Term Conversion extension rider

[Allen Trent]

I am seeing a lot more term carriers reduce their Conversion privilege to be less than the full level term period. If the client doesn't add a rider to extend the conversion period or the agent doesn't know or doesn't offer it, they may end up at the end of a 10 or 20 year level term period without an option to convert to WL/UL/IUL even if they are 30 to 50 years old and not near the max ages of 65-70 years old conversion expiration.

So, my question is How many of you are offering & selling the client on the added cost of the rider to extend the conversion privilege to the full level term period?

Just curious about thoughts on this as carriers are continuing to remove the ability for clients to continue coverage with the much higher renewal rates after the level term period and shorter conversion privileges. These are 2 of the ways that term has continued to get cheaper & cheaper.

 

[pfg1]

Its the shell game many carriers play to get to the top of the pricing engines.
Most (maybe all) of the cheapest options have crappy conversion privileges. I recently sold a Lincoln policy that was a great fit for the client - covg and price. Was near the top as far as cheapest. But only had a 7yr conversion option on 20yr term. If I wanted the fully convertible term (20yrs), it was WAY more $.

That said, most of the carriers I use....I sell coverage that has full conversion options and they are a tiny bit more. Some carriers don't even often a stripped out term policy - they only offer fully convertible.

 

[WinoBlues]

Great question

I like offering the options. How the options are received tends to break down by the size of the policy and age group.

The smaller face and younger clients tend to want cheapest. Not always because of the cost but just not seeing the future value of riders.

Larger face and older clients seem to, of course, see their mortality and morbidity as more of a reality and not something that may happen. Example: They see the Accelerated Death Benefit as a bonus benefit they could use.

 

[Allen Trent]

Great question

I like offering the options. How the options are received tends to break down by the size of the policy and age group.

The smaller face and younger clients tend to want cheapest. Not always because of the cost but just not seeing the future value of riders.

Larger face and older clients seem to, of course, see their mortality and morbidity as more of a reality and not something that may happen. Example: They see the Accelerated Death Benefit as a bonus benefit they could use.

agree. seems the best way to go, but I cringe thinking someone 25-45 now can predict their needs or insurability 20-30 years down the road. I guess it is our job to communicate to them the importance of conversion if their health changes or the repercussions if they don't exercise by the last chance date. I just hope all carriers send a final notification too.

 

[WinoBlues]

I guess it is our job to communicate to them the importance of conversion if their health changes or the repercussions if they don't exercise by the last chance date. I just hope all carriers send a final notification too.

Reminds me of something I used to staple to the policy packet. A colored half sheet. With a couple sentences covering potential replacement, Face Amount Riders. And of course my contact info. Worked really well. Another of those things that worked so well I stopped doing it for some reason.

 

[pfg1]

Another of those things that worked so well I stopped doing it for some reason.

funny how that works sometimes

But I agree, and good point Wino

 

[MVI]

I like using Ohio National's term plus program which is a guaranteed convertible term into any of their permanent products for the whole term of the policy.

I've never offered a guaranteed convertible term that wasn't convertible the whole period.

Also - watch out for the carriers that are guaranteed convertible but only to a select few of their permanent products, which are usually not as good as their full suite.

 

[WinoBlues]

Ohio National's term plus program which is a guaranteed convertible term into any of their permanent products

ONL has some very good options. Wish they still had a GUL. They had one of the early GULs it was a very good plan.

I've never offered a guaranteed convertible term that wasn't convertible the whole period.

ONL - I wrote a ONL 15 level term on a guy 15 years ago. Conversion period (to age 70 I think) passed and I had to write him a new plan. His wife's has also passed.

I've never offered a guaranteed convertible term that wasn't convertible the whole period.

That may be true of a few carriers or if you tend to write younger people.

I completely agree that the conversion options today stink in comparison to days gone by. The wording is everything. What a company offers today can change tomorrow. I was speaking with a JNL client I wrote 20 years ago. He has one option with JNL and not great. Same thing with old West Coast Life (Protective) They have a very over priced WL. Well, Overpriced is relative I guess.

 

[pfg1]

I like using Ohio National's term plus program which is a guaranteed convertible term into any of their permanent products for the whole term of the policy.

I've never offered a guaranteed convertible term that wasn't convertible the whole period.

Yeah, their plus is good. Just lately their underwriting seems to have gotten alot tighter. Giving me fits on about everyone I try.

Also - watch out for the carriers that are guaranteed convertible but only to a select few of their permanent products, which are usually not as good as their full suite.

That's the deal with almost all the "cheap" term rates at the top of the engines. Little to no convertibility options, or very short window.... its the game the carriers are playing to win the lowest price war.

 

[Allen Trent]

its the game the carriers are playing to win the lowest price war.

yup. and consumers & most agents are playing right along. by the increased sales & market share of those rate leaders, pressure by agents on the other slow adopter carriers eventually caves to chase the lower rate by many of the same take-aways.