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I got a call a few days ago from a couple who are both 74 years old. They have had Protective term life insurance in force for several years and decided to look at converting $25,000 for final expense purposes since their conversion option ends next year. Seeing Protective Life’s fraud for a universal life insurance conversion option, only guaranteed 10 years when they still have 10 years guaranteed on their term insurance, they decided to take a look at the non participating whole life policy that Protective offers.

This couple saw the up sides and the down sides to Protective’s whole life insurance conversion. The upside was a one page application and no health qualifying. Let me check my notes….Nope, that’s it for up sides. The down sides were that, while the whole life policy did build cash value, it was based on an endowment at age 120. Endowment with whole life insurance is that point when the cash value equals the death benefit, traditionally at age 100, but some companies have caught on to the fact that endowing later means more money stays in their pocket. The other down side to Protective Life’s conversion is that it promises to convert at the same rate class the clients were originally approved at or, the best rate class that is available on the product they choose. In their case they were both approved at preferred plus rates on their term insurance but the best rate available for the whole life conversion is a standard rate class. No magic about why preferred plus rates aren’t available on this conversion and again it has to do with Protective’s pockets. And the last downside to this conversion to whole life insurance with Protective is that, even with them having health issues now that they didn’t have when they took out the term insurance, they can still qualify for standard with other companies for better rates and better products.

I put out queries to my usual flock of companies and some additional companies that are just good, strong, small whole life policy companies, participating companies, like Cincinnati Life and Guardian. The list got whittled down quite a bit because so many companies have opted out of whole life and replaced it with IUL’s and GUL’s. Then there were some who quoted the right rate class but didn’t have a whole life policy that went down to $25,000, smallest generally being $50,000. The two that got my attention were Cincinnati Life and Guardian. Cincinnati Life was less expensive than Protective and endowed at age 100 instead of 120. Guardian was a little more expensive than Protective, endowed at age 100, but also put dividends toward paid up additional insurance. That could potentially mean a death benefit nearing $50,000 by age 100 or a guaranteed cash out of $25,000.

Bottom line. For those whose health isn’t completely down the tubes, we have to learn to not be afraid of taking an exam and having our health history disclosed. With the clients above he has controlled type 2 diabetes, sleep apnea and a history of prostate cancer and she has type 2 diabetes and high blood pressure and they both still qualify for standard life insurance rates. No exam and no health questions may be all you can do, but you lose the best rate and product opportunities when you choose life insurance like AARP offers. Final expense life insurance doesn’t have to be a choice of the lesser of evils. If you have questions or are considering a $25,000 to $50,000 final expense policy, call or email me directly. My name is Ed Hinerman. Let’s talk.