How many FE customers use the Reduced paid-Up option on their policy?

[wehotex]

If you encounter an FE customer who has paid MORE than the Death amount (if possible?), is it ever worth it for the policyholder to stop paying, get the reduced amount upon death and instead diligently save money each month to pool enough for the final expenses?

 

[Newby]

Every case is individual. How much does their death benefit reduce if they take it? How much benefit do they need to cover? How healthy are they? Can they qualify for a new policy? Assuming you're gonna live long enough to save monthly to reach their goal is not a good plan unless they're completely uninsurable.

 

[WinoBlues]

"Many" is subjective.

I have help people do it for a number of reasons, need changes, can not afford the premium, replacement, and so on. That and ETI can be great options for the right reasons. Saving the premium in a coffee can buried in the back yard next to the cat is not one of them.

 

[walthamny]

You are not going to run into this issue like you would with someone making 300K and buying a whole life policy. For most GI holders, the medical copays have wiped them out. For all others, if they were good at saving they would have saved earlier in their life cycle and frankly not need a FE policy. Its a rare issue

 

[Newby]

Many times RPU is even the plan from the beginning. If you do the math comparing a 20-pay policy to if they took the same premium (higher death benefit) with life-pay it is often very similar if they go RPU at the 20th year of the life pay. Meaning they had a payment for 20 years and they have a paid in full policy for similar amounts at the 20th year.

But the lifepay option gives them more coverage during the payment period (20-years) AND gives them more options further into the policy.

 

[jdeasy]

If you encounter an FE customer who has paid MORE than the Death amount (if possible?), is it ever worth it for the policyholder to stop paying, get the reduced amount upon death and instead diligently save money each month to pool enough for the final expenses?

Even when you run into one that has paid more than the death benefit the RPU is going to be less than the face.

Still might be worth it to someone to just stop paying premiums?

I discuss all forfeiture options with all prospects as part of my recommendations. I won't proceed with a presentation with someone that has current insurance without getting the detail of where they are now. Either by seeing the policy or by calling the company. Usually calling even when they have the policy. Many, many times people have "forgotten" about a policy loan.

Once presented I've had very few people take the RPU option. I can count on one hand the RPU takers over 20 years of doing this. Usually even if I recommend RPU over cash surrender they are getting the cash.

But they all say in the beginning that the cash is not that important to them. I have even had a few say they are doing the RPU only to call a few days later to change to cash surrender.

Show their options. Make a recommendation. Let them decide.