Do you hesitate when considering talking to your client about converting their term life insurance? Perhaps you don’t understand how the conversion works or think that you will do a lot of work but won’t get paid!
There are many misconceptions about converting term life insurance policies to permanent plans. True, it does have to be done correctly, but it is easier than you think. So, I would like to show you the advantages of converting coverage on your clients and prospects by discussing the myths about conversion. You will then be able to offer to help your clients get the benefits of lifetime coverage and get paid while doing it.
Myths about term life insurance conversions
- I can’t do the conversion unless I am the original writing agent – If you are contracted with the carrier or become contracted with the carrier you are doing the conversion with, you will be the agent on the conversion.
- I won’t get paid on a conversion – You sure will!! Conversions are treated as a new case and you get paid a new commission based on the target premium. Now I do have to put a slight caveat on this; there are a few carriers out there that do not pay commission if you convert a policy with a company that they purchased. For example, U.S. Financial was purchased by AXA. AXA does not pay commission on a U.S. Financial conversion. Check with your BGA first.
- You can only convert all or nothing – You can do a partial conversion for your client making the permanent product more affordable. Your client can even do a partial conversion and keep the remaining term policy inforce. This is great for an early conversion on a longer level premium term plan making it smart to talk about conversions earlier rather than later!!
- You must wait until the end of the level premium term period to convert – Many carriers offer incentives in plan availability for conversions if your client converts within the first 5 years of the term plan. As in point #3, conversion earlier at a younger age may be smart for your client.
- My clients would do better with a new policy – This may be true in some cases but certainly not all! Remember, your client maintains the risk classification on the original term policy when converting to a permanent plan. If they were Preferred or Preferred Best on the original plan and now would be a Standard, the conversion could look better.
- There may be medical underwriting with a conversion – There is no medical underwriting with a conversion that does not contain riders. If your client wishes to convert a rider that was on their term plan, they may have to answer some health questions to do that. If they do not wish to answer the health question, they can simply drop the rider when converting.
- You can only convert to a whole life plan – Most of the carriers we work with offer universal life plans for conversion; Index UL, Accumulation UL as well as Guaranteed Death Benefit UL.
Advantages you can offer to your clients for converting now:
- Help them to build a savings with the cash value of a permanent life insurance plan.
- The earlier they convert to a permanent plan the more cost effective it will be over their lifetime.
- Health problems that may occur later in life do not affect their life insurance rate classification when converting their term plan.
- Coverage for their lifetime. All too often we see clients that have come to the end of their level premium period on their term plan and now cannot afford permanent life coverage. Early conversion would give them affordable coverage for their lifetime.
You have a trusted source to help you with your term conversion!
Term conversions are easier than you may think. Plus, you have a trusted resource in BBA Life Brokerage that can help with:
- Determining the products that are available to your clients for conversions.
- Provide the proposal to present to your client.
- Help you present your conversion opportunity to your client.
- Offer all available options so your client can make an informed decision.
You owe it to your clients to fully explore the options that term conversion has to offer. A small increase in premium now could provide your client with lots of options later in life that they would not have had otherwise. We are here to help. Give us a call to discuss your next conversion opportunity.