About Mark Pace

T. Mark Pace

When there is an immediate need for cash at the time of someone’s death, it has been my experience that life insurance, when properly acquired and managed, is one of the best tools ever invented for the creation and transfer of wealth. However, life insurance is rarely acquired properly and, because it is mistakenly assumed to be a "buy and hold" asset, it is never managed. The resulting financial disasters are far too frequent and completely avoidable.

If you would like to learn more about any Pig-in-a-Poke blog posts or discuss any other life insurance issues, contact T. Mark Pace at Mark@objectivereview.com

 

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Pace’s Pig-in-a-Poke

About Pace’s Pig-in-a-Poke

Pace’s Pig-in-a-Poke, provides an arena for sharing the four great passions in my life. My three foundational passions are:

  1. Invest in yourself first;
  2. The genius in all of us, and;
  3. We can all live a long healthy life.

These three support my life work and my fourth passion; LIPM™ (Life Insurance Property Management).

As the blog title suggests, my focus is on debunking all of the myths, misuse, and muddled thinking that has accumulated in the life insurance industry. And, from time to time, I will go outside of the specific world of life insurance and share my views on my other three passions.

I hope you find my blog worthy of your attention, informative, and occasionally inspirational. I welcome your comments, questions and suggestions.

Mark Pace

Beware! Term conversion is not what it used to be

The Poke:

There once was a time when you could count on converting most level term life insurance policies into permanent policies at anytime during the level term period of the policy. And, generally speaking, you could convert to almost any one of the permanent life insurance products available from that carrier at the time of conversion.

This is no longer the case! Count on nothing and assume the worst because in many situations the conversion options are now severely limited in comparison to the past.

The Poke Exposed:

Battered by a 20-year long premium war and the resulting reduction in their profit margins on these products, many life insurance companies – particularly the least expensive, brokerage-type carriers with no field sales force – realized their historical conversion privileges were under priced. Because raising premiums is risky (the price war still rages on!), they have trimmed term policy value by eliminating features and benefits such as the old liberal conversion privileges.

The modification of the conversion privileges in older term products shows up as a dramatic reduction in the permanent products available for conversion. In many cases, they offer a single product that is poorly priced in comparison to the other permanent products they sell on a regular, non-conversion basis.

In addition, on the newer policies being currently sold the time periods during which conversion is an option are now only a fraction of the policy’s life span (e.g.: your 10-year policy can only be converted during the first 3 years). The insurance companies are happy to give you a choice; however, but only if you purchase their more expensive term policies that offer an “extended” conversion period.

Pace’s Poke Remedy:

If you are helping a client acquire term life insurance, you still can choose among the carriers, predominantly those with a field sales force, who have maintained liberal conversion privileges.

If you are advising clients about the term life insurance they already own, (perhaps on the policies you sold them some time ago), you need to stay on top of this.

Term Life insurance property rights, in this case conversion rights, are not always apparent or clear. The companies include many modifiers in their contracts and often maintain a vague definition of what is available for conversion.

Bottom Line: As renewals come along, or if you are tracking the payment of premiums, it is a good idea to check to see if there have been any changes to the renewal features in your existing block of business. And, for new policies, be very careful about checking the conversion privileges.

Do your homework and do not assume things are as they were in the past.

About the author

Mark Pace
Mark Pace
When there is a need for immediate liquidity at the time of someone’s death, it has been my experience that life insurance, when it is properly acquired and managed, is one of the best tools ever created for the creation and transfer of wealth. However, in my 35 plus years of experience, life insurance is rarely properly acquired and never managed… thereby creating a monumental financial disaster for many individuals that should never happen.

If you would like to learn more about this Pig-in-a-Poke subject or discuss any other life insurance issues, contact T. Mark Pace at Mark@objectivereview.com

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