Advisors are always looking for new business. As something of a twist, I’ve been finding it for them in their old business. While reviewing in-force term policies at my company, First American, I check for conversion expiration dates and end of level period dates. It’s turning up lots of business opportunities for advisors.
I remind advisors that a conversion date is coming up or their level term period is expiring and suggest this would be a good time to make contact with clients. Most appreciate the nudge since it helps clients and can result in a conversion or a new sale. It also prepares them for the impending correspondence from the insurance carrier about an upcoming change in their premiums.
Unfortunately, there are other examples where the news is not so good. Recently, I came across a 10-year $500,000 plan that was issued 15 years ago and remains inforce today. The initial $365 annual premium is now $1,173 quarterly. If the woman is still insurable, she could be paying $1,500 annually. I’ve been told the client isn’t returning the advisor’s calls. This can’t come as a surprise to an advisor who failed to maintain communication after the sale.
In another case, a 15-year $500,000 term plan with a conversion expiration date a little more than two years ago went from a level premium of $345 annually to a current $1,890. Next year, it jumps to $2,520. What will it be if the woman lives to age 85?
There are instances where there’s still time. One policy owner’s $250,000 policy’s premiums remain level for seven more years, until the client reaches age 77. However, the conversion expiration is only two months away. If he misses it at 77, the monthly premium of $165 goes to $585 and a year later, it’s $1,003.
And then there’s the policy owner who purchased a $1million 15-year term plan in 2003 and the policy renewed last month. His annual premium went from $10,880 to $115,600! He is now 78-years old. Faced with a premium increase of more than $100,000, no wonder he dropped the policy.