Low priced term with quality life insurance carriers is something a truly independent agent like myself must keep track of to present to their prospects and clients, so I began researching a carrier yesterday that is posting some very low prices on a comparative term quote engine. (Since my research has been very preliminary, and not wanting to misrepresent them, I will not name the carrier.) I Google searched their name and went to their website. I called up their marketing department and first asked about conversion. Conversion is to age 70 and there is a guaranteed UL to convert to.
That sort of conversion is very likely part of any initial research an agent would do on a carrier. Lowest price is one thing, it’s something a consumer can readily understand, but with term life insurance the second most important factor to evaluate is the carrier’s conversion options. Conversion allows you to automatically switch your term into a permanent type product, whole life or UL, without proof of insurability. Get a 20 year term policy today at preferred non tobacco at 45, and then at 65 convert it, let’s say, to a guaranteed UL, despite having had cancer and a heart attack. Conversion might be your only game in town for plan B, if you want or need life insurance beyond the term period, and you’ve had health problems.
The carrier had conversion to age 70. That’s good, about par for what’s out there. The gold standard for conversion age is age 75. Minnesota Life Insurance Company has conversion to age 75 with their Advantage Elite Term product. Two other major carriers had conversion to age 75 up until this year, but have discontinued it. I would recommend avoiding carriers with an age 65 conversion limit, since age 70 or 75 is way better.
The carrier whole life and a guaranteed UL (G-UL) to convert to. That’s good news too. Guaranteed or no lapse universal life is what you would like to have for conversion, under a majority of circumstances, since it locks in coverage for life: pay on time and the coverage is guaranteed not to lapse. Certain carriers recently have withdrawn their G-ULs for conversion, another spill over from the recession. That’s very bad news for those policy holders.
The problem for an agent or consumer judging a carrier on conversion is that you have no idea what the carrier may offer 20 or 30 years from now and at what price. You can look at the carrier’s financial stability, and the products and premiums on what they currently offer for conversion for some insight, but knowing what will happen that far into the future defies most measures of prophecy. Only a sage life insurance analyst could have predicted what’s happened in the last 5 years to the industry.
That’s why usually my recommendation for best term is Genworth Life and Annuity’s Colony Term UL. This term automatically converts to a UL at a set price at the term’s end. You can see the UL’s premium’s price right on the illustration. Genworth’s prices are amongst the lowest as well.
I did some financial research on a carrier. There are ratings agencies: Fitch, A.M. Best, Standard & Poor’s and Moody’s. The ratings agencies’s overall trustworthiness was tarnished in this recession, to say the least, but it’s a start. To get any bad news first, I Google searched “Carrier X downgrades”. It is not uncommon to get results on an insurance carrier from this. The recession has certainly been a challenge. The key may be into how they are responding to the recession. The next search was “Carrier X outlook” gives information on the carrier’s prospects.
It turns out I won’t represent this carrier at this time. An independent agent can’t always meet a carrier’s commitment requirements.