is just money your family gets if you’re gone? We flip that script by breaking down return of premium term life insurance—coverage that protects your loved ones now and returns every dollar of premium if you outlive the term. It’s simple, clear, and powerful for people who want a big death benefit today and a guaranteed lump sum tomorrow.

We walk through the nuts and bolts in plain English: how ROP term compares to standard term and whole life, why premiums are higher than basic term but far lower than whole life, and how to choose a term length that mirrors your real risk window—mortgage years, kids at home, and business obligations. Tim shares a real-world example from his own policy, what the monthly cost looks like, and how that end-of-term check can be repurposed for college, retirement, or a paid-up policy. We also explain how carriers make money—investing pooled premiums—and why honest underwriting matters for pricing and approval.

If you’re in your 20s to early 50s and want strong protection with a built-in exit plan, this conversation lays out the tradeoffs and the upside. You’ll learn when ROP term shines, when standard term may be better, and how to evaluate quotes so the numbers match your goals. Ready to stress less about “use it or lose it” and start planning for a future check?

If this helped clarify your options, follow and share the show, and leave a quick review so more families can find it. Want tailored guidance? Call or text 423-417-2070 for a free 20 minute consultation.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

SPEAKER_00:

Welcome to the Walters Agency Podcast, where insurance makes pizza five. Hosted by Licensed Insurance Agency Owner Timothy Walters, we are here to help families, homeowners, and small business owners throughout East Tennessee protect what matters most. Our mission: creating win-win-win solutions for insurance. Let's dive in.

SPEAKER_01:

Return of premium life insurance is just about death. Think again. What if your policy could be a strategic asset, a tool to protect and preserve everything you built? In this episode, we reveal how return of premium insurance is helping to move families' basic coverage to secure their financial legacy and stay in control no matter what. Welcome back everyone. Skip Monaco slash producer back in the studio with Timothy Walters, owner of the Walters Agency. Timothy, how's it going?

SPEAKER_02:

It's going well, Skip. How are you doing?

SPEAKER_01:

Doing just fine and uh a bit confused on uh I'm not familiar with return of premium insurance, so I'm I'm uh eager to learn what exactly is that and and uh how's it beneficial?

SPEAKER_02:

Yeah, well, um honestly, Skip, it is fairly simple. It's a fairly simple product. It's one of the reasons I like it. Um so I think a lot of people who maybe have you know checked into life insurance, they they know about whole life versus term life. And if you don't know, what I always say, call your agent, uh talk to them about it. But uh those are the two basic kinds of life insurance that are commonly available on the market. So return a premium is a term life product. Uh so technically you call it a return of premium term policy, okay? Mouthful, right? So, you know, I just call them a return of premium or uh ROP or whatever. Um, but basically what it is is uh you take out a policy that goes for a certain amount of time, which is the term. It can be five years, it could be 10 years, 15, 20, sometimes even 30 years, and you have a specific, you know, death benefit for you, you know, your beneficiaries, typically your family, but it could really be anybody. Um so you know, I see them anywhere from$100,000 to$500,000 uh, you know, death benefit. And like term policies, normal term policies are about the least expensive uh month-to-month uh policies that you typically find on the market. Um, so they have the benefit of being less expensive on average for the same death benefit as you would have with a whole life policy. And whole life is you know permanent as long as you pay the premium, you know, the term goes until you die, uh, and then your beneficiaries get paid. Um, you know, it's less expensive than a whole life policy typically, but at the end of the term, if you survive, and you know, of course, I think most of us would want to survive at the end of the term. I certainly do. I I have a return on premium policy on myself. Uh, it was a 20-year policy. I bought when I was about 30 years old, so I've got six years left on it, I think. Uh hopefully I make it. You know, it's I think it, I think it's like around 50 or 60 bucks a month. So that's more expensive than a similar regular term premium would have been for the same death benefit. But at the end of it, you know, when I turn about 50 years old, I'm gonna get a very nice check from the insurance company uh for all of the premium that I paid in during that 20 years. I think it's gonna, if I remember the math right, I'm gonna hopefully get about a$15,000 check from the insurance company uh around about my 50th birthday. So, you know, from an economical standpoint, uh I like them because you do get a very, you can get a very big death benefit. Like you can typically get higher death benefits for a much lower premium than you can with a whole life policy. And if you get a return of premium policy when you're in your 20s or your 30s, uh, they're typically, you know, reasonably priced. You can get a great death benefit for your family. And at the end of it, you're typically not going to be terribly old when the when the term runs out. So you can take that money, you can either reinvest it into some other type of insurance product, you know, maybe like a single paid whole life policy or invest it or you know, splurge on a vacation, help pay for your kids' college. I mean, you can, it's your money. You can do whatever you want with it. And the only thing that you've lost over that period of time, that term, is the utility of the money right then. You know, you know, technically speaking, you could have spent that money on a cheeseburger, right? Or a pack of cigarettes. I mean, whatever your advice is. You know, if you do buy a policy like this, you've got that life insurance protection for your beneficiaries, your family. Um, and it's a great product. I mean, it really is. Um, and and I I do I do like to talk to people about them. Some people accuse me of pushing them. Uh, I don't really push anything. I try I try to examine, you know, people's actual situation and what's going to work for them. But I think they are a really good product. Uh, you know, they offer great protection for a reasonable price. And at the end of it, you know, if you make it to the end of it, which I hope you do, if you're watching this and you have a policy, I hope you make it. Uh, just like I hope I make it, uh, you know, you do get that money back, which is a great deal, I think.

