Limited Pay Pros and Cons

Nov 21, 2016

  1. Cokey30
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    Cokey30 Expert

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    Hi to all I'm a new agent and I'm trying to wrap my head around limited pay whole life vs a whole life policy you pay for until you die . It seems as if the limited pay would be a no brainer since you pay for it and then your done . What am I missing why wouldn't everyone choose this option over a regular whole life policy ? Thanks in advance
     
    Cokey30, Nov 21, 2016
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  2. AboutThatLife
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    In the short term, you could take a higher face policy and still cancel it in the future for the desired paid up amount.
     
  3. NJHealthBroker
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    NJHealthBroker New Member

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    Like AboutThatLife stated, a Whole Life till Age 100 will allow you to purchase more death benefit for less money. The limited pay policies will accumulate cash value quicker than a traditional policy.

    In the end, it depends on the purpose of the insurance. For people that have excess cash, that are able to dump large amounts into a policy, the limited pay is a nice option. For others that would like a guaranteed permanent policy, but don't have an much money, or are looking for greater death benefit, the traditional policy is better suited.
     
  4. Tahoe Ray
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    Tahoe Ray Guru

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    Welcome NJHealthBroker...nice response. We need more participation in this forum so it would be great to see you post some more.
     
  5. walthamny
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    walthamny Guru

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    As an agent you will make less money in the long run if you are just selling 10 pay policies. 10 pay policies only pay you renewal for 9 years after the 1st year. However, you still have to service the 10 pay policy if you are still at the captive insurance company. WL paid to age 100 will pay you renewals for the rest of your life so some agents continue to balk at selling 10 pay policies.
     
  6. AboutThatLife
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    AboutThatLife Guru

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    If they RPU the policy after 10 years do you still get renewals?
     
  7. NJHealthBroker
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    NJHealthBroker New Member

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    Thank you Tahoe, I appreciate the warm welcome. I'm eager to share my knowledge, and also learn from others in certain aspects of the business that I'm not as strong in. I hope to contribute to the community as much, or more than, I take from it.
     
  8. rousemark
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    rousemark Still Here!

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    No...but if you write the same premium in both plans, the life pay will usually pay more comission since many companies reduce the FYC rate on 10 Pay. More comission and better coverage for the client. It is a true win - win.
     
  9. VolAgent
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    VolAgent Guru

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    Very short sighted...

    Guess what happens in 10 years? They no longer have to pay a premium, but they are use to doing so. So that is premium dollars that can be used for something else, plus they have seen the insurance work. Also, if you did a good job over the years you should have written more business and gotten referrals. Additionally, if a 10 pay was the right option, then you did the right thing for your client.

    Finally, most captive agents won't be there in 10 years anyway, so why should a new agent worry about it?

    And let me add, exactly how much service does a paid up life policy really need? Maybe a beneficiary or address change form once in a blue moon??
     
    VolAgent, Nov 23, 2016
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  10. Norwayguy
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    Norwayguy I have spent way too much time here.

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    The app needs a thumbs up button
     
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