Non-Medical Policy Conversions - Why So Hard?

[MisterSir]

Wondering if any of my fellow life producers has experienced the same, disappointing, results with policy "conversions" from term to permanent? Simply put: this is the promise a carrier makes to "convert" a term policy into "permanent" coverage (i.e., cash accumulation, or GUL policies) WITHOUT medical underwriting. The process is supposed to carry over the underwriting category of the original term policy, so that a term policy issued at "preferred" risk receives "preferred" ratings on the converted policy, regardless of the insured's health. It's a common feature on term policies... and useful, too. Nice to offer "policy conversion" as an option to clients whose term policies are creeping toward expiration.

Except, in my experience, the carriers are not all that interested in fulfilling their side of the bargain. These requests are routed through "policy change" departments, rather than via new business. So instead of the "get 'er done" attitude on the sales department, you get the "missed a signature" attitude of back room paper-pushers. For one of my carriers, a "non-medical policy conversion" requires 16 signatures, on 38 pages of forms. They don't seem eager to pursue this business, and I wonder why?

Because it seems to me that policy conversions work out pretty well for the carrier. If a guy is paying $45/mo for $500k of term life with 12 years remaining on the contract, and I convince him to pay $450mo so that the policy lasts forever... that's 10x more premium, on the identical $500k of risk, for the next 12 years.... PLUS $450mo for the rest of that client's life, beyond year #12.

So why is it so difficult to get these conversions processed? Are my carriers no good? Are yours better?

 

[WinoBlues]

Wondering if any of my fellow life producers has experienced the same, disappointing, results with policy "conversions" from term to permanent? Simply put: this is the promise a carrier makes to "convert" a term policy into "permanent" coverage (i.e., cash accumulation, or GUL policies) WITHOUT medical underwriting. The process is supposed to carry over the underwriting category of the original term policy, so that a term policy issued at "preferred" risk receives "preferred" ratings on the converted policy, regardless of the insured's health. It's a common feature on term policies... and useful, too. Nice to offer "policy conversion" as an option to clients whose term policies are creeping toward expiration.

Except, in my experience, the carriers are not all that interested in fulfilling their side of the bargain. These requests are routed through "policy change" departments, rather than via new business. So instead of the "get 'er done" attitude on the sales department, you get the "missed a signature" attitude of back room paper-pushers. For one of my carriers, a "non-medical policy conversion" requires 16 signatures, on 38 pages of forms. They don't seem eager to pursue this business, and I wonder why?

Because it seems to me that policy conversions work out pretty well for the carrier. If a guy is paying $45/mo for $500k of term life with 12 years remaining on the contract, and I convince him to pay $450mo so that the policy lasts forever... that's 10x more premium, on the identical $500k of risk, for the next 12 years.... PLUS $450mo for the rest of that client's life, beyond year #12.

So why is it so difficult to get these conversions processed? Are my carriers no good? Are yours better?

>>(i.e., cash accumulation, or GUL policies)

Where does it say that? Some will offer to any plan available most now are "To a plan available for conversion." ANd most suck!

>>"policy change"

It is a policy change

>>For one of my carriers, a "non-medical policy conversion" requires 16 signatures, on 38 pages of forms.

Prudential?

>>don't seem eager to pursue this business, and I wonder why?

Adverse selection?

>>$500k of risk, .. PLUS $450mo

$500,000.00 / 450mo = 1111mos / 12 = 93 years. Is the $500,000 going to grow with PdUpAds while the $450 stays static? How old is the client? Based on age and health how many year to mortality?

>>So why is it so difficult to get these conversions processed? Are my carriers no good?

No underwriting is not that difficult normally. Who are your carriers?


I agree with you on conversions. I have done many. The options were much better across the industry than they are today.

Just got off the phone with a 69 year old West Coast Life term client. He is remarried and looking to increase the time of his coverage. Super healthy. We touched on conversion to Protective's option. However, because he is so healthy he is much better financially off rewriting it to a new plan. If he was unhealthy we would be converting. Adverse Selection.

All IMohsoHO

 

[Newby]

I’m doing one with RNA right now. They seem helpful and it’s able to convert to their very competitive WL rates.

Lafayette has been easy to work with on these also.

 

[WinoBlues]

I’m doing one with RNA right now. They seem helpful and it’s able to convert to their very competitive WL rates.

Lafayette has been easy to work with on these also.

Some are still very easy. I recently did one with United Heritage. One or two client signatures and done. However, I did one on an old Prudential policy and it took forever. And the only option was a UL.

 

[WinoBlues]

Adverse Selection example.

Just got a call from a long time client. She wanted to know if she could increase her son's Whole Life policy. We converted the $20,000 childrider last year to $100,000 of Whole Life. He has been a vegetative state for 20 years. If he was a healthy 25 year old I would have sold her something else.

Funny thing is she started to complain about the $80mo premium and I started laughing. By the questions she was asking and the terms she was using I could tell some duffus agent was talking to her. I told her who ever was talking to her was an ***. She said "Yeah, he always has been" It was one of her nephews and his manager. Sounds like Primerica or WFG. Idiots!