A case for ROP Term

[WinoBlues]

For the 32 y/o, I think that's the wrong move, here's why:

1m for 30 years in MI is 52/month. Dude has around $100 difference. I'm going to assume he meets the income requirements for a Roth. 30 years $1200 annually *.07 average growth rate is 121k, cash.

He blows the check out of the water. He almost matches the paid up option. This guy's self insured, no matter what.

Let's say he takes distributions at age 62. 4% is $4800, tax free. That's a vacation every year.

He doesn't even have to take RMD's for his entire life. If he stops contributing at 62 and dies at 80, he dies with 400k in the account and his children have to take RMD's, but the cash continues to grow tax free.

They could reasonably have a minimum of 16000 a year tax free for life without ever losing the principal (obvs some years up, some down)

Plus, if the Roth's through employment, he can take out loans that are tax free.

The RoP really only works IF the term is short and/or the risk tolerance is low. However, the agent gets a pretty sweet bump in comm.

Not saying you're doing that for the money, at all.

I just think because he's so young, he can ride the market waves and come out better.

There we go.

You are correct he more than qualifys.

Show me the Guarantees. That is what he asked me. FYI, his wife went with AAA ROPterm.

 

[Travis Price]

There we go.

You are correct he more than qualifys.

Show me the Guarantees. That is what he asked me. FYI, his wife went with AAA ROPterm.

So, his risk tolerance is relatively low... Which is going to be a major problem, but that's a him problem, not a you problem.

You could beat the cash with a CD, but not the paid up.

His cash back is going to be eaten away due to inflation, but again.. his problem.

Ultimately, if the client *wants* RoP, I'm not going to turn down the Comm, but I'd be pretty straight up he could do better.

 

[WinoBlues]

Yes, very conservative lifestyle. Academic

 

[Travis Price]

Yes, very conservative lifestyle. Academic

He specialized in the wrong academics

 

[WinoBlues]

Very 'net' and 'guarantees'

 

[Travis Price]

Very 'net' and 'guarantees'

That's the one of the biggest things I hate about education. They don't really teach you about financial literacy and how to use money as a tool.

Even guarantees are a risk (especially in his case) because of inflation.

 

[WinoBlues]

That's the one of the biggest things I hate about education. They don't really teach you about financial literacy and how to use money as a tool.

Even guarantees are a risk (especially in his case) because of inflation.

He was recruited by the President to head a council in DC. That ended and now has a house on the California central coast.

While I agree about education not equating to real life.

You have a good rebuttal

 

[WinoBlues]

Oh, and he wanted the paid up in not a cash value. Like the one I did on his dad

 

[pfg1]

For the 32 y/o, I think that's the wrong move, here's why:

1m for 30 years in MI is 52/month. Dude has around $100 difference. I'm going to assume he meets the income requirements for a Roth. 30 years $1200 annually *.07 average growth rate is 121k, cash.

He blows the check out of the water. He almost matches the paid up option. This guy's self insured, no matter what.

Let's say he takes distributions at age 62. 4% is $4800, tax free. That's a vacation every year.

He doesn't even have to take RMD's for his entire life. If he stops contributing at 62 and dies at 80, he dies with 400k in the account and his children have to take RMD's, but the cash continues to grow tax free.

They could reasonably have a minimum of 16000 a year tax free for life without ever losing the principal (obvs some years up, some down)

Plus, if the Roth's through employment, he can take out loans that are tax free.

The RoP really only works IF the term is short and/or the risk tolerance is low. However, the agent gets a pretty sweet bump in comm.

Not saying you're doing that for the money, at all.

I just think because he's so young, he can ride the market waves and come out better.

You are correct... IF (and its a big IF) they invest the money and get 7%.
The problem historically, people didn't do that... they SPENT the $.

The Art Williams BTID movement turned into BTSD for many folks.

At least with ROP, they get something back. Not saying its right or wrong, just saying. (I've sold 1 ROP case ever)

So your rebuttal would be a good way to sell against it for sure!

 

[Travis Price]

You are correct... IF (and its a big IF) they invest the money and get 7%.
The problem historically, people didn't do that... they SPENT the $.

The Art Williams BTID movement turned into BTSD for many folks.

At least with ROP, they get something back. Not saying its right or wrong, just saying. (I've sold 1 ROP case ever)

So your rebuttal would be a good way to sell against it for sure!

It's pretty easy with an employer Roth to make this happen, which is why I chose that vehicle. It's harder when you do it with an individual account. In order to BTID you have to make it as easy as possible for people to forget about the money.

You literally set it once and look at it once a year to make sure your mix is legit and leave it alone.