WOW, how did you get the apps issued so fast? My Banner apps usually take 3 to 5 weeks.
Oh, trust me, not bragging, just happened to be current clients who wanted the insurance and did the exams and apps the same day. They are in their early thirties with no health history to drag them down - preferrred and preferred + ratings.
All three policies together might pay your water bill, those are the only ones that get thru easily for me.
I wonder how important the premium really is with ROP. Assuming there is no cash flow issue, the more the cost, the more the dollar return. And from what I understand, the additional premium would have to earn from 5-7% tax free and guaranteed to match the return of ROI.
What am I missing?
Rick
I'm confused by this statement, but then, maybe I don't understand ROP well enough. I'm willing to learn.
As I understand it, ROP does not promise any growth of premium, instead, just the opposite. You get paid back in 20 years what you paid in today, effectively a much shrunken dollar. The carrier in turn, has free use of your money during this time.
If this is true, then it absolutely matters what the premium is. It helps keep the deflationary pressures of my dollars at bay if I can manage to give them fewer dollars up front.
The 5-7% is what you have to make if you invest the equivalent of the ROP premium yourself rather than having them do it for you. The carrier can get a much lower return (usually called profit) simply because many ROP policies lapse.
Just think about all the clients that don't have R.O.P. or term protections at all.
Lets keep it simple.
If you die, you get the money and if you don't die, you get all of your money back.
If you are planning on only keeping it for a few years, then don't waste your time buying a R.O.P.
I just know on my own policy at the end of the period, I'm getting all of my money back and I would have had 30 years of free insurance. If I decide to lapse the policy and lose the protection then that is my own fault.
My problem is that I want more things in life to have a R.O.P. after I get done using it.
Not just things like Home Owners Insurance, that I will never use, but everything.
I would be willing to pay almost double, if I get my money back at the end. My example is I pay almost $600.00 a year for home owners. I would be willing to pay $800 to $1000 a year and after 20 years, I don't have any claims, then I get all of my money back.
Also, for the agents that don't understand how to market a R.O.P. product, I say thank you. You make my job a lot easier to come in behind you. I'm going to keep drilling into the client do they want their money back or not at the end of the term period. But if you don't want to show them R.O.P. then I say again thank you and my agents and me own you a beer on us.
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Mark Rosenthal aka markingriffin
IMO/Ins Agent/Agent Trainer/Free Advice markcrosenthal@aol.comwww.realfastservice.com
Please visit mywebsite to learn more about me.
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Would you pay double or triple your HO premium to get it all back after 20 - 30 years?
How about double or triple your health insurance premium to get it all back (less claims paid)? Believe it or not, there were some carriers (other than Mega) that were offering that a few years ago. Of course they are no longer in the business.
Seems like some of the carriers in the ROP term business have discontinued offering that kind of coverage or have gone away. Does CNA ring a bell? I think they were in the ROP/mortgage term business for about 3 weeks before they quit.
Shenandoah was also in that market, as was Conseco.
To me one of the biggest concerns about ROP term is carriers going by the wayside and the assuming carrier refusing to honor the promise of the refund.
Cincinnatti Life, AIG, Genworth, Life Investors, Fidelity Life - all selling ROP - all doomed to go out of business and not honor the contract....it can happen....I guess....but really???? Lets keep this discussion going.
Right on John - much ado over nothing - But I though it was funny how much ROP was slandered...however lets all agree with this then ROP trumps whole life ANY day! How's that for adding fuel to the fire?
In some cases problems can arise when an agent's personal bias comes into play. I also have to work on this issue in several areas.
Go to Best Buy and only see one computer - you ask the rep and he says "after intense analysis we've determined this is the only computer we're going to show since we feel it's the best deal."
Would you pay double or triple your HO premium to get it all back after 20 - 30 years?
Yes I will in a heartbeat. I want R.O.P. on everything, not just insurance.
If I was renting a house, and the landlord told me if I pay more rent to get my money back, after I move out. I would jump on it.
Not all agents are going to like R.O.P. or offer it to their clients or push it. I'm glad that they don't or I might not be able to come in behind them and make a sale. To those agents that don't get it, I thank you and a lot of agents do also.
Last edited by Markingriffin : 12-25-2008 at 09:52 AM.
Keep in mind that you're still talking about term insurance. One of the things I point out to the prospect is how the premiums will skyrocket when the term is over. Couple that with the extremely low percentage of return in the early years and it makes ROP look unattractive.
