T-20 Switch Life Insurance Review

Transcription

1 T-20 Switch Life Insurance Review Prepared for : Sample Switch Demo Brokerage InforcePRO 101 Main Street Vancouver British Columbia Vancouver, K9K 1J1 rajarshi@inforcepro.com

2 Policy Summary Policy Number: INM-SampleSwitch Policy Payment Frequency: M Policy Expiry Date: 9 September 2040 Owner Name: Sample Switch Policy Premium: $80.00 Coverage Summary Issue Date: 9 September 2010 Next Renewal Date: 9 September 2020 Product Name: Family Term-10 Modal Premium: $80.00 Benefit Amount: $600, Conversion Expiry Date: Health Status: Full Name: Gender: 9 September 2030 Regular Non Smoker Sample Switch M Date Of Birth: 9 September 1960

3 Definitions Term Insurance Your term insurance, much like your car insurance, renews at the end of every term. When your Term Policy is purchased, the renewal rates of your policy are predetermined and your future cost is presented to you. Term insurance is relatively inexpensive when it is first purchased, however with each successive renewal, the policy cost increases significantly. Term insurance expires at a pre-determined date, usually at the age of 80 at which point you are no longer insured. Permanent Insurance Permanent insurance will never expire as Term will, and the price will never go up because it has a predetermined permanent annual cost. *Approximation meant to portray a concept rather than client specific values. Rewriting vs. Converting There are two ways that you can take out a new policy to take advantage of savings : rewriting and converting. Rewriting means canceling your current plan and purchasing a new one. This means you must go through medical exams again to receive approval for coverage. ""Converting"" means changing your term coverage amount or a portion of your term coverage amount into permanent insurance. There is no medical approval required for conversions. For the portion of your death benefit that is converted to permanent, the price will never increase. However for the portion of death benefit that remains as term coverage, the premium will continue to increase at the end of each term.

4 Cost Of Waiting For Moving To New Term This section illustrates the potential future costs of waiting to move from your current term to another term in the future. Cost of New Term in 5 Years Cost of New Term in 10 Years Total Coverage $600, $600, Product Name Family Term-10 Family Term-10 Future Term Rewrite Premium $ $ Today's Rewrite Premium $ $ The future prices mentioned above are for illustration purposes only. The prices may change and the product illustrated above may not even be available. The future prices also assume your current health status which may not hold true.

5 Term Rewrite (Short Term Savings) Your first option is to replace your current policy with one similar to it to take advantage of lower market rates. If you choose to rewrite, you would pay a total premium of $ monthly, which results in savings of $16, over 10 years. In addition, your coverage will not face a renewal premium increase for another 10 years. Therefore, it is important to keep in mind that this is not the best long-term option in terms of cost savings. Although the premiums are significantly lower initially, the premiums will increase exponentially during each renewal period. If immediate cost savings are your highest priority, then the policy might be a good fit. Otherwise, a permanent plan might be a wiser decision. Current Carrier Quote Lowest Cost Carrier Quote Total Coverage $600, $600, Product Name Family Term-10 TermSelect 10 R&C Monthly Premium $ $ Savings $16, $17, Savings Period (in years) Discount Rate 0% 0% Short Term Cost

6 Extend Coverage: Term 20 Switch No medical underwriting! Provision expires on 09-Sep-2015 Current Carrier Quote Total Coverage $600, Product Name Family Term-20 Monthly Premium $ Savings $88, Savings Period (in years) 20 Discount Rate 0%

7 Partial Conversion Current Carrier Quote Partial Conversion Lowest Cost Carrier Quote Replacement Perm Product Name Manulife UL Level CIS [T100] EstateADVANTAGE [SI+F,T100-A] Perm Benefit Amount $420, $420, Perm Modal Premium $ $ Remaining Term Remaining Term Term Product Name Family Term-10 TermSelect 10 R&C Term Benefit Amount $180, $180, Term Modal Premium $51.26 $50.02 Total Coverage $600, $600, Monthly Premium $ $ Savings NA NA Savings Period (in years) Discount Rate 0% 0% Note: Permanent insurance prices are set to increase substantially due to the continued low-interest environment adversely affecting insurers bond yields and thus projections for non-premium income.

