How To Help Baby Boomers' Save Life Insurance Dollars

Term Insurance Upgrade Or

(How to help save baby boomers’ life insurance)

Many Baby Boomers still have low cost term insurance in force which they will lose because it will become unaffordable at renewal.

Case Study: Mr. Client, a 60 year old male, bought a $1,000,000 20 year level term policy in 1995. The annual premium was $825. Mr. Client has been enjoying low cost term coverage for 17 years. Like many Baby Boomers, Mr. Client believed his savvy investments in the 90’s would reap big profits and enable him to retire comfortably by age 65. Because his investments haven’t met his expectations, Mr. Client’s wife is not financially secure without Mr. Client’s income. In addition Mr. Client has realized not only are his children still dependent on him, his parents are dependent on him also. Because his spouse, children and parents are dependent on his income the need for the life insurance extends beyond the level premium period. Mr. Client needs to extend the coverage for 20 years and / or for life.

Problem

If Mr. Client waits 3 years to apply for a new 20 level term policy, the premium will cost 35% more, because of his increased age.
His current term is either not convertible or convertible to an older, less competitive permanent plan.
Based on current mortality charts, Mr. Client only has a 4% probability of death within the next 3 years, a 96% chance that he will outlive this policy and be faced with this dilemma.
Mr. Client takes the risk of a significant health change over the next 3 years that may affect his insurability, meaning he will be stuck with the worst alternative, paying the increasing ART rates.

Yr 4	Yr 5	Yr 6	Yr 7	Yr 8	Yr 9	Yr 10	Yr 11	Yr 12	Yr 13
$25,085	$27,965	$31,005	$34,085	$37,205	$40,565	$44,045	$48,265	$52,985	$59,185

*Sample Ultimate ART Term Rates are illustrated because actual art rates were unavailable from this carrier

Mr. Client purchases new $1,000,000, 20 year level term policy for $5,795

New term premium of $5,795 is still less expensive than the increasing ART rates of his current term plan in year 21 and beyond.
He has locked in guaranteed premiums for an additional 17 years.
He has taken advantage of his current good health status at preferred rates while he can still qualify.
He has extended his convertibility option into a more competitive permanent plan.

Summary

					Cost of Waiting
Current Term Premium	New Term Now		New GUL Now		Term In 3 Years		GUL In 3 Years
	PrefNS	StdNS	PrefNS	StdNS	PrefNS	StdNS	PrefNS	StdNS
$825	$5,795	$9,470	$14,390		$8,655	$13,910	$17,320	$21,254