Also, doesn't the client have to cancel the policy with most companies to get the cash values?
If they want cash back, why not U.L. or IUL? They have the potential to keep premiums level until age 120. And, they can borrow the cash values and keep the insurance in force.
MickeyMa: Always a great idea - borrowing against your own money in an insurance policy...Nice! And maybe the insurance company can charge you interest too on your OWN money...Another good idea! Anybody ever hear of a simple loan with somebody else's money - that would be a bank loan. How insurace ever got mixed with banking is beyond me...And why is borrowing against your own assets EVER a good idea? The whole life types always say you can borrow against your own money like that is some type of a benefit...Whoa!
Keep in mind that you're still talking about term insurance. One of the things I point out to the prospect is how the premiums will skyrocket when the term is over. Couple that with the extremely low percentage of return in the early years and it makes ROP look unattractive.
Also, doesn't the client have to cancel the policy with most companies to get the cash values?
If they want cash back, why not U.L. or IUL? They have the potential to keep premiums level until age 120. And, they can borrow the cash values and keep the insurance in force.
Just keeping things in perspective...most permenant policies provide no cash value in the first 2 years and have a declining surrender charge so comparing what you get from term w/rop and UL in years 1-5 is probably moot...and as we extent into years 5- say 15 you might get 100% of the cash value however at what years does the cash value equal 100% of premium paid in...I know this is very hard to answer and it should be....I can't tell you how often I have run into old policies where the client tells me they have a paid up policy only to find out after I have dug into that the policy is close to lapsing due to the cash value, dividends, interest no keeping pace with the premiums...
MickeyMa: Always a great idea - borrowing against your own money in an insurance policy...Nice! And maybe the insurance company can charge you interest too on your OWN money...Another good idea! Anybody ever hear of a simple loan with somebody else's money - that would be a bank loan. How insurace ever got mixed with banking is beyond me...And why is borrowing against your own assets EVER a good idea? The whole life types always say you can borrow against your own money like that is some type of a benefit...Whoa!
Maybe you should stick to health.
Borrowing at a low rate to invest at a higher rate can be a very good idea if the risk is low.
Borrowing life insurance cash values also means the life insurance continues.
ROP is a gimmick. The insurer earns the refund from excess premium. Still can be better for the insured whose ability to save is limited (which is why many are buying term).
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I thought this WAS a real job!
MickeyMa: Always a great idea - borrowing against your own money in an insurance policy...Nice! And maybe the insurance company can charge you interest too on your OWN money...Another good idea! Anybody ever hear of a simple loan with somebody else's money - that would be a bank loan. How insurace ever got mixed with banking is beyond me...And why is borrowing against your own assets EVER a good idea? The whole life types always say you can borrow against your own money like that is some type of a benefit...Whoa!
healthguy the reason you might wish to borrow your own money in a life policy is to avoid taxation....assuming you have already withdrawn your total cost basis in the policy ie total premiums paid in if you were to then withdraw more cash value that cash value would be taxable. If instead you borrow against the cash value and maintain the policy in force until death then you have managed to withdraw potentially taxable cash value from the policy tax free....however tax free does not mean it didn't cost you something and that something was the insurance companies interest....however you may be able to not payback the loan and interest and the policy may still stay in force and so avaoid taxation
I guess what I'm saying is that it can be beneficial to avoid taxation of your money by the government...I have always wondered though if you are young and take a loan against cash value if over time the interest expense would not be worse then paying your taxes.
Permanent Life insurance = a great way to overpay more for life insurance than you should and underinsure your life at the same time. This thread has degraded into a defense of whole life...I didnt want it to go here, but it has - but I do appreciate your perspective Norway guy - but respectfully disagree...I have NEVER seen someone come out ahead with whole life- you overpay, underinsure, and the insurance company is the only one laughing all the way to the bank.
Last edited by HealthGuy : 12-24-2008 at 10:56 AM.
I can't tell you how many clients I run into, that bought a U.L. many years ago and now they are getting letters in the mail asking them to either double or triple their premiums, or it will lapse very soon. Just 15 years ago the interest rates were about 15%. Today they are around 5% or lower. For those that borrowed some of the money from their U.L. there cash value is near zero today. You know what happens when it hits zero. The policy stops. Unless they bought an age 100 Guarantee. Most clients were never sold that type of U.L.
The last thing you want to do is borrow against your U.L. policy, unless you have to.
