Lifetime Annuity option at the end of the term

[DAM Jr]

This is my first time running into this and was hoping someone might be able to confirm if I'm on the right track, as I have a meeting with the client first thing. It's regarding the annuity option at the end of the Term Life 30. From what I'm gathering, the annuity simply pays out a specific amount, looks like it tends to be on the lower side, once the 30 years is up, and the insured is still with us. A 10-year guaranteed is also an option, which I'm thinking it does the same thing, but if the payee dies halfway thru, their beneficiary will receive 5 years' worth of payments.

I guess what I'm having trouble with, assuming I'm on track above, why would anybody NOT take this? The term is up, premiums for converting go thru the roof, it's no additional cost. What am I missing?

 

[scagnt83]

Never heard of a living annuitization option on Term.

What carrier? Whats the name of the policy series?

Its most likely a Return of Premium option… which I would suggest taking the shortest payment period possible.

I promise its not annuitization of the DB.

 

[DAM Jr]

It's with MOO, fully underwritten Term 30. I've never seen anything like it, and I'm on the phone with a rep right now, who had to put me on hold because she doesn't know how to explain it. I was originally thinking the PH had an option to have the DB paid out over time, instead of a lump sum. But, after spending an hour with ChatGPT last night, it appears it's more like a ROP option.

The rep came back and still didn't know. Will follow up with MOO later.

 

[scagnt83]

Its definitely ROP.

MOO used to sell it a long time ago.

Some carriers would require installment payments instead of a lump sum. Or you could choose installments vs. lumpsum on the app. (installments were a lower premium)

 

[DAM Jr]

Its definitely ROP.

MOO used to sell it a long time ago.

Some carriers would require installment payments instead of a lump sum. Or you could choose installments vs. lumpsum on the app. (installments were a lower premium)

Appreciate the feedback! I'm thinking the same.

 

[Tahoe Ray]

It would be an interesting product though.

Basically a pension that self completes on early death.

Obviously it would require mandatory funding but if you had it set up as a multi-pay DIA with a term rider, it would work.

 

[scagnt83]

It would be an interesting product though.

Basically a pension that self completes on early death.

Obviously it would require mandatory funding but if you had it set up as a multi-pay DIA with a term rider, it would work.

It would be interesting.

Biggest issue for me is the delayed gratification. People forget why they bought it really quick.

AIG had/has the GUL that pays the DB while living once they reach age 80. It sounds good on the surface. Basically guaranteed a 4% return on their money during a time of 1% guarantees. But thats a long wait. Im dealing with one right now that completely forgot about that aspect of the policy.

 

[Allen Trent]

Does client still need death benefit? If insurable, can they take lump sum to buyba single pay life contract.

If not insurable & there is a conversion option still on the policy, could they convert to a single pay product with MOO

If not insurable & policy not convertible, does it have a non forfeiture option of paid up policies? Most rop do because all cash value policies need to have non forfeiture options available