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If they bought a 500k term policy, how would the conversion work in 20 years?
How much Life Insurance does one need?
- Thread starter senior-advisor-indiana
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They work the same way but the product they can convert to depends on the carrier.
By owning the term plan, they have the right to convert to a permanent plan without regards to health (usually) for the entire term, in this case, 20 years. The premium is based upon the age when it is converted.
They do not have to converet the entire amount.
Here's my thinking on this. They are in their early 30's and need their money for housing, food, and raising their kids. While in the long run a permanent insurance policy might be a good idea, it is doubtful they can afford it. (Just like paying cash for a house is a good idea).
They need a TON of protection, not necessarily the best "deal" over the next 50 years. Also, who knows what kind of insurance and what amount they need in the future. (Well, Al probably does!)
That's why I would definitely opt for a large term plan. A $500,000 20 year term (preferred) is about $30 per month. They can afford that. Can they afford $2,000 for a UL?
Rick
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Rick -
It's time to find a different company to write UL's with. If the premium is $30 a month for term, I doubt it would be $2000 a month for a UL, unless you are overfunding it (significantly).
Dan
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Who do you guys use for UL for this age group?
These people recently bought a policy from Amercian Income Life. $100 a month( haven't recieved the policy yet though so could be higher?). That policy has 23K WL + 40k term him. For her 20K WL and for the 2 kids 10K.
It also has a hospital benifit and a couple others like ER. SOmething like $100 per day for a couple days (worthless). He smokes she doesn't. She had cancer about 7-10 yrs ago. No treatment or anything in atleast 5 yrs.
These people recently bought a policy from Amercian Income Life. $100 a month( haven't recieved the policy yet though so could be higher?). That policy has 23K WL + 40k term him. For her 20K WL and for the 2 kids 10K.
It also has a hospital benifit and a couple others like ER. SOmething like $100 per day for a couple days (worthless). He smokes she doesn't. She had cancer about 7-10 yrs ago. No treatment or anything in atleast 5 yrs.
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I just had an idea
They could each purchase a $300k term and then convert it when the term runs out if they want. Would a 300k term convert to a 20k paid up policy?
They could each purchase a $300k term and then convert it when the term runs out if they want. Would a 300k term convert to a 20k paid up policy?
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I just had an idea
They could each purchase a $300k term and then convert it when the term runs out if they want. Would a 300k term convert to a 20k paid up policy?
Can someone explain the conversion?
Let's say that after 10 years into a $300K term, a client (now age 40) wants to convert $100k to WL/UL (depending on company).
Does he then pay the difference in premiums going forward for $100k WL and $200k term?
If I want to illustrate this for a client, do I keep him at the same rating he initially had and just change the age?
If not, can someone please define how I do this, or how to estimate the additional cost? Thanks
- 15,319
The easy answer is to ask the carrier (or GA) you might be using to illustrate this for you.
The benefit of converting is to simply avoid having to qualify medically. If the client was preferred when the term was issued, he will still be preferred when he converts. Current health does not affect the rating.
The client will pay the rates for his current age at the old rating.
Hope this makes sense.
Rick