SPEAKER_01:

Yeah. Well, and it blows my mind because you get all of your premiums back. How does the insurance company, the the holder of the policy, how do they make money, I guess, off the interest or investment of it?

SPEAKER_02:

Oh, the investment. Uh, that's how insurance companies make their money. Uh, I I think we maybe talked about that once uh in a in a prior episode uh when we talked about life insurance. That's really how most life insurance companies make their money. They take the your the premium that you pay them and they invest that, you know, in investment portfolios and the stock markets and and I assume maybe other things, uh maybe precious. I don't know. I mean, I'm not a, you know, I don't I don't I don't hold stock in any insurance companies, but uh uh that's what I know is how they basically make their money. They take the premiums and of course they've got to pay their overhead costs, you know, their employees, their, you know, their equipment, you know, everything you gotta have to run a business uh in insurance, uh and whatever remainder uh is, they typically invest that in uh, you know, again, the stock market. And these companies, a lot of time, a lot of them have been around for you know over a hundred years. You know, they know uh pretty well, they have a pretty good idea of what works and what doesn't when it comes to investments. So uh, like if you if you look at some of our companies like AIG or Cincinnati, uh uh Mutual of Omaha, I mean, these are companies that have been around for decades, if not hundreds of years, um, and they they know how to invest this money, and that's how they make their profits.

SPEAKER_01:

Well, typically term life runs out at 70, right? Is that correct?

SPEAKER_02:

Well, term life uh is gonna run out at the end of the contracted term. Now, if you purchase a term life policy and you're older, sometimes there's stipulations within them uh that says, you know, something's gonna happen with uh with with the uh coverage after a certain age. Uh, but again, most companies are not going to write a term policy um, you know, that goes past a certain threshold anyway. I mean, that's that it's not that that's when they become unprofitable, right? If you're writing like a hundred thousand dollar life insurance policy for somebody who's in their 70s, and they've already almost crossed the mortality threshold, right? Um, so you don't see a lot of companies writing term anything uh past a certain age. Uh there's some specialty companies, of course, that do. Um, but uh for your regular, like what most regular people are are getting in the market, um, you know, you're not gonna see term policies, affordable term policies, uh much past the age of, say, 50 or 55. You know, term policies are really good for uh younger people, again, because you can get that high death benefit for a very low uh cost. And again, the return of premium, I like them because not only are you paying for the benefit of, you know, if you do pass away, if you get hit by a bus, you know, your family gets whatever the contract to death benefit is. But at if you do survive, you don't get hit by the bus, then you get that money you paid in for that five, 10, 15, 20, maybe 30 years, you get that back and you can use it for other things. And that's that's really nice, as opposed to a regular term policy when you know you don't get any money back, uh, you just bought that protection for that period of time.

