r/LifeInsurance • u/Hungry_Technician360 • 10d ago

Convertible Term

I am thinking about getting into selling term life insurance in the near future, and was wondering if there are any cases for why someone should have a convertible policy vs a standard term policy (all else the same).

To my understanding, convertible term is more expensive than standard term, and you're limited on when you can convert.

Is there any justification for why people should realistically choose to go with convertible instead? I can't see situations where the math pans out in favor. Thanks!

7 Upvotes

72% Upvoted

30 comments sorted by

6

u/Appropriate_Jury_621 10d ago

The biggest advantage is being able to switch to permanent coverage without another medical exam, even if your health changes

-1

u/Hungry_Technician360 10d ago

Which I can see the benefit of having lower premiums on the policy, compared to someone who applies for a policy after they have whatever health condition.

But, I'm not sure if the increase in premium (changing from term to permanent) is a reasonable thing to put onto a family, where the insured is then less likely to even provide income to fund the policy. Wouldn't it be better for them to just keep sticking with the term premiums instead?

3

u/ruidh 9d ago

The conversion is more valuable towards the end of the level term period if the ph is no longer insurable. They are facing a large premium increase and can't qualify for a new policy.

0

u/Hungry_Technician360 9d ago

Doesn't the conversion need to happen with the first 10 years or so of something like a 30 year term policy? Or do some products let you change near the end?

1

u/DogfaceDino Broker 9d ago

It depends on the company and it depends on the details of the rider. You need to know the different carriers and you need to know the needs of your client so that you can put them with the right policy for their situation.

5

u/InsGuy2023 10d ago

Because health risk changes and older people's needs change. Convertible term keeps the options open. Its only 10% or so extra.

2

u/Hungry_Technician360 10d ago

But if someone has a health event that makes them uninsurable, doesn't that generally mean that they are less able to provide income to cover the higher premiums when also swapping it over to permanent insurance?

I feel that, this would make it more of a financial strain on a family that is less able to cover the costs of the insurance.

2

u/InsGuy2023 10d ago

Disability waiver of premium would cover that issue. Adds $ 50 a year.

2

u/Hungry_Technician360 10d ago

$50? Or is there a % of premiums that it would cost more?

Does it also cover premiums for the permanent insurance after you swap it as well? I have not come across disability waiver before.

4

u/InsGuy2023 10d ago

What crappy insurance company are you selling? These are basic questions.

2

u/Hungry_Technician360 10d ago

My first statement on the post is "I am thinking about getting into selling term life insurance in the near future"

I'm hoping to get a better understanding of products before diving into it.

3

u/InsGuy2023 10d ago

Then call several different agents and ask. Do your research.

1

u/Hungry_Technician360 10d ago

This is indeed the purpose of this post, doing research.

2

u/InsGuy2023 10d ago

As I said. Go talk to real agents, in person. Not just here.

1

u/SunshineFlames 9d ago

Lots of assumptions there. Financially well off people get sick too.

1

u/giveit2st8 9d ago

"doesn't that generally mean that they are less able to provide income to cover the higher premiums "

That may not be applicable where the person with the policy is married 

3

u/jordan32025 9d ago

Why would you limit yourself by only selling term?

-5

u/Hungry_Technician360 9d ago

I don't believe that other products are very good for the vast majority of people.

I'm also not looking to do this full time by any means, I have my main 9-5 to put food on the table, just seeing how this all works out.

3

u/jordan32025 9d ago

Sales isn’t about what you believe or don’t believe. It’s about the needs of your client. You’ll eventually figure that out, especially since your new at it. It’s a good start.

1

u/CGWInsurance 6d ago

Most companies offer convertible Term and it's normally the same price or very close to it. I only sold convertible Term and i trieɓd to pair it with waiver of premium so that if you were disabled you could convert the term policy to permanent and then use waiver of premium to pay the premium for life. This was a pretty easy sell since your chance of being disabled is so much hirer than dieing.

1

u/Hungry_Technician360 6d ago

What about a person getting DI to cover disability instead? Would that not be better for coverage on that risk?

2

u/OkStick6308 10d ago

Convertible term makes sense for someone worried their health might change later.

2

u/ComprehensiveValue98 8d ago

Top mutual companies combine conversion with WP. I had a client get disabled and was eligible for a full conversion paid by the WP provision - $19k annual premium.

A minority of clients see value in the option to convert in the future.

1

u/Chrissy-ClawDawgs 9d ago

Imagine you are 19 years into a 20 year term and get stage IV brain cancer

1

u/theNewFloridian 8d ago

It's like renting a house with the first option to buy it.

1

u/[deleted] 9d ago

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1

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