How can you determine the best pricing strategy for term life insurance?

What options does the life insurance company have to convert to in the future? Most term policies have some sort of conversion privelage available, but is it really to actionable product? Understanding more about the company backing this long term financial promise is often worth more than consumers forgoing these options for literally a few dollars.

The purpose and ones budget are two primary determinants. Convertibility is a feature that needs to be factored in. Price alone should not dictate carrier selection. The duration of coverage should be discussed but the amount needed should trump duration IMO. Having $500k for 20 years when $1M is the need doesn't help the survivor should death occur say in year 9. Where there is ample income a permanent product properly designed could result in a much lower net cost over a similar level term period.

Very simple, shop around. Make sure your agent is looking for the best coverage and affordability, and that there are options available to you once the term ends. Can you renew the coverage? Can you convert the coverage? Can you sell the coverage once it's converted to a permanent policy? These are just a few of the considerations. Make the carriers compete for your business.

Convertibility, is also a big factor! This feature allows you to convert from “Term Coverage,” into a permanent life insurance policy, with the same issuing Company @ the same rating the insured was originally issued.

Essentially, effective pricing is a balancing act between affordability and ensuring term life cover plan meets clients needs and objectives. Convertible option added does not cost significantly more. Yes when using the convertible option, medical underwriting will NOT be required. However cost of converted plan will be based on 1.new level of cover chosen(cannot exceed original level of cover ) 2.new term selected 3. Age at time of exercising option. There is no one size fits all when it comes to these plans. Example. Ideal level of cover could be 500k over a 30 year term. However if the premium is unaffordable then this “ideal option is out the widow” Risk of proceeding with this option is that plan is cancelled in the short term l.

This should also take into consideration the reason for the life insurance. You may not need as long coverage if this is a buy/sell policy. If you only need coverage during your earning years, you should tailor it to that length of need.

To me, your explanation on the convertible cost is misleading, specifically “without having to take a medical exam or pay higher rates”. No medical exam, or evidence of insurability is required, you will pay a significantly higher premium to convert your Term to Perm! If you were originally issued @ preferred non-tobacco, you will convert @ preferred non-tobacco… although the cost will be at your current age and the premiums needed to support coverage to life expectancy, can be as much as 300% higher, than your 15 year level term you are converting. In my 30 years selling Life Insurance, I have converted many Term Policies to Permanent Policies, mostly for those whose medical condition has drastically changed or became terminal!

I agree Randy. Convertible option should not be the basis for choosing a plan. It is more to Add flexibility and some options should you outlive the original term. Selecting an appropriate term plan should be solely based on the solving current protection needs. Convertible option may become more important in a situation where client cannot afford optimum option and you need to reduce term significantly in order to ensure plan is affordable. Should clients financial situation improve then convertible option could be ideal to extend term further.

"Convertible term policies allow you to switch to a permanent life insurance policy without having to take a medical exam or pay higher rates." This is not accurate. You WILL pay higher rates because you are converting to a permanent policy. Your rates, as it will pertain to the underwriting, are locked in, but not the rate of COI.

You'll need to consider the purpose of the coverage. Paying for 20 years of coverage when you only need 15 years is a wasted premium. You also need to consider what the carrier's conversion policy is. Some carriers have better conversion options in the first 5-10 years. Most conversions are done in the first 5 years or the last 2 years by carrier statistics. This should be discussed upfront with proper financial planning.

Important to remember the purpose of life insurance in a deeper sense. I would suggest it is to insure your future income that you have not earned yet. If you die tomorrow, how much of lump sum life insurance payment would compensate your family for the loss of your income now and up to your potential retirement? It is one approach of many, can also included specific areas to protect financially, children’s education etc etc