Client Advocacy

Term Conversions Can Save Premium Dollars

We pride ourselves on collaborating with our clients and their advisors to help ensure that our life insurance solutions enhance the bigger picture, focusing on planning and purpose, not just product placement.  Unlike other financial assets, the cost of an insurance policy depends on the health of the insured, so we cast a wide net and negotiate for the best possible rate for each client from a selection of quality insurance carriers.  The placement of a life insurance policy marks the beginning, not the end of our client relationships. When we complete a life insurance acquisition, we deliver a promise to oversee the plan and policy we placed to help ensure that the insurance portfolio remains the best fit for years to come.

Term policies can be a good solution when a need is temporary, such as when funding a buy/sell agreement or providing income protection for a spouse.  However, many term products provide a conversion option whereby the insured can convert their term product to a permanent product at the same insurance carrier within a conversion window, using the insurability rating of the term policy and the attained age.

In the example below, Mr. Sample Client locks in his insurability when he is 35 and at his healthiest, qualifying for best class rates.  After 10 years, Mr. Client experiences a downgrade in health that excludes him from qualifying for best class rates on any new life insurance policies.  However, he can convert the term policy to a permanent policy using the best class rates that he locked in at age 35.  Ultimately, this scenario provides premium cost savings of over $30,000 during Mr. Client’s lifetime.  A longer lifespan would create a larger delta for cost savings of $1,170.73 every year for the $1 million policy, a 14% discount.

Insurance carriers would rather the insured let their term policy lapse after the temporary need is met.  We advocate for our clients to pay into a term policy not only to fill a temporary need but also to reserve the opportunity to use the lower-cost best class rates after an unexpected downgrade in health, resulting in overall cost savings for our clients.

Contact us with any questions or opportunities to help you or your clients achieve identified goals. This is what we enjoy doing for only a select number of families, businesses, and charitable institutions each year, and we look forward to hearing from you.