Term Life Insurance Lapsing?

Are you in danger of your term life insurance lapsing?

Do you know the conversion deadline in your term life insurance policy?

One of the most critical dates in a term life insurance policy is its conversion deadline. It is important to know the conversion deadline and review your options before it passes. Insurance companies DO NOT notify you about this deadline approaching. Many people who purchased term life insurance within the past 20 years may not understand these conversion options. Term life insurance lapsing because of health reasons or affordability can create problems for families and businesses. Most inforce policies do not permit you to convert the policy in all years without new evidence of insurability. To avoid finding yourself with limited options after the deadline has passed, speak with an insurance professional.

Why would I need to convert my term policy?

You may never need to convert your term policy to permanent insurance but if you have a significant health problem after purchasing the term insurance, you may fall into the rated or un-insurable category going forward. When this happens, that conversion deadline becomes critical. Conversion may be your only option to continue life insurance with premiums based on your previous good health. Unfortunately, there are millions of people in this situation who cannot convert because the deadline expired. For example, if you own a 20 year term policy, it may only be convertible for 10 years or until age 65.

You want a term life insurance policy with the longest conversion deadline possible, something like 80% of the guaranteed term period. It is equally important to buy from a company that allows you to convert to their entire portfolio of products. Some companies limit their term conversions to only one policy, often not their best. Terry Savage offers some great advice in her recent column about term life insurance lapsing because of unknown conversion deadlines.

What are Living Benefits in a life insurance policy?

Living Benefits may be the single most important enhancement to the value of life insurance in the past several years. Living Benefits allows you to draw against the face amount of your policy when you have a critical, chronic or terminal health event. It is not a loan and there does not have to be any cash value in the policy. It is an advance and it comes from the face amount. You can receive up to 90% of the face value depending on the severity of the health incident.

If you currently own life insurance, it likely does not allow you to draw against the face amount. Living Benefits do not cost additional premium. Adding Living Benefits and knowing the conversion deadline are the perfect reasons to review your current coverage.

Life Insurance Awareness Month is coming up soon. We offer state of the art solutions for life insurance and lifetime income annuities. Let us help you minimize your premiums and maximize the value of your coverages. Please call us at 561–869–4500 or email me at TB@LifeCyclePlanners.com. Upon request, we will send you an overview of Living Benefits in a life insurance policy.