Calling ROP Free Insurance?

[go4life]

It depends on insured's health status and the rate of return on ROP is different . Here's the way I explain to my clients when buying term. I compare ROP and original term life.

Example:

A 42-year-old nonsmoking male can get $100,000 of term coverage through Manhattan Life for $36.99 per month with a standard rating. If a return-of-premium rider is added on, the cost jumps to $94.95 per month, an increase of $57.96 per month. Without the rider, the policy owner will pay a total of $8,877.60 over 20 yrs. The additional rider will thus bring the total cost of the term policy to $13,910.40.

Now, let's put this into perspective. In Example, $57.96 is spent every month for 20 years to recover a total of $22,788; this translates into an annual rate of return of approximately 4.589%. This money is tax free because it is a return of principal.

If you tax bracket is 28% ...it will be around 6.5% rate of return to be equal to 4.589% annual tax-free rate of return.

Again, it depends on how well of investment knowledge insured has ....and i'm telling the truth, 50% of my term clients have chose ROP . Sometimes, we have to bring clients to reality, and let them know how much interest they currently get offered from their mortgage ( around 3.75% or less)

 

[AllenChicago]

IMO, it makes better financial sense to get a Term policy and an Annunity policy if the client likes the ROP concept. If he/she dies during the term, the Death Benefit + The Annuity value is paid to the beneficiary.

After working with many death claims over the years, I've come to despise Life Policies that keep the Cash Value when paying the Death Benefit.
ac

 

[DHK]

NQDA have no step-up in basis to the beneficiary, so there's still income taxes owed upon distribution.

Permanent Life Insurance Death benefit = cash value + net amount at risk

 

[Norwayguy]

It's not free which makes that a lie. Rule of thumb, don't lie to your clients.

It does however pay you back every dollar you've paid for it if you don't use it.

At year 20 or 30.

 

[Jerard]

Back to the original question..... I would call ROP my "Have your cake and eat it, too" plan. And then 'splain the features.

 

[1reason]

Anyone have thoughts or sales of AAA ROP (or others). I recently met with AAA and am considering their products.

I would like to know how their rates compare and experiences agents have had. They have a couple of policies that appear compelling including a very quick issue for people who can answer no to a few questions.

I'm looking at them from the life and P&C sides both, so any feedback is appreciated.

 

[goillini52]

Anyone have thoughts or sales of AAA ROP (or others). I recently met with AAA and am considering their products.

I would like to know how their rates compare and experiences agents have had. They have a couple of policies that appear compelling including a very quick issue for people who can answer no to a few questions.

I'm looking at them from the life and P&C sides both, so any feedback is appreciated.

Hmmmmm, you're asking about AAA. There's another thread going about BBB. I wonder how long it'll take to get to XXX.

Or ZZZ.