LIFE INSURANCE. Term Conversion. producer guide. For Producer Use Only. Not for Public Distribution.

Transcription

1 LIFE INSURANCE Term Conversion LIN BAN producer guide

2 MetLife s Internal Term Conversion program offers clients the contractual right to convert term insurance policies issued by Metropolitan Life Insurance Company and affiliated companies to a permanent MetLife life insurance product within the specified conversion period. Consider the following great reasons for your clients to convert their term policies to permanent insurance: Permanent life insurance provides life-long insurance protection, provided adequate premiums are paid. Despite higher initial premiums, permanent life insurance may actually be less expensive in the long term than extending your clients existing term insurance. In most cases, no medical examination will be required for conversion from our term product to a MetLife permanent life product, which allows your clients to keep the same or equivalent underwriting class issued for the term policy. Permanent life insurance can build cash value on a tax-deferred basis. Cash values can be accessed to help meet retirement needs or other goals. 1 Term Conversion Eligibility Term insurance and term riders may be convertible to permanent life insurance products through the MetLife Term Conversion Program. Before converting into a permanent product, be sure that the term coverage is eligible for conversion and the policy is paid up-to-date. Listed below are eligibility requirements for both term conversion and term riders: Term Conversion Term insurance policies, issued by any of the MetLife companies, must be within their contractual conversion period. All risk classes are eligible. Partial conversions are available; however, the remaining balance of term coverage must be above the term policy s minimum issue limit. Riders included in the conversion provision may be carried to the permanent policy; provided however, they are available on the permanent policy. Any riders not part of the original term policy will be fully underwritten. CONVERTING TERM RIDERS Term riders that are eligible for conversion may be transferred over to our permanent products, where available. Term riders sold on MetLife Insurance Company of Connecticut 2 Universal Life policies are eligible for conversion to any permanent MetLife product. CONVERTING A TERM POLICY TO A METLIFE PROMISE WHOLE LIFE SM POLICY WITH THE ENHANCED CARE BENEFIT (ECB) RIDER Underwriting the ECB as part of a Term Conversion to a MetLife Promise Whole Life policy must meet the following guidelines: Insured must be under age 60 at the time of conversion. The term policy must have been issued within five years prior to the conversion request. The term policy must have been fully underwritten and issued Table D or better, or with a flat extra of $5/K or less. The term conversion application, with medical questions, must be completed. The Enterprise authorization is also required. Underwriting will be limited to database checks unless more extensive underwriting is required for cause. The lifetime maximum amount that can be converted with the ECB for all policies is $1,000,000 of base policy face amount per insured. Any term conversion applications submitted with requests for ECB that do not meet the above specifications will be issued with only the contractual base policy conversion provisions. Please contact your underwriting team with any questions about the underwriting guidelines or to discuss the ECB for a particular client. 1 1 Tax-free life insurance distributions assume that contract is properly structured. Loans and withdrawals will decrease the cash value and death benefit. 2 MetLife Insurance Company of Connecticut is now known as MetLife Insurance Company USA.

3 The following chart lists the existing term policies that are eligible for conversion. TERM POLICY/ OPTIONAL RIDER MetLife USA GLT MLI USA GLT MLIC GLT (in NY only) MetLife OYT with the Convertible and Renewable Rider ISSUE YEARS Nov present Feb Nov Aug present Dec present MetLife OYT Dec present FMLI GLT Feb Aug MetLife OYT 1996 approx ISSUE AGE CONVERSION CREDIT If a term product is not listed above, please contact the internal sales desk for further information. Please review policy forms to verify the conversion period and the convertibility of any riders. CONVERSION PERIOD All No For issue ages less than 65 the policy is convertible until the earlier of the end of the initial level premium paying term period, or the policy anniversary at the insured s attained age 70. For issue ages 65 and over, the policy is convertible for the first five policy years only. All No For issue ages less than 65 the policy is convertible until the earlier of the end of the initial level premium paying term period, or the policy anniversary at the insured s attained age 70. For issue ages 65 and over, the policy is convertible for the first five policy years only. Up to 75 None Policy must be within its contractual conversion period. Conversion period runs from policy year 2 to the end of the renewable period. Not convertible Not convertible Not applicable All No For issue ages less than 65 the policy is convertible until the earlier of the end of the initial level premium paying term period, or the policy anniversary at the insured s attained age 70. For issue ages 65 and over, the policy is convertible for the first five policy years only. Less than MetLife Old OYT Pre-1966 All Yes To age 60 or 5 years, if later MetLife MetTerm May 2003 Dec MetLife MetTerm Mar Apr GenAm GLT-10 and GLT-20 NEF Vanguard Guaranteed Level Term NEF Vanguard Guaranteed Level Term Yes For issue ages less than 55 conversion is allowed up to the insured s age 60. For issue ages between 55 through 71 conversion is allowed for the first 5 policy years. For issue ages between 72 through 75 conversion is allowed to the insured s age 76. All First 5 Policy Years Only For issue ages less than 65, the policy is convertible to the earlier of the end of the initial level term period, or the policy anniversary on which the insured is attained age 70. For issue ages 65 and older, the policy is convertible for the first 5 years only. All Yes Conversion is allowed while the policy is in force up to the policy anniversary 5 years prior to final policy expiry date All No The earlier of the end the initial level premium period or age 70. May 2003 Dec Mar April 2003 All First 5 policy years only For issue ages less than 65, the policy is convertible to the earlier of the end of the initial level term period, or the policy anniversary on which the insured is attained age 70. For issue ages 65 and older, the policy is convertible for the first 5 years only. All Yes Conversion is allowed while the policy is in force up to the policy anniversary 5 years prior to final policy expiry date. NEF Vanguard Term Pre-2000 All Yes Up to age 90 NEF Yearly Renewable Term NEF 5-Year Renewable and Convertible Term MetLife of CT Special T MetLife of CT Annual Renewable Term All Yes Up to age All No Convertible up to 5 years before expiry date First 5 policy years or attained age 55, whichever comes first First 5 policy years or attained age 55, whichever comes first Conversion expiry date is year prior to the end of the initial level premium period not to exceed 15 years from issue date or attained age 80, whichever comes first. Convertible to an individual permanent form of insurance up to age 65. 2

