Rop Term

[Tahoe Ray]

Will you have a happy client when the term premium gets delayed in the mail and the policy lapses along with the forfeiture of the return of premium benefit? What happens if the client has short-term financial problems and can't pay the premium?


Run the ROP term premium against a current assumption UL with the same face amount (and premium). You'll find equal if not better performance of the UL product (on current assumptions), plus a "safety valve" of either being able to surrender the policy before the end of the ROP funding period or to skip a payment or two. Even at the guaranteed interest rate and current mortality, UL is better because of the flexibility. Really a no-brainer right now.


Personally, I don't care for ROP term except in very high interest rate environments. In high interest rate environments, the high interest rate allows for lower ROP premiums (and effectively "guarantees" the high interest rate). But even then the client has to keep the policy for the full term, and the lack of flexibility is problematic. You have to make sure the client understands this risk.

I'm not a big ROP guy but do use it where it fits. If I'm buying 30yr ROP for a younger client (30s) I would be surprised if the UL would even come close for the same premium/DB...it would likely lapse (even on the current side) long before year 30. Maybe you're using your idea with a different demographic but this is where it mostly comes up for me.

Also, most of the ROP term policies that we use (Trans, Pru, ING etc.) allow for cash surrenders and RdPu options long before the end of the term.

I like flexibility too but as with most term sales, we're normally trying to max the DB for a specific need (income replacement, debt repayment, etc.) so I'm not seeing how a permanent product can compete for that specific reason.

 

[WinoBlues]

Bam. Auto corrected!

In all seriousness, I haven't seen it in the wild yet. Who is it normally used for?

that was funny.

I will admit that I used to sell it much more. The companies were People's Benefit, Genworth and Cincinnati Life. Prices were a lot lower.

Most of my ROP clients fell into two camps. The ones that had a term need for a specific purpose and term such as mortgage. I would show them term and ROP. Many liked the RdPdUp option as much as the ROP.

The others were smaller <250,000.00 policies many times single parents where family income was the need with a paid up FE policy at the end. A lot of those where referred to me by their parents or grandparents. Of the latter group child riders sometimes as important to them.

Also remember that the accelerated death benefit.

 

[meclimit]

That can happen with ANY policy, not unique to ROP term.

However, being able to charge the premium to a credit card, and having a secondary addressee can help to mitigate this risk. Assurity offers this.



I agree with you. However, much of the population is brainwashed to wanting to only buy term, so this is a smart way to help people get the insurance they need, instead of debating which product is 'best'.

Some insurance is better than none.

More is better than less.



This is a term policy, for protection only. If you're bringing in "interest rate environments" when talking to your client about this, then I can tell that you're not a fan of this policy, nor sold any.

I think its important to compare the difference in premium between the ROP premium and a non-ROP premium product. Then tell the client the rate of return they are getting on the difference. When they see its not much, most are happy to consider other options and use those dollars elsewhere.

Credit card funding is nice. But again, compare the cost of a term policy that allows credit funding vs. one that does not. It costs companies 2-3% to accept credit cards. The cost is passed on one way or the other. But yes, for someone living paycheck to paycheck it may be worth it.

But you are right -- getting them the amount of insurance they need is the first priority.

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That can happen with ANY policy, not unique to ROP term.

Forgot to address this. For WL (if the APL option is chosen) and UL, if there is enough cash value, missing a premium (or sending it in late) won't lapse the policy.

 

[DHK]

Forgot to address this. For WL (if the APL option is chosen) and UL, if there is enough cash value, missing a premium (or sending it in late) won't lapse the policy.

For the first few years, depending on how you structure the policy, the risks are the same. Except one is putting in much more premium into the WL, UL, IUL that there's more reason for the insured to not let that policy lapse.

 

[mcouper]

Who offers the best ROP term policy?

ING, Prudential, Cincy

 

[Gabe9175]

Who offers the best ROP term policy?

I have written quite a few with Assurity

 

[0b1kanobee]

What carrier does a 10 yr ROP term? If you know a premium per month that would be great as well. (my last slave died on me)

I have a lady that needs it as part of her divorce decree.

Female age 40
amount = $150,000
Non-smoker
preferred

 

[Gabe9175]

What carrier does a 10 yr ROP term? If you know a premium per month that would be great as well. (my last slave died on me)

I have a lady that needs it as part of her divorce decree.

Female age 40
amount = $150,000
Non-smoker
preferred

Thats a really good question, I thought Assurity did ROP on a 10 year but I just checked and its only on 20 and 30 year. If you find a carrier that does let me know

 

[Tahoe Ray]

What carrier does a 10 yr ROP term? If you know a premium per month that would be great as well. (my last slave died on me)

I have a lady that needs it as part of her divorce decree.

Female age 40
amount = $150,000
Non-smoker
preferred

A 10 pay WL from someone like Met should have all premiums paid available for surrender by year 11 (for a younger, healthy, client like this).

Alternatively, you could do a 15yr ROP with Pru and get back around 80% at the end of year 10.

Neither one is perfect but either may be an option.

 

[pcbinsurance]

Why does she "need" a return of premium policy? The divorce decree isn't going to say it has to be a ROP, is it? Just a simple 10 yr term should suffice. It won't cost much.

Fewest years I know of is 15 yr ROP but most are 20-30.