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Return of premium life insurance is a type of term life insurance policy that returns the premiums paid for coverage if the insured party survives the policy's term.

Q: What is return of premium?

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Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)

Return-of-premium life insurance is like an ordinary life insurance policy, but payments made on premiums are returned to the insured individual if the policy ends and they are still alive. Thus, return-of-premium life insurance policies do not punish one for outliving their life insurance. The average such policy might cost 25% to 50% more in premiums, compared to an ordinary life insurance policy.

In Pro Rate cancellation , the insurer will not charge a penalty premium and the return premium is the premium for the unexpired term of the policy.While in Short Rate cancellation , the insurer charge for a penalty premium as the cancellation is due to insured request . The Insurer keeps a percentage of earned premium to cover its costs.

The Benefits of purchasing return of Premium Term Life Insurance is that at the end of the coverage period that you selected, you can choose to get a lump sum payment on the base premium amount you have paid out. You can use the money as you choose, supplement your income at retirement, send your children to college, pay for personal expenses or for something else you would like.

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Related questions

Risk premium is the compensation investors expect to earn in return for taking risks.

The market risk premium is measured by the market return less risk-free rate. You can calculate the market risk premium as market risk premium is equal to the expected return of the market minus the risk-free rate.

1. real rate of return 2. inflation premium 3. risk premium

If the required rate of return is 11 the risk free rate is 7 and the market risk premium is 4 If the market risk premium increased to 6 percent what would happen to the stocks required rate of return?

Return of premium term insurance deals with the ability to get your money back if you cancel mid-term. Most companies will give a pro-rata return.

Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%

Increasing term

Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)

For this answer we have to know the six categories of premioum:a. Inflation premium(more risk): high inflation means tha investors will require a higher return in order to invest at a certain project.b. Maturity premium: the longer the duration of a project, the higher the return that investors will require.c. Liquidity premium: the excess return that investors will require in order to invest their capital in a less desirable project on a secondary market.d. Exchange rate risk premium: the excess return that investors will require in order to invest their capital in a foreign financial assets that has volatile exchange rate.e. default risk premium: .... in order to invest in a more (??) project to default companyf. Real rate of interests

Return-of-premium life insurance is like an ordinary life insurance policy, but payments made on premiums are returned to the insured individual if the policy ends and they are still alive. Thus, return-of-premium life insurance policies do not punish one for outliving their life insurance. The average such policy might cost 25% to 50% more in premiums, compared to an ordinary life insurance policy.

If one survives the term of a return of premium life insurance policy, they are likely to get the sum assured and the interest or bonuses earned over the period. This can be viewed as a way to reduce risk and also invest.

In Pro Rate cancellation , the insurer will not charge a penalty premium and the return premium is the premium for the unexpired term of the policy.While in Short Rate cancellation , the insurer charge for a penalty premium as the cancellation is due to insured request . The Insurer keeps a percentage of earned premium to cover its costs.