I recently wrote about kind of running across a new (this year) change in American General Life’s term conversion rules that really stinks for anyone who has had their term policy for more than 5 years. It particularly struck a raw nerve because I was trying to help a client convert a portion of his policy that had been in force 6 years.
In a nutshell, before the change you could convert a term insurance policy to any of the universal life or whole life products in American General’s portfolio, which includes some very good products, great values in fact. The change was that after 5 years in force a person could only convert to one policy and that policy only has a 10 year level premium guarantee. So, the option for my client was to convert $100,000 of term that still had a low price for another 14 years, to an overpriced UL with a price guaranteed for 10 years.
I got a call from Durr Sexton, a VP of sales and marketing for American General. One of the things I asked about was why they made this kind of customer unfriendly choice, essentially penalizing their loyal customers who had kept their policies in force for a long time. He assured me that there had been a tremendous amount of communication in the year and a half prior to the change. He emailed me copies of the communications which were in fact dated beginning nearly 1.5 years prior to the change. I had never seen any of these communications as an agent of the company.
I then forwarded the email to my general agent, one of the largest general agencies in Denver and he forwarded it to his brokerage which is one of the largest brokerages in the country. None of them had received any of the communications. If they didn’t get the communications they couldn’t have passed them on to their thousands of agents and hundreds of thousand if not millions of clients didn’t know this change was coming. And they should have been made aware. Having your conversion option ransacked is really important stuff.
Back to my client who was no longer eligible to convert to all American General permanent products. When I passed on to Mr Sexton that apparently they hadn’t informed everyone as they claimed they had done, I was offered a do over for my client. They said to send me his policy number and they would illustrate a conversion as if he had not passed the five years.
Bottom line. If you have an American General term policy you need to contact your agent, of if they’ve never bothered to service your business, call me toll free at 866-539-7914. You need to be aware of where your policy stands and what your options are. You need to know that American General did a sloppy job of making agents aware and you may still be able to exercise options that they consider no longer available.