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Rob Thompson, Regional Vice President |
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Just last week I was talking to an agent who had a 21-year-old, newly married client. This client wanted to purchase $250,000 of life insurance coverage. The agent was struggling with whether to recommend a universal life (UL) policy with a premium of just over $1,300 per year or a 20-year term life policy with a premium of about $195 per year. I suggested he combine the two.
Why? UL is a great product, but the premiums might be a stretch for a young couple just starting out. It’s important not to price families out of the market, and possibly set them up to abandon premium payments when money gets tight.
Instead, I told him about a "combo" solution: 90 percent term life ($225,000) and 10 percent accelerated universal life (AUL) ($25,000). At around $400, the combined premiums would be less than half of a UL policy and wouldn’t put too much financial stress on his young clients.1
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What’s the Advantage?
Term insurance is great for covering expenses with limited time horizons, like a mortgage. Permanent insurance is ideal for covering those expenses that generally stay with us for life, like consumer debt, final expenses and estate taxes.
Combining the two policies can provide an affordable way to cover both temporary and permanent financial obligations. It can improve the persistency of the sale, while still allowing younger clients to begin building cash value. In addition to the death benefit, in the future they can borrow against the cash value of a permanent policy for supplemental retirement income and emergency medical expenses.
Symetra Life has a "Combination Needs Analysis" calculator to help you determine the right mix of term and permanent insurance for your client.
Completely Convertible
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Selling a term life policy doesn’t close the door on permanent insurance. All of Symetra’s term life policies are fully convertible up to age 75. This option often appeals to young people who may be unable to afford permanent insurance now, but who want to leave the door open to covering those permanent needs and protecting future insurability.
An added bonus is that helping clients convert a term policy to a permanent policy allows you to tap into another source of income from your existing block of business. After only 13 months, you can help a client convert a term life policy into any Symetra permanent life policy for full commission (up to 90 percent of the commissionable target premium).2
So, for example, let’s say the young husband we mentioned above is now 35 years old and wants to convert his $225,000 term life policy to AUL. Because no evidence of insurability is required on a conversion, in this hypothetical situation our client still qualifies for the best possible rate class (standard nonsmoker). The potential first-year commission on this conversion would be about $1,450.2
Think conversions are a difficult sale? One of the agencies I’m working with submitted five AUL conversions just last week. We’d like to show you how to put these strategies to work for you.
For more information about the combination sales strategy, policy conversions and commissions, contact the Sales Center at invest@symetra.com or 1-800-706-0700.
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1This hypothetical illustration is based on $401 in combined premiums generated from a Symetra Express quote for $225,000 of Symetra Term Life coverage and $25,000 of Symetra Accelerated Universal Life coverage. Rates quoted are as of July 21, 2005, and are based on a 21-year-old male in excellent health (preferred best rate class), living in Washington state.
2This hypothetical commission illustration is based on 90 percent of commissionable target premium in the first year. The maximum life expense allowance of 50 percent is included, but is paid only to those who qualify. This illustration is based on Symetra Life commissions as of July 15, 2005, and presumes the 35-year-old male client is in the standard nonsmoker rate class.
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