Life Insurance expiring?

Life Insurance expiring? Don’t forget about CONVERSION for term life insurance.

First off, did you know term life insurance will expire?

Here’s the scene: You have owned your term life insurance plan for several years and you realize that your policy is going to expire soon if you do not act. Further, your health isn’t what it was back when you applied. You family still needs the coverage. Can you qualify for a new plan? If you can, will it be affordable?

This is a very common situation and, sadly, most people have no idea that there could be a fairly simple solution: Conversion.

Conversion, simply stated, is the option to exchange all or part of your term policy for a permanent policy with the same company. In most cases, a new medical exam will not be required because the health rating on the original term is transferred to the new plan.

The Pros

This is very advantageous because, when applicable, the process usually only requires a signature on a page or two and then it is complete. The company cannot ask you about your current health when converting your policy so, if you have a chronic condition, this could seem like a true miracle.

The Cons

Conversion options vary from company to company. The right to convert or exchange often expires before the term ends.  For example, if you own a 20 year term, the conversion option may expire after the 5th, 10th, 15th, or 17th year. There could also be age stipulations. On most plans, a conversion period of at least 5 years is usually offered.

There is also the question of what products will be made available for conversion. Some companies will allow you to convert to any product in their portfolio at the time of conversion. Others have created a “conversion product(s)” to fulfill the need. We believe strongly that having more options is preferable to fewer.

Why don’t you know about this?

Even though most term life insurance products sold in the United States today are convertible during at least part of their terms, few people really understand how the process works. Agent training on the art of conversion seems to lack as well. As important as this option is, it is a shame there is not more attention drawn to it.

For more information and how it might apply to your situation, please contact us for a free, confidential, no obligation consultation.

Houston Life and Annuity is a locally owned Life and Medicare brokerage serving Houstonians.