New Transamerica Single Pay Term and ROP

[R. Paul Aguirre]

So I found this flyer today on the Trans website introducing their new Advanced Premium Agreement. This is basically a singe pay for term, but on the ROP side you receive 30 years of annual premiums back. Here is an example. I am trying to get intouch with somebody regarding the taxation on this. Any of you heard of this one before?

Trendsetter ROP 30 Annual Premium: $ 1,625
30-Year Cumulative Premium: $ 48,750
Single Advance Premium: $ 32,807
Returned Premium: $ 48,750​

 

[STIBROKER]

now if I can just find someone with $33,000 laying around......

 

[R. Paul Aguirre]

Taxed annually 1099, still pretty cool.

 

[STIBROKER]

Still would not give that much money to a insurance company all at once.....

Taxed annually 1099, still pretty cool.

 

[The Hunter]

Just curious; What age and face amount are you using in this
Illustration?

 

[R. Paul Aguirre]

Just curious; What age and face amount are you using in this
Illustration?

That is the example used in the flyer, it does not show an age or face amount.

For a 28 year old standard 500k ROP Male it would be

$1,405 annually

The return of premium would be $42,150 on $28,365 down.

 

[TEXAS PITBULL]

I too saw this and found it interesting

 

[Broker007]

Very, very nice. Thanks for the info.

 

[Marpol]

in the bottom of the flyer it says:

1 Interest credited by Transamerica to premium paid under the Advanced Premium Agreement is taxable and will be reported annually to the IRS in a Form
1099-INT if in excess of $10.

This mean that you will be paying tax on phantom income every year.

This is not new with trans but it is a good flyer....

 

[arnguy]

Well, Marpol, I think the words phantom income are incorrect inasmuch as they imply something illusory, nonexistent, or fictitious. The IRS deems it constructive income in that technically it is available to you even if you do not take it or use it. This definition of constructive income often causes consternation in people who buy prepaid funeral expense coverage through a trust. The trust invests the money and adds the income to the prefunded trust but does not distribute it. The client gets an annual 1099 for the income generated by the trust. Not many understand that concept causing unnecessary phone calls to the agent or funeral home.