Advisor Today - November/December 2015 - (Page 26)

product spotlight LIFE INSURANCE By Benjamin Haenning From Term to Perm Here are some helpful ideas to guide the conversion conversation with your client. C onverting a term life insurance client to a permanent life insurance client can be a great prospecting opportunity. To make the discussion of converting term easier down the road, the conversation should begin when the policy is being sold, not at the time of conversion. Up front, the client has the education and potentially the expectation that he will convert at least a portion of the term insurance in the future. This way, when you schedule an annual review with a term client, the term conversion conversation will not be foreign. How many have heard the story, "I purchased my term policy at the lowest premium and did not worry about conversion options. Conversion is insignificant to me because I do not plan on converting that policy within the next 20 years." While that may be the original plan, what the client overlooked is that life changes, good and bad. Where you plan on being in 20 years, and where you will actually be in 20 years, most likely are not the same. While life expectancy can be estimated, no one knows the date he will die. Permanent insurance can ensure that the policy will be there when your client needs it. Conversion options Because of this, term conversion options are critical when discussing term insurance. For every example of a healthy client who cannot purchase life insurance after the term period is up, there is another example of a client who became uninsurable and can convert. For example, a business owner who went through bankruptcy may not be able to purchase new life insurance due to financial underwriting. If clients can spend a few extra dollars per month on a term policy that contains beneficial conversion options, they should. Oftentimes, the difference between a limited conversion policy and a more fully convertible policy is a few cups of coffee a month. Flexible conversion options can make the conversation easier in the future but keep in mind that all term policies have some conversion restrictions. The conversion conversation Converting your term insurance clients into permanent insurance clients can sometimes be difficult. Clients raise objections, procrastinate, and many times, do not want to spend the extra money. Here are five ideas and best practices that can help with having those conversations. * Accumulating conversion credits. Clients often receive a conversion credit to their permanent policy upon conversion. Some companies offer term policies that accumulate conversion credits for a specific number of years. These policies give you a specific point in the future to talk to the client about conversion. Prior to the conversion credits expiring, a discussion about lost credits can help convert him to a permanent insurance client. * Partial conversion. Some carriers allow the client to convert a portion of their term policy. If the client's budget does not permit conversion of the full amount of term, consider converting a reduced amount. * A hybrid policy. Is the client adverse to permanent life insurance because it's too expensive? If so, take a hybrid approach. Depending on the company, some term policies can convert to a permanent life insurance policy that is blended with term insurance. This can initially be more affordable to the client. * Present the facts. Every year that a client puts off converting, the more expensive the new cont'd on page 28 26 ADVISOR TODAY | November/December 2015

Table of Contents for the Digital Edition of Advisor Today - November/December 2015

From the Editor
New Products
In Step with a Winner
Finding Success in the Chinese-American Market
Dealing with Client Confidentiality
Hashtag Your Way to Social Media Relevance
Starting the LTCI Conversation
From Term to Perm
Protecting the Downside with Allocation Adjustment
Jules Gaudreau: A NAIFA Success Story
Helping Clients Cope with Market Volatility
NAIFA Government Relations
Working with Single Women
Financial Planning FAQs of Small-Business Owners
Three Retirement Conversations to Have with Clients Today
The Advent of Robo-Advisors
Moving into the Retirement Space with 401(k) and 403(b) Plans
Moving the Sales Process Forward
Cultivating the African American Market
The Lighter Side of LIfe
Advertiser Index
Back Page

Advisor Today - November/December 2015