In today’s economy, some of your wealthier clients may be hesitant to purchase Survivorship Life Insurance coverage due to uncertainty, either in the market, estate taxes or their family’s circumstances. There is another way to cover their insurance need without the finality of a Survivorship plan or the cost.
We have contracts with carriers who offer the ability to convert Individual Term Insurance policies into a Survivorship plan during the designated conversion period.
Your clients receive immediate insurance protection while locking in their underwriting class. This approach requires less of a commitment coming out of your client’s checkbook while satisfying the total insurance need.
The policies can be owned individually or by an Irrevocable Life Insurance Trust (ILIT) and down the road they will have the ability to convert into a SUL plan at attained age if the uncertainty regarding estate taxes and the current market condition erodes.
Items to keep in mind when considering using an ILIT to purchase Term coverage
First, if you use a trust, the individual who is not covered by the Term policy will need to provide evidence of insurability when the policy is converted to a SUL plan. Second, you could have the trust purchase half of the total insurance need on each spouse.
Using this method, the individuals will be able to acquire the total insurance need without showing proof of insurability at the time of the policy change.
If you have clients who are hesitant to address their estate planning needs and are taking a “wait and see” approach, you may want to introduce this strategy.
Our Life Sales & Marketing Associates can show you which carriers Term policies can participate in this concept and prepare quotes showing the most affordable options.