Best company for ROP Term?

[James]

Will we ever get over the idea that the "Rate of Return" has any significance? Today, when I hear people espousing such nonsense while overlooking the real problem people are having, it is no wonder some think our economy is heading for doom and gloom. Lets face it, if one makes 3%, 7% or 15% in investment return but on average are paying out 34% of every dollar in interest on loans, it simply idiotic to think it matters. I am not saying people are spending too much, but they listen to this god for awful advice of todays gurus of investments and basically don't know how badly they are screwing themselves. I don't see how Term or ROP has any bearing on ones financial health? The entire idea of Term sucks for most and throwing ROP into the mix only muddies the waters of a failing industry. I can see the draw of those that sell Term to ROP, they also have to make a living! Most agents will never be able to make decent living, selling only Term.

 

[James]

The ROP's I have looked at only doubles the premium.

Depends if it is a 15, 20 or 30 year contract. It does about triple the amount on a 15 but barely doubles the rate of a 30 year term. In fact, a 15 year ROP will likely have a higher premium then a 20 year ROP premium.

 

[djs]

Will we ever get over the idea that the "Rate of Return" has any significance? Today, when I hear people espousing such nonsense while overlooking the real problem people are having, it is no wonder some think our economy is heading for doom and gloom. Lets face it, if one makes 3%, 7% or 15% in investment return but on average are paying out 34% of every dollar in interest on loans, it simply idiotic to think it matters. I am not saying people are spending too much, but they listen to this god for awful advice of todays gurus of investments and basically don't know how badly they are screwing themselves. I don't see how Term or ROP has any bearing on ones financial health? The entire idea of Term sucks for most and throwing ROP into the mix only muddies the waters of a failing industry. I can see the draw of those that sell Term to ROP, they also have to make a living! Most agents will never be able to make decent living, selling only Term.

James -

I'm not sure I really understand this post, since you say both rate of return has no significance, and yet, it does. If people are paying out 34% on loans, this is a terrible rate of return, probably (depends why they have the loan, if they are making 50%, then it's good).

Why does the entire idea of term suck? Term has some great uses, and I sell it frequently to those who need insurance but are cash flow restricted, and to those who have a temporary need for additional insurance. Life insurance isn't an investment, it a protection policy. The rate of return you get on any policy that has cash build up is critical to ensuring the health of the policy vs the health of your cash flow.

Dan

 

[Agent Jeff]

James -

I'm not sure I really understand this post, since you say both rate of return has no significance, and yet, it does. If people are paying out 34% on loans, this is a terrible rate of return, probably (depends why they have the loan, if they are making 50%, then it's good).

Why does the entire idea of term suck? Term has some great uses, and I sell it frequently to those who need insurance but are cash flow restricted, and to those who have a temporary need for additional insurance. Life insurance isn't an investment, it a protection policy. The rate of return you get on any policy that has cash build up is critical to ensuring the health of the policy vs the health of your cash flow.

Dan

I think James is saying that term sucks for the insurance agent since the commissions are too low and maybe to the client ultimately also because the industry is failing.

 

[James]

James -

I'm not sure I really understand this post, since you say both rate of return has no significance, and yet, it does. If people are paying out 34% on loans, this is a terrible rate of return, probably (depends why they have the loan, if they are making 50%, then it's good).

Why does the entire idea of term suck? Term has some great uses, and I sell it frequently to those who need insurance but are cash flow restricted, and to those who have a temporary need for additional insurance. Life insurance isn't an investment, it a protection policy. The rate of return you get on any policy that has cash build up is critical to ensuring the health of the policy vs the health of your cash flow.

Dan

Well its a two fold problem, one for the agent and the other is that we as agents agreeing that the vast majority of people actually benefit from the expression, "Buy Term and Invest". We already know they are not investing and when they do, they'll likely earn half the rate (according to more then one major study) of what a good WL policy will pay!

So ask yourself, why are they not investing?

 

[djs]

Well its a two fold problem, one for the agent and the other is that we as agents agreeing that the vast majority of people actually benefit from the expression, "Buy Term and Invest". We already know they are not investing and when they do, they'll likely earn half the rate (according to more then one major study) of what a good WL policy will pay!

So ask yourself, why are they not investing?

The real problem is, insurance agents sell whole life policies as a monetary investment. It's protection, not an investment. I agree that the buy term and invest the difference montra only works when actually implemented, which I help my clients do.

Dan

 

[James]

The real problem is, insurance agents sell whole life policies as a monetary investment. It's protection, not an investment. I agree that the buy term and invest the difference montra only works when actually implemented, which I help my clients do.

Dan

For most people, IMHO, investing is not the most prudent way of getting ahead. Well, not untill they get their financial house in order.

 

[djs]

For most people, IMHO, investing is not the most prudent way of getting ahead. Well, not untill they get their financial house in order.

As strangely put as that is, I pretty much agree with it. If someone is borrowing on their credit card to pay their groceries, they shouldn't be putting money into a mutual fund investment.

The premise of the thread though, implies someone has some disposable cash. If not, buying life insurance is not the best move. If someone is putting groceries on their credit card, they don't need to be talking about ROP riders on their life insurance policy.

The question really is, how disciplined is the client. If they don't have any financial discipline, than investing won't help them out at all.

Dan

 

[Alsky]

If a client wants a term product and also wants the ROP, I like Genworth Vantage, why you ask? The main reasons:

1) The rates are affordable.
2) Owner can take loans on the policy "value".
3) Owner has the option to convert to a paid up policy at the end of the term in lieu of the ROP.

Throw in the company is super strong, the policy is convertible and policy has an Accelerated benefit feature, all this makes it a great choice for a good portion of my clients... Now the other shoe drops, the only bad part is that Genworth can be very tough in underwriting if there are any health issues, but who isn't no a days I guess.

 

[James]

If a client wants a term product and also wants the ROP, I like Genworth Vantage, why you ask? The main reasons:

1) The rates are affordable.
2) Owner can take loans on the policy "value".
3) Owner has the option to convert to a paid up policy at the end of the term in lieu of the ROP.

Throw in the company is super strong, the policy is convertible and policy has an Accelerated benefit feature, all this makes it a great choice for a good portion of my clients... Now the other shoe drops, the only bad part is that Genworth can be very tough in underwriting if there are any health issues, but who isn't no a days I guess.

Exactly what value? A term with or without ROP has no value as in Cash build up so what exactly would you borrow from?

Outside of that, Genworth is really no more competitive then anyone else and point three, you can do that with any company. Not like an insurance company going to say, "We rather not have your money, but thanks anyway". Or if they do you can really say, "I heard just about everything now".