Use in Divorce
A return of premium policy might be used after a divorce in which the divorce decree either requires each spouse to purchase life insurance on the other spouse or for the spouse that is paying for alimony or child support to buy life insurance on themselves for a period of time to compensate the surviving party for the loss of alimony or child support.
When a party who is covered by any life insurance policy lives past the term of the insurance, the premiums paid for the traditional term policy are considered spent money for the "risk" that never occurred. By using a return of premium term life insurance policy, the insurance company would return all premiums to the party who paid for the policy. This is considered a reimbursed expense and is not taxable in the United States.
Read more about this topic: Return Of Premium Life Insurance
Famous quotes containing the word divorce:
“Anybody who’s been through a divorce will tell you that at one point ... they’ve thought murder. The line between thinking murder and doing murder isn’t that major.”
—Oliver Stone (b. 1946)