Monday, May 18, 2015

Three Ways You Can Benefit From Converting Term Policies Earlier

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Term insurance policies are designed to protect you for a short period of time: 10, 15, or 20 years often at a reasonable price.
Before your level term period expires (and before your policy anniversary date nearest age 70), you may be able to convert some of that term insurance into a permanent policy. Be sure to check your policy for your specific last day allowed to convert.
Here are three reasons to consider converting your policy to permanent life insurance earlier.
1. Premiums are directly related to age and health
When you convert, your life insurance premiums are directly related to your age and the risk class of your term policy. With each birthday, the insurance premiums will increase. Meaning the least expensive time to purchase insurance is now!
Let’s look at Scott and Max:
  • Both purchase $500,000 of 20-year term insurance at age 35 for $350 annual premium and receive a preferred non-smoker risk class rating.
  • Max converts his policy after 5 years to a Prestige 100 whole life insurance policy at age 40 for an annual premium of $7,673.
  • Scott converts his policy after 15 years to a Prestige 100 whole life insurance policy at age 50 for an annual premium of $12,693.
  • By age 90, Max will pay $385,750 in premium while Scott will pay $513,320 for the same Prestige 100 whole life policy.
2. Build a cash value
While term insurance can have a lower cost, it may be costing you in the opportunity to build cash value.
Depending on the type of permanent life insurance that you purchase, you have the opportunity for dividends and compound cash value growth that happens inside of a permanent policy. This cash value can be accessed in an emergency, or potentially supplement your retirement income.
3. Potential for higher benefit at death
When you own a whole life insurance policy, at death your beneficiary receives the stated amount of the policy (example: Scott and Max have a $500,000 death benefit) plus the amount any non-guaranteed dividend additions (if the paid-up additions option is elected).
With term insurance, the beneficiary only receives the stated amount of the policy ($500,000).
Conclusion
The earlier you convert, the more time you have to take advantage of the benefits of permanent life insurance.
Check with your representative or insurance company to see if you may be eligible to convert that term insurance coverage into permanent insurance.
Author: Ben Haenning, Senior Communications Coordinator - Life Marketing
Whole life insurance rates subject to change without notice. Prestige 100 issued on policy forms 06-PW-1 and any state variations by The Ohio National Life Insurance Company. Guarantees are based upon the claims-paying ability of the issuer. Dividends are not guaranteed. Product, product features and rider availability vary by state. Issuer not licensed to conduct business and products not distributed in Alaska, Hawaii and New York.


Term life insurance products are issued by and guarantees based on the claims-paying ability of Ohio National Life Assurance Corporation. Term Life Insurance Policy Form 07-TR-1 and 07-TRE-1 and any state variations.
Premiums are based on the age of the insured at nearest birthday and specified underwriting classification and is subject to change without notice. Premiums for issued policies may be different than a quote premium based upon actual underwriting classification. The premium stated in the policy is guaranteed to remain level for the term of the policy. The policy includes certain limitations during the first two policy years.
Product, product features and rider availability vary by state. Company not licensed to conduct business in Alaska, Hawaii and New York.

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