By Shannon Daugherty, ACS, FLMI
Shannon Daugherty has been with Western for 14 years as a Marketing Assistant in the Marketing Department. In her new role as Member Programs Assistant, Shannon will write articles about our insurance products to help members understand the complex nature of insurance and annuities. Shannon is a licensed insurance agent who has also earned the designation of Fellow, Life Management Institute or FLMI.
When it comes to life insurance, what is a conversion?
Many times, you can take a term life insurance policy and change or “convert” it to a permanent policy. Just like a caterpillar goes into a chrysalis and “converts” into something else – a butterfly!
Term insurance covers the insured for a limited number of years. Permanent insurance covers the insured for their whole life. There are positives for each, but today I’m only going to focus on a couple of the benefits of converting term to whole life insurance.
For example, take Josh* who for instance, at age 30, buys a term policy for $50,000 that will last for 10 years, and pays a premium of $10.41 per month. At the end of the 10 years, he can renew his policy for another 10 years, and his premium will go up to $19.52 per month. He can keep renewing through the years and his premiums will increase each time. By the time he is 70 years old, Josh will be paying over $200 per month. Yikes!
A great benefit of many term policies is that you can convert them, or change them, into a permanent plan. A permanent plan lasts your whole life, as long as you pay your premiums, and the rates will never increase. The best thing to do is to lock in a rate at an early age.
Now, Josh decides to convert his policy to whole life when he is 50-years-old. The wonderful thing about converting is you don’t have to answer health questions.
Josh talks to his helpful Western agent, and finds out that he can convert his policy to a whole life plan for $50,000 at the cost of about $120 per month. That rate will never increase, saving him money in his later years. Remember, with his other plan of continuing with term, his rate would go up to over $200 monthly, and continue to increase! He is saving $80 a month!
Talk to your agent and discuss your situation. Look at different prices for different products or even different coverages to customize your insurance to your needs.
ASK YOUR AGENT ABOUT CONVERTING!
*Non-smoker, in good health (subject to underwriting)
ACS, FLMI, Member Programs Assistant
Call 877-935-2467 to speak with a Western Fraternal Life Representative.