Did you know that you can convert your term life insurance to a permanent plan with no proof of insurability? Many times clients will not be aware of this fact and are excited to hear about this valuable option. Depending on the carrier, there is a period of time that all or part of the policy can be converted to a permanent plan offered by that carrier. Just about every carrier will offer a whole life and or a universal life as a conversion option. For example, if you have a 500,000 20 year term and decide to convert 100,000 to guaranteed universal life, you will then have 100k of guaranted universal life and 400k of 20 year term. It is important to note that this conversion can be done with no proof of insurability. Even if you are uninsurable, you can still do the conversion.
Some companies will actually allow you to convert another companies term to their permanent plan. Usually to be able to exercise that option the company will require that the policy was issued within a certain number of years, with at least a standard non-smoker rate. This can be a great option if the term carrier doesn’t have good permanent policies to convert to. For example, we had a client who had term but wanted to convert part of his plan to dividend paying whole life. The term carrier he was with didn’t offer a whole life product. We were able to place the conversion to whole life with a highly respected mutual life insurance company.
As your needs change, it is important to understand this option.
A basic life insurance quote has a few components to it. The length of the the policy, the face amount, the company, and the underwriting estimate.
The length of the policy must be determined before you get your life insurance quote. You can either have a level term policy that goes for a period of time or a permanent plan. Level term plans are either annual renewable term, 5 year level term, 10 year level term, 15 year level term, 20 year level term, and 30 year level term. The 10 year, 20 year, and 30 year can be return of premium plans as well. A return of premium plan returns the full premium paid if you make it through the term alive. The other type of plan that you can get a quote for is a permanent plan life whole life or universal life.
Obviously determining the face amount of the policy is necessary to get a quote. Ask your agent to take you through the life insurance calculator if you don’t know how much you should buy. The companies that offer the plan that you are seeking will be included in the life quote. The final piece of the quote you will receive is the underwriting estimate. This estimate will take into account whether you are a smoker or non-smoker, health, etc. Based on these factors an insurance rating is guestimated and thus you will get an estimated rate quote (price). The quotes can include riders also if you decide to select them.
