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Term life insurance conversion option?

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  • Term life insurance conversion option?

    Just wanted to get the WCI crowd input on this. I'm looking into term life insurance. 20 year policy for now, 3 million. I'm 33. In good health now. Have gotten a few quotes, and it's come down to two major options.

    First, would be a policy with a company like AIG, running mid 1100s/year. No good conversion option.

    Second option would be with a company like United Omaha. 1202/yr. However, this one does offer a conversion option. I'm not a life insurance expert, but my understanding is this allows a conversion to a different policy without a new health exam (aka. In say 19 years, if God forbid my health is terrible, I can convert to a different policy, but still pay the rate for someone I perfect health.).

    After reading WCI, I know that whole life is a terrible option and I'm not looking for that. The second would be aterm life policies with option of converting to whole life or something else without a new health exam. What would you guys do in this situation? Worth paying a little more each year for this conversion option? Thanks for input!

  • #2
    All term life policies include a conversion option. Some will be longer than others. For example, Guardian's conversion option is for five years but you can add an Extended Conversion Rider to allow the conversion for the entire guaranteed premium period.

    If you know you don't want Whole Life, it really does not matter which one you purchase. I would go with the lowest cost with the carrier that will likely allow you to qualify for the best underwriting class.

    The conversion is a last resort in the event you become uninsurable and still need or want the coverage after the guarantee premium period ends. In most cases, you are not paying anything more for it.
    Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF