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Convertible Term Life Insurance

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  • Convertible Term Life Insurance

    Much has been written about whole life insurance. Are there any thoughts about term life insurance that has the ability to convert to permanent protection? My adviser recommended a policy from Nationwide. How much does this ability to convert typically cost and is it worth it?

  • #2
    if your advisor recommended it, then you just found out he's a salesman rather than an advisor. Don't do this. Term insurance is just to cover your family in the unlikely even that you die

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    • #3
      Nope.

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      • #4
        What's wrong with having the option to convert?

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        • #5
          just because something is an option doesn't make it a good option. It presents you with the opportunity to make a poor decision. Why not think about it this way-the option exists so that the adviser can profit off of it rather than the option exists as a benefit for you

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          • #6
            Originally posted by sourshoes View Post
            What's wrong with having the option to convert?
            Compared to a vanilla term policy it will cost more. Options like this cost money in the form of higher premiums.

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            • #7
              Originally posted by wcinewbie View Post
              Much has been written about whole life insurance. Are there any thoughts about term life insurance that has the ability to convert to permanent protection? My adviser recommended a policy from Nationwide. How much does this ability to convert typically cost and is it worth it?
              Having the option to convert can be important. IF an insured gets to the end of their term period, has major health issues that prevents them from buying new coverage AND still has a need for coverage then converting is a solution that often is better than paying the unlocked rate of that term policy. Term policies when unlocked, typically jump 10-20x more than what the locked rate was and then continue to increase annually, it gets crazy expensive.

              Virtually all carriers have a conversion built into that don't cost anything more so no reason to really pay more for Nationwide since there is nothing special about that product other than the rep may have a personal affinity for it. My term site that is also on WCI recommended list is www.yourtermquotes.com feel free to go there and run all the quotes you want to see what works best for you and your family.

              If we can help further just let me know.

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              • #8
                Originally posted by FIREshrink View Post

                Compared to a vanilla term policy it will cost more. Options like this cost money in the form of higher premiums.
                I was told that some insurance carriers include it in their policies and their premiums are comparable to carriers that do not include it in their policies.

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                • #9
                  Originally posted by Scott at MD Financial Services View Post

                  Having the option to convert can be important. IF an insured gets to the end of their term period, has major health issues that prevents them from buying new coverage AND still has a need for coverage then converting is a solution that often is better than paying the unlocked rate of that term policy. Term policies when unlocked, typically jump 10-20x more than what the locked rate was and then continue to increase annually, it gets crazy expensive.

                  Virtually all carriers have a conversion built into that don't cost anything more so no reason to really pay more for Nationwide since there is nothing special about that product other than the rep may have a personal affinity for it. My term site that is also on WCI recommended list is www.yourtermquotes.com feel free to go there and run all the quotes you want to see what works best for you and your family.

                  If we can help further just let me know.
                  Is nationwide known to be more expensive? It was suggested as I have abnormal labs.

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                  • #10
                    Not terribly more expensive, an example is a client this am wanted $2.5 million of a 10 year term age 39, male, best health class, rate $52, Nationwide would have been $59 so 15% more. Not a big deal on 52 bucks but if that health class would have been standard "due to abnormal labs" as an example, it is $115 for the least expensive vs. $151 for Nationwide. If you want to use that rep, just have them pre-screen your specific issues with at least 5-7 carriers to see what those other carriers would say. Every term life brokerage house where your rep is probably accessing the term portfolios have a the ability to pre-screen cases across numerous carriers or they are not a very good brokerage office. Our brokerage office does a pre-screen to about 75 carriers, takes 2-3 days for the complete report to come back, not a big deal to do and you then know exactly which carrier a specific client should go to. We do it on every client that has anything more than High Blood pressure or high Cholesterol.

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                    • #11
                      to the OP: you should be working toward the goal of becoming self- insured. If so, you will no longer need any life insurance.
                      I became self-insured at age 47, and delight in tallying the premiums not paid.

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