Why Not ROP?
If you will take a look at the attached illustration (click here) for “ROP Client” you will see a 20 year ROP plan from American General. This is an excellent ROP product and is representative of the marketplace. The client can pay the premium of $4,332.00 per year for 20 years and at the end of that time, cash in the policy for the $86,640 cash value. The client had the coverage for 20 years, didn’t die and got their money back at the end of the 20th year.
NOT a bad deal.
WHAT IF HE WOULD LIKE TO KEEP THE COVERAGE?
However, let’s assume that the client still needs the $300,000 of coverage at the end of the 20 year period – BUT they are uninsurable! They can NOT take the $86,640 and keep the coverage for a $24,741.00 (increasing) annual premium. The premium increases to $41,000 in four years and then it really gets expensive! There is no flexibility in this product – that is the downside.
WHAT IS ROPWOC?
ROPWOC (Return of Premium With Option to Continue) is a product that allows the client to reach the 20 year period and then decide if they would like to take the guaranteed cash value – OR keep the coverage for the same low rate they paid during the first 20 years . . . . guaranteed! This options puts the flexibility back into the product! A simple concept – a simple solution.
Take a look at the ROPWOC Client illustration now (click here). ROPWOC is actually the TransAce product offered by Transamerica Family Markets. The product has a very low premium. It is so low that it is actually less than most ROP Term plans! In a move to beat the ROP plans at their own game, Transamerica designed a plan that has a GUARANTEED return of premium at 15 years, 20 years and 25 years and then gives the client the opportunity to NOT take the cash value but to choose to keep the valuable coverage.
DON BOOZER & ASSOCIATES