Eschels Financial Group: Should you convert term life insurance policies?

Term insurance lasts for only a certain number of years and it can be a bargain for your clients. It’s an excellent and very affordable way of protecting against financial disaster, but  make sure you warn your clients against sitting on a policy until it is too late to replace it with a permanent option.  There are 6 great reasons why a term policy should be converted:

• The insured will likely outlive their term life policy.

• Term policies are not generally seen as an effective estate planning tool, as they will expire after the end of the term- what happens to a growing estate problem then?

• Do we rent or do we buy? There is power in owning and having equity which can pay for college educations, for example.

• Restructuring a client’s retirement plan can  include converting to a permanent policy which can be used as a supplemental income tax free.

• A disabled adult may need continued care after the death of the insured.

• No need to go through another medical underwriting as the healthy rate offered when the term policy was originally purchased  becomes the offer at the time of conversion.  

And a bonus….. External Conversions. What is an external conversion? The specifics vary among participating carriers, but they generally allow clients to convert their existing term policy to a new, permanent policy with an entirely different insurance carrier.  More affordable permanent policy rates may be available, or the different carrier may offer types of permanent policies that their current carrier does not offer.   Do you discuss life insurance at every client annual review meeting, and review that existing term policy? Even discussing a client’s group term policy at their employer can be as sobering due to even more lack of portability. Call us and allow the conversation to begin….. your clients will thank you for being proactive with them as their advisor.

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