Getting back your insurance premiums

December 25, 2011 • Insurance Planning

Did you know that if you purchase critical illness insurance or disability insurance and don’t make any claims you can get your premiums back? It’s true. The return of premium feature is added on to a regular policy by some insurance providers in Canada. There’s an additional cost, but it may be worth your while.

How it works

Details vary by provider, but a typical critical illness insurance policy will refund 100% of your premium dollars at maturity (usually age 65 or 75) or on surrender if you haven’t made a claim. A disability insurance policy offering the feature will typically refund 50% of your premium dollars if minimal or no claims are made after a specified period, such as every seven years.

Is it worth it? It depends on the policy and your personal situation.

What’s best for you?

Looking at the potential financial cost versus the potential financial benefit is one approach. It involves comparing the cost of the return-of-premium feature with what you could earn by investing that amount annually in a conservative investment for the number of years until you would qualify to get back your premiums. If the amount of the refunded premiums is likely to be higher than the projected amount of the investment, then choosing the return-of-premium feature may be a good idea.

The return-of-premium option is just once factor to consider in formulating a comprehensive protection plan for you and your family. We are committed to working with you to find the solutions that meet your needs and also fit your budget.

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