I currently have a Return on Premium (RoP) life insurance policy. I've already got $3,500 paid into the policy, and another 26yrs till the policy pays out.
I'm currently paying $72/month. The reason for the question is I just got a quote from another insurance company which is offering me the same 30yr RoP policy but for just $49/month. So I'd save $23/month.
If I was to swap to this new company, I would lose the $3,500 that I have in my current policy. Over the course of the next 30yrs I'd hold onto $8,280.
For the purposes of comparison, let's say that I'm going to buy a $23 bond each month, timed to payout as close to the end of 30yrs as possible. I've looked up the bond rates for today:
- 1mo: 0.25%
- 3mo: 0.35%
- 6mo: 0.48%
- 1yr: 0.66%
- 2yr: 0.84%
- 3yr: 0.98%
- 4yr: 1.26%
- 5yr: 1.55%
- 10yr: 1.76%
- 20yr: 2.17%
- 30yr: 2.50%
Will my interest cover the forfeited premiums, if not what rate would be required?
EDIT: I've been asked to post more information (I'm 35 years old. And the life insurance is for $250,000.) Just to try to steer the flow of answers, my interest is not in a comparison of RoP to term or other options but whether the forfeiture of my current premiums is warranted.