Term Conversions
One of the most valuable privileges of most term policies is the ability to convert them to a permanent policy with no medical evidence. This allows you to change a policy that could expire or get too expensive to own (forcing your client to lapse the policy) into something that will last for when they need it. Clients often don't know about this privilege and often don't know they can retain their existing health rating!
Thats where you as the advisor comes in! Now we understand how hard it is to keep up with the busy day to day of our advisors and true to form we at LDA wanted to help save you time and increase revenue so we made a free template that can be used in conjunction with an LDA report to help communicate the value of this concept.
Example Template
(scroll to the bottom to download and brand with your logo)
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| I wanted to share with you some information on an extremely valuable option you may be interested in exercising with your term life insurance policy called a "Term Conversion." |
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What is a Term Conversion?
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- First, let's start with the basics of term insurance (just in case you forgot!) A term life insurance policy has a set length of time where the policy has a guaranteed price and insurance benefit. After the defined term length is up, the price increases (also on a guaranteed schedule defined in your contract, generally at a substantial increase in cost).
- A term policy generally expires at age 80 or 85 and the most popular forms are ten-year and twenty-year term lengths.
- A term conversion allows you to change from a term policy (something temporary) to something permanent (no expiration age as long as you pay the premiums).
- Its main advantage is that you do not need new medical evidence to change policy types.
- Many people assume at the end of their term length they will be healthy and it will be easy to get an offer from an insurance company, but this is not always the case making it a risky strategy.
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- No Medical Required.
- Retain the health rating you had when you got issued your policy (fantastic option to consider if your health has changed).
- Guarantee your insurability for life as long as you pay the premium.
- Usually, the more affordable option if you need insurance in place at the time of death (most people do even if just to cover final expenses at a lower cost).
- The purchase of permanent life insurance at younger ages achieves lower insurance premium costs;
- Most permanent plans allow you to build tax-advantaged cash value growth as an option or part of the plan design.
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Consider this scenario:
Tom, a consultant, buys a Term 10 insurance policy at age 45 in good health. However, over the last 5 years due to his workload and lifestyle, has gained a considerable amount of weight. He has 5 years left till renewal at age 50 however the likelihood of him being rated (increased cost due to health risk and the increase in his age) means that he might not be able to purchase enough insurance to cover his liabilities due to the increased cost. He has the option to convert his temporary term insurance into participating insurance at his current health rating on his term policy (standard).
Tom is a real client, I have changed the name but included a link to his real-life example. We recently helped him convert to permanent insurance at standard health. Please take a moment to view a sample term conversion and contact me to see your personal review. |
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John F. Doe
1-800-123-4567
john.doe@insurance.com
www.website.com |
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If you want to learn more about how Life Design Analysis can help teach your clients how to secure their family's financial future, Sign up Free
Already an LDA Subscriber and want help with this concept book a training session with Jon or Nik from our support staff to see how Life Design Analysis can help your practice (just click on their names).
