Originally Posted by pfg1
Would you consider having no life ins death benefit in a traditional policy a downside also? Obviously its not a product designed for that, just curious on your thoughts.
Most people have a segment of assets that are invested very conservatively... this type product imo
, falls into that area. So the lost opp cost is minimal, when looking at the total picture.
conservative investments are generally earmarked for emergencies. that is why they pay low interest rates because they are liquid with no risk. why put that money into an non-liquid "investment".
fyi... a single pay life/ltc
policy is NOT an investment. it's very expensive life insurance.
Originally Posted by ltcadviser
Opportunity cost which has been mentioned; and asset-offset.
Benefit is fixed cost structure.
Traditional policy downside is rate increase risk.
the rate increase risk is very small and it's much smaller now than it was in the past.
the opportunity cost is certain.
a rate increase is not.
Originally Posted by bluemarlin08
Every time I hear that I always think of "LEAP" presentations. Just curious, what interest rate do you use when showing lost opportunity cost, 5, 7%?
I ask the client what they expect to earn on their $.
In most cases they say 3%.
It's very easy to beat any single pay product once your client understands the opportunity cost, whether you assume 2%, 3% or whatever percent.
the opportunity cost in the single pay products is huge.