- 25,164
I sell some ROP. I do not highlight the current tax treatment much. I talk more in terms of the CV being a lump sum for funeral.
RdPu Wl is even better. Compares to a small quick pay Whole Life. The cash value is just a tool.
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Whatever Happened to ROP Term??
- Thread starter Mark
- Start date
I sell some ROP. I do not highlight the current tax treatment much. I talk more in terms of the CV being a lump sum for funeral.
RdPu Wl is even better. Compares to a small quick pay Whole Life. The cash value is just a tool.
I use ROP mainly for those 20- and 30-something clients to whom life insurance seems like a distant need (these clients often see themselves as bullet-proof and death not happening anytime soon). Showing that we will pay them one way or another - whether they live or die - often seals the deal. It's not for everyone, especially clients in their 40's and 50's due to cost.
As for it being a windfall to the company, considering that only 2% to 3% of all term policies actually pay out the face amount at death, one could make the same argument about term policies in general.
As for it being a windfall to the company, considering that only 2% to 3% of all term policies actually pay out the face amount at death, one could make the same argument about term policies in general.
- 2,455
I'm looking at a ROP quote for 20 years term. At year 20 it shows the ROP for exactly the premiums paid in ($23,558). Another column says "reduced paid up" at 20 years $107,342. Does that mean at the end of the term they have a paid up policy for $107,342 if they decide to not take the $23,558?
I asked my marketer and they were not sure. Said they would get back with me tomorrow. Different girl than the one I usually deal with. The guy I used to deal with was extremely smart but somehow I got moved. I think I asked him too many questions.
I asked my marketer and they were not sure. Said they would get back with me tomorrow. Different girl than the one I usually deal with. The guy I used to deal with was extremely smart but somehow I got moved. I think I asked him too many questions.
- 1,405
I suspect, if they leave the money with the company, that they will have a $107,342 paid up policy with a cash value of $23,558 and the cash value will likely grow.
When ROP first came out I addressed that concept several times. I generally worry about changes to tax rules, and believed strongly that if company's offered paid up policies as an option at maturity, then it would offer the client a way to continue to defer tax, if the tax rules changed, and tax was applied later.
Apart from that, I like the idea that most people need a lot of insurance during their income earning years, but may want a clean-up fund for retirement. ROP term really can offer both, more coverage in the early years, and a smaller paid up policy thereafter.
- 2,455
That sounds too good to be true. You mean you think there could be cash value and it could grow even though they would no longer pay premiums?
The premium jumps from $1,177.92 per year to $4,777.56 in year 21 and keeps going up in year 22 to $5,286.27 and keeps getting higher. At age 69 it says they would have to pay $24,480 per year.
All the numbers for ROP and Reduced paid up columns are 0 after year 20
- 1,405
Fair point.
Let's get more specific.
What is the age of the individual so we can look at premiums in relationship to face amount for the 20 year ROP going in.
How old is he when he buys the policy? Non-smoker? Preferred health?
Let's get more specific.
What is the age of the individual so we can look at premiums in relationship to face amount for the 20 year ROP going in.
How old is he when he buys the policy? Non-smoker? Preferred health?
- 25,164
35 year old dad, home owner.
Preferred non smoker
Primary bread winner
$250,000 mortgage
2 young children
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I'm looking at a ROP quote for 20 years term. At year 20 it shows the ROP for exactly the premiums paid in ($23,558). Another column says "reduced paid up" at 20 years $107,342. Does that mean at the end of the term they have a paid up policy for $107,342 if they decide to not take the $23,558?
I asked my marketer and they were not sure. Said they would get back with me tomorrow. Different girl than the one I usually deal with. The guy I used to deal with was extremely smart but somehow I got moved. I think I asked him too many questions.
Yes. Or a combo of each. He could take some ROP and get some RdPu.
Also per one of my ROP companies. - If they get close to the end of the term and decide they do not want to pay anymore. They can either cash out, take the ROP or let the cash values pay the premium till gone. The RdPu is basically a PdUp term to age 100.
Hope that helps.
Lee
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- 1,953
That's quite a bit of face for the paid up policy using the 23K.. Can you name the carrier?
- 2,455
Well that's the most info I have received so far. Wasn't able to call my 'smart' marketer back yet and the other one hadn't got back with me. Was out buying an office desk.
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$500,000 FACE amount with W.R.L.
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- 25,164
Nah, just kidding.
