A case for ROP Term

children have to take RMD's, but the cash continues to grow tax free.

no longer true on that 1 minor point. Effective at the end of 2019, stretch IRA RMDs are no longer a thing for most non-spouse beneficiaries. The only option will be the max 10 year deferral without the requirement of any RMDs to the beneficiary during that 10 year period.

Rest of your post seems right on for the scenario you mentioned of someone young & eligible for Roth contributions, etc.

For those really low risk tolerance or dead set against paying for something they get no money back for, ROP can be an option.
 
no longer true on that 1 minor point. Effective at the end of 2019, stretch IRA RMDs are no longer a thing for most non-spouse beneficiaries. The only option will be the max 10 year deferral without the requirement of any RMDs to the beneficiary during that 10 year period.

Rest of your post seems right on for the scenario you mentioned of someone young & eligible for Roth contributions, etc.

For those really low risk tolerance or dead set against paying for something they get no money back for, ROP can be an option.

That is correct. I had to look it up.

Publication 590-B (2019), Distributions from Individual Retirement Arrangements (IRAs) | Internal Revenue Service
 
the biggest issue I see is that getting started saving money is really, really hard for most Americans (insert excuses here). For those of us self starters/save 1st spend last, it seems so easy.

if a person desires to start saving, most professionals with securities licenses have no interest as there is no money in helping people save $50, $100, $200 per month. they want to work on big rollovers or existing savers with large account values. Those same individuals with securities licenses rarely want to help someone with term life as it seems like too much work for then. Insurance only licensed agents don't tend to want to help coach someone to save more in their retirement plans or lack the licenses to be able to properly discuss investing.

So, we are left with Self starters figuring it out on their own or buying a forced savings plan from an insurance agent like WL, GUL or ROP

Regardless, still better than blowing the money on bigger house, newer better car or starbucks. funny how we always compare our financial/insurance products to each other, but never to all the wasteful consumerism items we all blow money on. +2-3% in a forced savings vehicle is way better than -100% in excessive consumption.
 
I think there's an argument that it's situational.

Personally, I don't love RoP. HOWEVER, it's not about me. It's about the client. Also, I'm not going to shy away from 3x the comm either.

As long as the client knows their options and makes their own decision, I'm good.

Agreed, agreed and agreed.

I do not write it anywhere close as often as I did when there were many choices to pick from. The rates were not that much higer than straight term. Most companies have dropped their ROPs or raised the rates.

I believe one reason for the rate increases is those plans are much stickier than they had planned. People keep them.

Your rebuttal was solid.
 
FWIW, the imputed return on a 32yo buying ROP vs traditional term is 4.54% (meaning that he'd have to earn at least that rate of return "investing the difference" in order to have more money than the ROP check).

It's not as bad a deal as it sounds...especially if he's just spending the difference or saving it in his checking account.

not sure, but I believe that 4.54% calculation is what a taxable investment would have to earn to net the equivalent of the ROP added premium would generate. I think it would have to be much higher if using a tax free vehicle such as Travis Price is showing as a Roth.

PS-- not arguing because I own 2 ROP, just thinking the imputed return calc of 4.54% might be using taxable equivalent yield based on say a 20-30% fed/state income tax bracket. meaning 4.54% taxable would net about 3.2% after 30% in taxes.
 
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