8 Full Conversion If you are ready to fully convert, then your premium, versus current, will increase today while you will experience significant lifetime savings due to the level-cost nature of the product. Current Carrier Quote Lowest Cost Carrier Quote Total Coverage $600, $600, Product Name Manulife UL Level CIS [T100] Foundation [SumIns+Fund,T100] Monthly Premium $ $ Savings $20, $26, Savings Period (in years) Discount Rate 0% 0%

9 Cost Of Waiting For Conversion This section illustrates the potential cost of waiting to convert. If, in fact, converting to a permanent policy is a possibility, it is important to be aware of the increase in cost. With that information, you can then decide on whether it is in your best interest to wait to convert or not. Conversion Cost in 5 Years Conversion Cost in 10 Years Cost At Conversion Expiry Total Coverage $600, $600, $600, Product Name Manulife UL Level CIS [T100] Manulife UL Level CIS [T100] Manulife UL Level CIS [T100] Future Conversion $1, $1, $1, Premium Today's Conversion $ $ $ Premium The future prices mentioned above are for illustration purposes only. The prices may change and the product illustrated above may not even be available. The future prices also assume your current health status which may not hold true.

10 Lifetime Cost Comparison Current- Coverage $600, Premium $80.00 $ $1, Expiry Avg. Premium: $ Lifetime Cost: $275, Every effort has been made to ensure accuracy of term renewal premiums, however the nature of historical rate tables is that gaps do exist. The original contract should govern further analysis. Term-10 Rewrite- Coverage $600, Premium $ $1, $3, Expiry Avg. Premium: $1, Lifetime Cost: $379, Term 20 Switch- Coverage $600, Premium $ $2, Expiry Avg. Premium: $ Lifetime Cost: $244, Partial Replacement- Coverage $600, Premium $ $ $1, $ Permanent Avg. Premium: $ Lifetime Cost: $300, Full Replacement- Coverage $600, Premium $ Permanent Avg. Premium: $ Lifetime Cost: $248,127.09

11 Lifetime Cost Overview

12 Additional Disclosures & Assumptions 1. We believe we have determined accurate renewals. However, we strongly advise you to double check with the carrier before taking any financial decision. 2. The discount rates used for every savings value is mentioned in the tables in each of the sections. 3. All new quotes presented in this report assume the same health status for all insured(s) as in the policy under review. 4. No substandard rating was found on this policy. Thus, that hasn't been factored into any of the calculations. 5. Impact of paid riders is not factored in this report.

13 Needs Review 1. Overall Why did you buy the protection you did? Have any of those reasons changed at all since then? Yes No 2. Have you moved your residence and/or adjusted your mortgage amount? Yes No 3. Have you bought a vacation property or incurred some other major financial liability? Yes No 4. Have you or your spouse changed jobs or had your income and/or benefits change significantly recently? Yes No 5. Have you or your spouse taken or do you expect to take 'early retirement' soon? Yes No 6. Has there been a change in your marital status? How about your children? Yes No 7. Have you had any additional children or grandchildren since your last review? Yes No 8. Have your children moved out on their own or returned home? Yes No 9. Have you updated your will or powers of attorney in the last 5 years? Yes No 10. Have there been any serious health issues in your immediate family? Yes No 11. Have you inherited any money? Yes No 12. Do you want to change the beneficiaries on your existing policies? Yes No Answer yes to any of these questions and you can definitely benefit from a review of your life insurance needs. Life changes planning. If your life has changed, your plan needs to also. Adapting your plans and policies gives you more of the peace of mind that means quality of life. Taking a little time now can save you a lot of time and trouble later. I m here to help you. Advisor Name: Client Name: Signature: Signature: Date: Date: