Big R.O.P. Changes Are Coming Soon!

[dgoldenz]

So what are you selling them?

With interest rates so low how can you sell any permanent product and talk about cash value?

Term or UL....I don't talk about cash value, I talk about death benefit. Cash value is meaningless if you die and the claim is paid. Too many agents focus on building cash value, which is more expensive up front and makes it more tempting for the client to borrow against the policy. Most clients don't understand the ramifications of them doing so, and most agents won't bother to explain it. They treat it like a second bank account.

Someone buying ROP term could get double the death benefit for the same price in straight term....which would your family rather have when you die, $250k, or $500k?

 

[Mark]

I am a big fan of R.O.P. and have a entire selling system on it. It is a niche product. For those that don't believe in it, there is nothing that I can say to change your mind and I will just go in behind you and offer it to your clients.

I'm not going to write a big long debate on R.O.P. But I believe it and own one myself.

I am very worried about ccc.
Maybe some of you that don't like R.O.P. will like it better after CCC. Example if you want to cancel this in 3 years, you can get most of your money back. I'm still studying the CCC rules, but it looks really good for the client, but the client will pay a lot more for all the upgrades.

While we are talking about increases. Because of reserves and a ton of other issues, you will see term prices going up also I bet.

 

[dgoldenz]

I am a big fan of R.O.P. and have a entire selling system on it. It is a niche product. For those that don't believe in it, there is nothing that I can say to change your mind and I will just go in behind you and offer it to your clients.

I'm not going to write a big long debate on R.O.P. But I believe it and own one myself.

I am very worried about ccc.
Maybe some of you that don't like R.O.P. will like it better after CCC. Example if you want to cancel this in 3 years, you can get most of your money back. I'm still studying the CCC rules, but it looks really good for the client, but the client will pay a lot more for all the upgrades.

While we are talking about increases. Because of reserves and a ton of other issues, you will see term prices going up also I bet.

Term prices will increase, but they will still cost half what ROP does. Getting all your money back sounds great, but like I said, most people will replace the policy long before the cash value builds up significantly.

 

[CHUMPS FROM OXFORD]

Just curious...and I don't know the answer since I don't bother with ROPs...If you were forced to take the difference in term and ROP (Same face amount etc...) and invested it tax-deferred at 6%...Which payout would be higher?

I realize most consumers won't do it, but I'm curious.

 

[Norwayguy]

Just curious...and I don't know the answer since I don't bother with ROPs...If you were forced to take the difference in term and ROP (Same face amount etc...) and invested it tax-deferred at 6%...Which payout would be higher?

I realize most consumers won't do it, but I'm curious.

I would say it would depend on the product...currently the ROP products essentially create a 5-7% return on investment assuming held to the end of the policy...If I could get the client to save the money on there own I would think that would be better because currently there is no value in the first 5 years then prorated during the rest of the years so especially in shorter periods the consumer saving the money would be better assuming they do and get that 6% return...I have only offer ROP for my clients that wouldn't look at term because they felt it was a waster of money and couldn't afford the needed death benefit of a permanent policy so had decided to do nothing (always a bad move) and they were not investors either so a 5-7 return was a decent deal once again assuming they keep the policy which I can not control.

 

[thecatcher]

ROP is a bad play for the clients because most of them will drop the policy in favor of a new one before they ever reach the full term...

I think This is absolutely accurate, for my clients i feel the only value an ROP has is when the term policy is for debt protection i.e mortgage, business loan etc. My client will keep the policy and then have the return to invest later.

 

[somarco]

Forgive my ignorance. CCC is ????

 

[CHUMPS FROM OXFORD]

Campus Crusade for Christ?

Care, Custody or Control

 

[Mark]

Forgive my ignorance. CCC is ????

To keep it simple. It is where you have to give the client a better return then what we are giving them now on ROP and sooner.

Example on a 20 year term, if you cancel it in 5 years, you get nothing. If you cancel it in 19 years you get 90% of you money back. It starts to build cash value after about 10 years.

CCC says that if they cancel it in year 3, you must give most of their money back. It will give them a higher cash value or rate of return. But the company will have to raise the prices 40 to 50 percent. All companies have to be ccc in 2010.

Those that don't like ROP might like it after CCC. For those clients that cancel early, they would get most of their money back.

I had a couple people at the home office explain it to me, and the bottom line is that the client will get more, but they are paying for it.

A lot of companies will just stop selling ROP instead of raising the prices and giving the client a better return. I just read that Allianz will do away with ROP soon and some other will.

 

[somarco]

Thanks, but what does CCC stand for?