Viaticizing Existing Term Life

[somarco]

Chatted with a college buddy earlier. He has been in the life insurance business longer than I have been in health. He has had good years and bad.

But that's another story.

He was telling me how he made over $100k on one sale.

He got my attention.

Existing client with $1,000,000 term. Diagnosed with ALS in the last 2 years. Ran through options to keep the coverage in force. Ran out of ideas and then asked if he had ever considered SELLING his plan.

Long story short . . . the viatical company paid the insured $450k . . . the agent got a NICE finders fee AND the commission on the conversion.

He had to run. Don't have all the details. Intriguing to say the least.

 

[TampaHound]

????

 

[Allen Trent]

Chatted with a college buddy earlier. He has been in the life insurance business longer than I have been in health. He has had good years and bad.

But that's another story.

He was telling me how he made over $100k on one sale.

He got my attention.

Existing client with $1,000,000 term. Diagnosed with ALS in the last 2 years. Ran through options to keep the coverage in force. Ran out of ideas and then asked if he had ever considered SELLING his plan.

Long story short . . . the viatical company paid the insured $450k . . . the agent got a NICE finders fee AND the commission on the conversion.

He had to run. Don't have all the details. Intriguing to say the least.

Sounds like the term must have still had term to permanent conversion privilege that the viatical/settlement company found valuable. I sure hope the rep thoroughly vetted the policy contract details for the insured. For instance, if the existing term had a Disability Premium Waiver, the policy premium may have been waived as term & then at the end of the level term period automatically converted to WL/UL with the premium continuing to be waived.

 

[somarco]

Can't answer your questions.

But I do recall the agent mentioning the guy was strapped for cash.

Doubt it had WP. The agent who handled the transaction was the original WA. He usually doesn't put riders on plans . . . including WP.

 

[billyb]

I thought I had a policy sold for a client until we found out the conversion option recently expired. No offers made. The insured is in his late 70's and the face was $500,000.

 

[Allen Trent]

I thought I had a policy sold for a client until we found out the conversion option recently expired. No offers made. The insured is in his late 70's and the face was $500,000.

Sadly, that is becoming more common. With so many term policies having little to no conversion privilege, it will become more rare. More and more carriers are starting to offer conversion only with an optional rider at a higher cost & most agents wont even offer it because it adds to the cost

 

[billyb]

He told me he would have accepted $80,000. I am not sure if he is still paying it or not.

 

[pfg1]

Sadly, that is becoming more common. With so many term policies having little to no conversion privilege, it will become more rare. More and more carriers are starting to offer conversion only with an optional rider at a higher cost & most agents wont even offer it because it adds to the cost

Which is why I sell fully convertible term in most every case. People never know what the future holds. The race to the cheapest term price is hurting the client in many cases, imo.

 

[Allen Trent]

Which is why I sell fully convertible term in most every case. People never know what the future holds. The race to the cheapest term price is hurting the client in many cases, imo.

agree. plus, I just saw a business policy that insured 4 of 5 owners on 1 policy. 170k base with 830k 20 yr term on 1 owner, then 3 riders for $1M on 3 owners. 1 owner wasn't covered because he was a tobacco user when policy taken out. now, they want to go with new & better separate policies on each owner because they realize none of the riders are covered unless they die before the base insured, none appear to be convertible. the problem is 1 of the insured riders is now uninsurable due to drug rehab, making it really difficult to deal with all the problems at hand. they bought this rider laden policy because it was cheaper & simpler than the other professionals had suggested

 

[somarco]

Which is why I sell fully convertible term in most every case. People never know what the future holds. The race to the cheapest term price is hurting the client in many cases, imo.

THIS ^^^^^^