Term Conversions

Discussion in 'General Insurance Agent Discussions' started by Golddoor, Oct 29, 2006.

  1. Golddoor
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    Golddoor Guru

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    Im a little confused on what term conversions are. Could someone please educate me on how and why you would do a term life conversion?

    Thanks,

    Golddoor
     
  2. joshril
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    joshril Guru

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    Term Conversion...

    It's the conversion of a term life policy to a permanent life contract.
     
  3. aufan
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    aufan Super Genius

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    This is a great question. One huge benefit of convertability is that with most companies, conversion to permanent is completed without proof of insurability.

    For example:

    Client has 10 yr convertable term. Client develops health problems in the 8th year of term. Client can convert any amount of original face amount into permanent coverage at current age and rate.

    I had a female client that had contracted breast cancer during the 4th year of a 20 yr term with face amount of 250,000. She decided to convert 50,000 into universal life and left 100,000 in term. The 250,000 was originally set up for mortgage protection and due to the mortgage being paid down, did not need the original face amount at earlier issue.

    Great example of how we as agents sell based on NEEDS. Also, we as agents need to make sure that we SERVICE CLIENTS AFTER THE SALE. It is a relationship business and I can tell you this client was very happy as she had not only beat her breast cancer, but also had options to protect her assets and her family in the event her health changes in the near future.

    Great question. We need tons more like this.
     
  4. Golddoor
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    Golddoor Guru

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    Im a little confused about when you say your client converted a $250,000 term and put $50,000 into a UL then kept $100,000 in term. What happened to the other $100,000?

    Also how do you guys approach you clients about how and why they should convert their term policies?
     
  5. somarco
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    somarco That Medicare Guy

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    I am assuming you did a thorough job of explaining options, including the possibility of taking an accelerated death benefit on the full face amount or viaticizing the policy. Either option would be available if the cancer returned or were in an advanced stage.

    Just because a particular financial obligation has been discharged does not mean others are not looming in the future. Health insurance has proved to be woefully inadequate in dealing with some illnesses, particularly cancer where meds can run $5k per month or more. Some are prescribed off-label and as such considered experimental. This translates into little or no reimbursement for the meds.

    At times like those it is good to have a back up resource.

    Personally, I would be reluctant to advise any client to reduce their face amount, particularly when a change in health has affected their ability to apply for new coverage.
     
  6. James
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    The other 100 grand was eliminated as in canceled. As for the other part, the approach is the yearly review, as in things change and you go back and review the changes and make adjustments in their insurance coverage or serviceing the client. Usually used by us leach's that suck money into permanent insurance. Sell Term Convert to W/L. Or in this case a UL, which is somewhat suspect (just kidding).
     
  7. Sam
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    Sam Founder Administrator

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    I have found that this is a common trick used by some captive companies, when trying to explain why their product is so much more expensive, they claim that all the "internet selling, new age crap, can never be converted", which is of course, a blatant lie.
     
  8. aufan
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    aufan Super Genius

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    Lot of good responses, but let's not forget that for most people term addresses a temporary need. By having the term in force at a low cost (premium) you establish the client/agent relationship and as needs change you can either add coverage or convert.

    This is the same concept that I use for my current marketing strategies. I use health insurance as my "bread and butter" but because I got my start as a captive agent mainly selling life I still LOVE writing life. My strategy is simply this. As I am helping my clients with their health insurance needs, I ask them when was the last time they reviewed their life insurance needs? Of course, you get all sorts of responses but mainly it opens the door and a majority of the time the client either DOES NOT have life insurance at all or not near enough. Also, I've learned that if a client bought life insurance from their local P&C agent, I can blow their rate out of the water and almost always increase their life coverage for a lower rate.

    Again, that is our job as agents. Making sure our clients are well protected while not breaking the bank. So far this strategy is proving to be very successful for me--not that it would work for everybody, but I get lots of referrals because my clients are glad to give me names and numbers of friends and family they know that I can help.

    Let's keep up the responses. If the thread drifts, let's start another one.
     
  9. James
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    James Guru

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    Okay, convert it too what? If I buy Banner exactly what am I going to convert too. If one is going to or may convert wouldn't it be best to buy term from a company that has a solid W/L or UL to convert too? Lets face it the best Mutual Companies are not generally the ones out there offering ultra cheap term policies.
     
  10. Sam
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    Sam Founder Administrator

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    I am not vouching fr Banner per se, but AIG, West Coast Life, First Colony and other of the cheapest term companies out there, also have some of the cheapest UL's, and secondary guarantees on the market.
     
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