Here is something to try, to show my point. Call the insurance company that sold you that U.L. and ask them if interest rates go down just 1%, how much sooner your policy will lapse. Hmmm, Wow. What your agent didn't explain that one to you. That if interest rates go down, that you policy can lapse a lot sooner then what was projected. I hope you bought an age 100 Guarantee. If you didn't then you need to allow me to show you one and lets get you something that can never lapse. The death benefit and rate can never change.
HealthGUy, I think you are going to make a great Life Agent.
Also HealthGuy, You don't want other agents to like R.O.P., it makes it easier for you to come behind them and replace their business and make their clients your clients. If all agents like R.O.P. I might be broke today.
I still don't understand the argument that clients don't keep the plans for 30 years. Why is that my responsibility?
The fact remains that if they do pay for 30 years, they get their money back. The difference in premium would have to be invested at a guaranteed rate of 5-7% tax free to earn as much.
I agree that by recommending this product we can be different than the usual, "by going with Banner you'll save $12.50 a month over your current plan."
I think I prefer to say "how would you like to pay less by paying more?"
Again, I might be missing something since I sell health/medicare about 95% of the time.
Rick
------------------------------------ ILIAA
Training, Community, Support, and Success Independent Life Insurance Agents Assn rick@iliaa.org
Thanks Mark for the encouragement, and I do well with cross selling life after selling the health insurance first, and I do it this way quite often..In fact, I am a more successful life agent today doing in my way and having ROP in my back pocket verses selling as a captive agent as I used to be...By the way the captive agency I worked with had no ROP product but they did have whole life, and wow WL is such a winner with todays consumer...What a joke - whole life was for a market segment that came and went about 50 years ago...Nobody wants to overpay for their life insurance by buying whole life anymore, they would rather buy term (or term with ROP) and 'invest' the difference in a family vacation or a flat screen tv! I gotta stop breaking my own rules, I didnt want to 'bash' whole life but here I go again...Can't help myself...
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Norwayguy - having a bit of fun here - but it must be fun 'explaining' what you posted below to a potential client, isn't it? Sounds like whole life concepts are 'easy' to understand - NOT really If I heard this explanation WL would be the last thing on earth I would want to buy, call me dumb - but I'm usually just at dumb as those I'm selling to - and try to get the average consumer to understand this concept you are trying to explain - you would lose them in the first sentence - thus my sentiments are proven again - Whole Life is confusing as hell for the consumer !
"healthguy the reason you might wish to borrow your own money in a life policy is to avoid taxation....assuming you have already withdrawn your total cost basis in the policy ie total premiums paid in if you were to then withdraw more cash value that cash value would be taxable. If instead you borrow against the cash value and maintain the policy in force until death then you have managed to withdraw potentially taxable cash value from the policy tax free....however tax free does not mean it didn't cost you something and that something was the insurance companies interest....however you may be able to not payback the loan and interest and the policy may still stay in force and so avaoid taxation"
Last edited by HealthGuy : 12-24-2008 at 12:34 PM.
Reason: Posts merged
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Norwayguy - having a bit of fun here - but it must be fun 'explaining' what you posted below to a potential client, isn't it? Sounds like whole life concepts are 'easy' to understand - NOT really If I heard this explanation WL would be the last thing on earth I would want to buy, call me dumb - but I'm usually just at dumb as those I'm selling to - and try to get the average consumer to understand this concept you are trying to explain - you would lose them in the first sentence - thus my sentiments are proven again - Whole Life is confusing as hell for the consumer !
"healthguy the reason you might wish to borrow your own money in a life policy is to avoid taxation....assuming you have already withdrawn your total cost basis in the policy ie total premiums paid in if you were to then withdraw more cash value that cash value would be taxable. If instead you borrow against the cash value and maintain the policy in force until death then you have managed to withdraw potentially taxable cash value from the policy tax free....however tax free does not mean it didn't cost you something and that something was the insurance companies interest....however you may be able to not payback the loan and interest and the policy may still stay in force and so avaoid taxation"
Healthguy, if you reread the posts you'll notice I don't pitch permanent policies....I however was answering your questions about how to run the numbers on ROP and why would you take a loan on your money as opposed to just accessing your money.
I sell primarily term, term w/rop in some instances UL w/age 100 guarantee and for older clients looking for burial policies simplified issue WL. There is no 1 product for every client.
Re: Why Does ROP Get a Bad Name?
ROP trumps whole life ANY day! How's that for adding fuel to the fire?
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