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As we age, even small health problems like high blood pressure or weight gain can make term life insurance harder to get. Clients find it reassuring to know that all of Symetra Life’s term policies are fully convertible to permanent insurance. |
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When John Storbeck meets with clients, he strongly believes his first obligation is to make sure they have some type of life insurance coverage — either term or permanent.
“Most of my clients are responsible people with homes and cars and families. I really don’t know too many people who aren’t good candidates for life insurance. They’re better off having it, and so I don’t get too righteous about what they buy,” he said.
But when clients want to know why term is so much cheaper than permanent insurance, Storbeck — president of Omega Financial Services in Kirkland, Wash. — is frank. The reason, he tells them, is that the chances they will die during the 10 or 20 years they own a term policy are remote. In fact, only about 1 percent1 of term life policies ever pay a death benefit.
Of the hundreds of life insurance policies he’s sold since starting business in 1982, he himself has processed only 16 death claims — 14 were for clients with permanent insurance.
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“Down the road when their term policy expires there’s a good chance I’ll be sitting down with them again and I’ll be saying, ‘I’m glad you’re alive, but we still have the same problems: a mortgage, car loans, kids in college, a spouse dependent on your income. If you want to buy another term policy I’d be happy to sell it to you, but last time I checked we still had a 100 percent mortality rate. If you want a policy that you are certain will pay when that eventuality occurs then your solutions are fairly limited,’” he said.
Storbeck points out that people in their 30s have a very high rate of being approved at preferred best or preferred plus rates, but it’s a different story in their 50s. Over the past 23 years, he’s had only two clients over the age of 55 qualify for preferred best rates (and he was one of them).
No Closed Doors
The good news is that purchasing 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.
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As people age, even common problems — such as high blood pressure, diabetes or weight gain (64 percent of Americans over the age of 20 are overweight)2 — may make term insurance prohibitively expensive or inaccessible.
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).
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So, for example, let’s say a healthy, nonsmoking 35-year-old man wants to convert his $225,000 term life policy to accelerated universal life. Because no evidence of insurability is required on a conversion, in this hypothetical situation this client still qualifies for the best possible rate class (standard nonsmoker). The potential first-year commission on this conversion would be about $1,450.3
Admittedly, it’s not easy for a 35-year-old to envision an unhealthier self at 55. If permanent insurance isn’t something your clients want to consider in their younger years, at least with a term life policy from Symetra Life they have the reassurance of knowing that even a serious medical diagnosis won’t leave them without options.
Storbeck estimates that about 10 percent of the term life customers he talks to each year about conversions make the move to permanent insurance. He recalls a client who purchased a term life policy from him at the age of 62. He had some pretty substantial health problems, so the premiums weren’t inexpensive.
“When he got to 70 I called him up and said, ‘Bob, you’re showing dangerous signs of living to a ripe old age. If you don’t want to pay for life insurance, don’t pay, but understand after 75 it’s over when your term policy runs out.’ He was adamant that he leave something for his wife, so we converted the policy. Keep in mind we’re talking about converting a $250,000 life policy for a 70-year-old man with table six health problems.”
Want to learn more about policy conversions and commissions? Contact the Sales Center at invest@symetra.com or 1-800-706-0700.
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Other Life Insurance Articles of Interest:
- Why ‘Buy Term and Invest the Rest’ Isn’t Always the Best Advice
Although semi-retired, Harold Roberts sells more than 120 life insurance policies a year — mostly permanent insurance. Here’s his secret.
- New Nursing Home Care Accelerated Benefit Provides Long Term Care Alternative
Symetra Life’s two no-cost living benefits can provide a long-term care safety net, with all the advantages of universal life insurance.
- Sell a Life Policy in 10 Minutes, No Kidding
We've made selling life insurance so simple, so intuitive, that even your grandma could go online to get a quote, fill out an application, and deliver a certificate of temporary insurance in less than 10 minutes. (Restrictions apply to temporary insurance coverage.)
- ‘Temporary’ vs. ‘Conditional’ Coverage: Don’t Leave Clients Exposed
Symetra Life is one of only a handful of companies that offer "temporary" life insurance protection to eligible term life and universal life applicants. That means whether or not your client is ultimately approved, if they are eligible for temporary coverage they are automatically covered up to $250,000 from the day they submit their application — no ifs, ands or buts.
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1 Financial Insights, "Cash Value Insurance," Peachtree Planning Corp., p. 4, 2002. This article notes that a survey from Life Insurance Management and Research Associates found that less than 1 percent of all term life insurance policies remained in force for 20 years. Some were converted to other coverages, while others were dropped. Additionally, research from Joseph Belth, Professor Emeritus of Insurance at the Kelley School of Business, Indiana University, found that less than 1 percent of all term life insurance policies paid a claim.
2 National Center for Health Statistics, "Overweight Prevalence (Data are for U.S. for 1999-2002)," accessed from "Fast Stats A to Z," online: Dec. 17, 2004.
3 This 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.
Life insurance is issued by Symetra Life Insurance Co., 777 108th Avenue NE, Suite 1200, Bellevue, WA, 98004-5135.
Symetra® and the Symetra Financial logo are registered service marks of Symetra Life Insurance Company, 777 108th Avenue NE, Suite 1200, Bellevue, WA 98004. |
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