SPEAKER_01:

So for somebody like me, I'm 58. So if uh would would a return of premium policy be something I could look at, or would it be just kind of ridiculously expensive?

SPEAKER_02:

Yeah, I mean, I I think I think we could probably I say we you could probably get a quote on one. Uh I really can't think of a carrier right off the top of my head because they do really, they really are more geared toward younger folks, uh, probably in their, like I said, young people or people in the early middle age uh bracket. Um, but yeah, you can still get term and uh possibly return a premium uh term policy. It would be more expensive. Like I said, I mean, the older you get, of course, you know, the more expensive life insurance is gonna be. Um, but I mean, it's still a possibility. And again, you know, you can always you know talk to an insurance guy like me. Uh, and if you're watching this, even if you don't want to talk to me, there's plenty of life insurance agents out there. Uh, we're thick on the ground. Uh, you know, just call one, ask them what the possibilities are, you know, be honest with, say, don't lie to them about your age, don't lie to them about your medical conditions or anything like that. Because everything comes out at the end. You know, there's always there's usually some kind of underwriting uh for these types of policies. Um, there's no point in line. Um, but uh if you want an honest answer, you know, and a reasonable uh timeline, then yeah, just call an agent, ask them, hey, you know, here's my situation, here's what I'm looking for, you know, what kind of protection are you looking for your family? You know, uh, do you have debts that you're trying to make sure are settled, or you just want to make sure your kids are able to pay for college without, you know, taking out, you know, onerous student loans? You know, do you want to make sure your spouse can keep the house, pay the mortgage, you know, without the income that you provide? Uh, you know, talk about what you're trying to do, and that'll help an agent kind of determine what products might work best for you. You know, or we're trying to premium is not the best product for everybody. I happen to like it, but it's not the best product for everybody. And it's not even available for some people, depending on, again, age, medical condition, you know, certain circumstances might uh make it uh an ineligible product, uh, depending on the situation.

SPEAKER_01:

So gotcha. Wow. Well, I always learned something on these podcasts about insurance, and uh you definitely blew my mind with this one. I I had no idea that that even existed. So guys, anybody of our listeners, viewers, check it out. Because if you especially if you're young to middle age, uh definitely check it out because it sounds like it's a heck of a deal.

SPEAKER_02:

Yeah. Like I said, I bought mine when I was 30 years old. If I bought it just the year before, I probably would have paid, you know, maybe$10 or$15 less per month. Call somebody, get something put in place. It's a great time at that age to uh to look into it if you haven't. And even if you're older, if you if my age or your age, if you haven't looked into it before, never hurts to ask. Call the agent, find out what's out there in the markets. There's plenty of offerings out there. I mean, they're on TV, you know, you see some of the TV advertisements on the the UT Balls games, uh, you know, for for life insurance policies, you know. Those are legit, you know. I mean, that just, you know, reach out and uh, you know, talk to somebody, see what the pros and cons are, and see if it's something that would fit your your situation. I mean, it's you but you have to ask. You have to ask the questions.

SPEAKER_01:

Well, Tim, appreciate it. Uh again, learn something new every every time I'm on the show. Appreciate it. And we'll look forward to seeing you on the next one.

SPEAKER_02:

Thank you, Skip. I appreciate it.

SPEAKER_00:

That's a wrap on this episode of the Walters Agency Podcast. Ready to find the right coverage for your home, business, or family? Call or text 423-417-2070 for a free 20 minute consultation. Until next time, stay covered, stay protected, and keep winning with the Walters Agency.