Re: an advantage of par whole life -- Insurance Forum

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Date Posted: Tue, August 06 2002, 5:14:43
Author: Rich Franzen
Subject:

Re: an advantage of par whole life
In reply to: Brent D. Gardner, ChFC 's message, "Re: an advantage of par whole life" on Mon, August 05 2002, 17:08:01

>$100,000 of Whole Life on a male age 35, nonsmoker.
>Annual premium = $1,197
>First year cash surrender value = $0
>
>Add $10,000 of PAR rider (similar to your OPP) in a
>one time single premium, the first year guaranteed
>cash surrender value is $9,886. That's a pretty small
>load, at less than 2%. A 3% load is not uncommon. To
>put this in perspective, this PAR rider pays 3-7%
>commission to the agent (depending on how much they
>produce).

I couldn't buy that much OPP (even if I could afford it). The OPP rider limits the amount of OPP purchased each year.

Unless we agree otherwise, the total of all payments in any given policy year cannot be more than 100% of the annual premium amount for the basic plan of insurance based on a standard class of risk.

The policy data page declares this amount to be $2,242. (Real premium for my "non-smoker" risk class is $1,764 -- policy began at age 42.) NYLIC's OPP load is 3%. The rider is in effect so long as two years do not go by in which OPP is not purchased.

PAR may be like what I heard MassMutual offers. The policyholder can purchase big chunks at once, but only at 5-year policy anniversaries. And I don't think they allow purchases past something like age 55.

>Essentially, what you've discovered is the hidden
>secret of Whole Life. =)

Once I found the "secret", I was really surprised my agent had not mentioned it to me. It's probably hard, though, to judge how a new client would react to a "spend even more!" pitch. In all honesty, I probably would have been skeptical. It also doesn't help that he is in Tampa Bay and I am in Melbourne (west and east coasts of Florida).

>If everyone purchased a little OPP with their base policy,
>they performance is enhanced a lot more than the small
>additional premium, making it worth while for most people,
>whether they want to accumluate more money for some purpose
>such as college or retirement, or if they want to build up
>dividends quickly to offset premiums at an early date.

Page 3 of The Visible Policy words it this way:

Front-loading cash into the back-loaded earning design of my policy results in significant gain improvement.

-- Rich
--- http://rocq.home.att.net

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Replies:

Re: an advantage of par whole life -- Brent D. Gardner, ChFC, Tue, August 06 2002, 14:27:52
- Re: an advantage of par whole life -- Rich Franzen, Tue, August 06 2002, 19:09:16
  - Re: an advantage of par whole life -- Brent D. Gardner, ChFC, Wed, August 07 2002, 0:21:43