Extend Your Term Life Insurance Even If Uninsurable

I recently got a call from a woman who wanted to get longer duration life insurance on her husband, but he had three heart attacks, a total of seven bypasses, and two stents. Getting life insurance with heart disease this significant is almost impossible. 

I told her there were guaranteed issue life insurance plans available to her husband, but that I would only recommend these as an absolute last resort.  

In talking further, she told me her husband had an old Federal Kemper life insurance policy, and I know Federal Kemper had a pretty good life insurance conversion option.  

In the 90s I sold some Federal Kemper policies, as they were very competitively priced at one point, but then they were purchased by Zurich Life, then by Chase Insurance, and they were ultimately purchased by Protective Life.  

Protective Life is a great insurance company that has great products for which this gentleman could now convert his policy to.  I gave him the option to extend his coverage at a new level premium for an additional 15, 20, 25, 30 years, or for his entire lifetime at affordable rates. He and his wife jumped at the chance to get longer coverage since he had previously been told more than once that no insurance company would insure him.   

If you are told that you are uninsurable for new life insurance for any reason, whether it’s because of significant heart disease, poorly controlled diabetes, a cancer diagnosis, or any other reason and you already have term life insurance, converting your policy may be your best option to maintain life insurance. 

If you’ve been told that you can only convert to whole life insurance and that it would be just too expensive, this is rarely the case nowadays.  Many term life insurance companies allow you to also convert to a universal life insurance rate which can cost half as much or less than half as much as a traditional whole life insurance rate would cost.  

If you call the home office at any life insurance company and you tell them you want to convert your term policy and ask them what it will cost, they will most likely give you the cost to provide coverage to age 100 or for life.  They most likely won’t offer to show you any other options to help reduce your cost, even though there are usually lower priced options.  

The other great thing about conversion is that you don’t have to convert your entire life insurance amount.  For example, if you have a $500,000 policy and the cost to convert the full $500,000 is more than you can afford, you can always convert only $50,000, $100,000, or whatever the minimum amount your particular insurance company allows.  Converting a lower amount can help to greatly reduce your cost.     

Also, because many universal life plans can accept a premium to provide coverage for only 15 years, 20 years, 30 years, etc., one of these shorter duration premiums can be significantly less expensive than the premium that would be required to provide you with coverage for your entire lifetime.  

The best thing you can do if you do still need longer life insurance, you can’t qualify for new coverage, and you currently have a convertible term plan is to find out what the actual cost would be. DON’T listen to anyone that tells you it’s just too expensive.    

I feel the conversion option on term life is very important, and I know that most insurance agents still pitch that buying the lowest term life insurance rate possible is what’s best. Beware that your choice on which term insurance company you buy now could impact your opportunity to maintain coverage later in life. 

There are some life insurance companies that I feel have a better conversion option than others.  The companies that currently have the best conversion option will allow you to convert to ANY of the permanent life insurance products that they offer, and they are listed below: 

Aviva Life
ColumbusLife
John Hancock
Lincoln National Life
Met Life
Midland National Life
Minnesota Life
Nationwide
North American Company for Life & Health
Ohio National Life (“Plus” product only)
Penn Mutual Life
Principal Life
Principal National Life
Prudential
ReliaStar Life (ING)
Security Mutual Life of New York
United of Omaha  

Term life insurance companies that are not listed above do still allow you to convert, but they only allow you to convert to one or only a limited number of permanent products that they offer.  

Many term carriers will allow you to convert during the full level premium period (i.e. 10, 15, 20, 25, or 30 years) up until a specific age like 70.  Some term carriers only allow you to convert for the first 5 or 10 years or to your age 65.  

The longer your conversion option, the better, as conversion provides you with the flexibility to continue your life insurance at a new level rate later or could even make you eligible to sell your life insurance policy for cash via a life settlement later. For term policies to be sold, they must still be convertible.    

A small handful of companies will allow you to convert up until your age 75, which is the ideal conversion length.  If two different insurance companies are close in cost for you, but one has a conversion option to age 70 only and the other has conversion option to age 75, then the age 75 conversion policy would usually be the company that I’d recommend.  

Below is a list of insurance companies that currently allow conversion for the full level premium term period up to age 75: 

Ameritas
Aviva Life
Genworth Life
John Hancock (with conversion extension rider only)
Midland National Life
Security Mutual Life of New York
Symetra Life
Transamerica (for their “Preferred Plus” rate class only)
United of Omaha 

If you currently have term insurance and are concerned that your policy will end and you may not be able to qualify for new coverage, find out if it’s still convertible and see what it will cost you to convert all or only a portion of your coverage. 

If I can help you, don’t hesitate to call me at 1-800-380-3533 and just ask for Gordon or email me at [email protected].