4 Term Conversion Credit A term conversion credit is an incentive offered by an insurance company to help term policyholders convert their term insurance to permanent insurance. This credit can be used to reduce the first-year premium on the permanent policy. Most term policies issued by Metropolitan Life Insurance Company, New England Life Insurance Company and MetLife Insurance Company of Connecticut (currently known as MetLife Insurance Company USA) are eligible for the term conversion credit. Term policies issued by MetLife Investors USA Insurance Company (currently known as MetLife Insurance Company USA), First MetLife Investors Insurance Company and General American Life Insurance Company are not eligible. Term policies issued on or after November 17, 2014 by MetLife Insurance Company USA are not eligible for term conversion credits. Term conversion credits are subject to attained age or policy duration requirements (see prior chart parameters). A term conversion credit cannot be paid in cash. Term credits can only be applied towards premiums paid on a new permanent policy that originated from a term conversion. The term conversion calculation differs depending on the identity of the original issuing company and the type of permanent policy elected. Credit Calculation When converting term insurance, the amount of the credit is based on the type of permanent insurance being converted to, the attained age 3 of the insured and the amount of coverage being converted. Clients may select most permanent products currently available within the MetLife Enterprise. To calculate the conversion credit, use the table on page 5 to determine the conversion factor. Find the row with the client s age and the column with the permanent product to locate the conversion factor. Multiply the factor by the amount of permanent coverage applied for in $1,000s. Credits DO NOT vary by sex, risk class or size band. Use A credits for Whole Life, B for VUL and C for UL. Minimum conversion credit amount is $50 if fully eligible coverage is converted. For partial conversions, the amount is pro-rated. Credits are applied toward base policy premiums. Credits are rounded up to the nearest dollar. Commissionable premiums are reduced by the credit amount. New York conversion credits cannot exceed the last 12 months term premiums paid. If the last term premium paid was the first-year term premium, the credit is limited to 80% of the premium. This applies to term policies with an original issue state of New York, even when the new permanent policy issue state is other than New York. Calculation Example: A 40-year-old male wants to convert $100,000 of his $250,000 MetLife Term policy to a UL policy. Use his age and the UL C column to determine the factor (1.04). Multiply this by the amount of permanent coverage in $1,000s (100) to calculate the conversion credit of $ = conversion factor x 100 = permanent coverage in $1,000s $ = conversion credit 3 3 Attained age based on the permanent product being applied for.

5 MetLife Enterprise Term Products Conversion Credit Calculation Age Whole Variable Universal Life Universal Life A Life B C Age Whole Variable Universal Life Universal Life A Life B C For ages 70 and up, use attained age 70 credits. A term conversion is fully commissionable, less the conversion credit. For help with conversion credit calculations, please contact the internal sales desk. Credit Calculation Converting New England Life Insurance Company Term Insurance When converting New England Life term insurance, the amount of the credit is based on the type of term policy, the age of the term coverage, the amount of the term coverage being converted and the current term premium. The type of permanent insurance does not matter. 4

6 New England Life Term Products Conversion Credit Calculation Age of TERM POLICY being converted Prior to 1st policy anniversary (less than 1 year old) After 1st, but prior to 2nd policy anniversary (1 to 2 years old) After 2nd policy anniversary (2 or more years old) Amount of credit Pro-rated (80% of 1st year annual term premium max) 80% of previous year annual term premium 100% of previous year annual term premium For partial conversions, the amount is pro-rated. Credits are applied toward base policy premiums. Commissionable premiums are reduced by the credit amount. Conversion credit calculated above cannot be greater than the target premium if new policy is a flexible premium policy. Underwriting Underwriting requirements vary depending on the individual s preference for converting their term policies to permanent policies. Underwriting is not required under these circumstances: Contractual term conversion or current company offer. No additional policy riders requested on the permanent policy except those that are contractually convertible. Permanent life insurance face amount is equal to or less than the converting term policy. New plan has the same (or comparable) risk class as the converted term policy. Changing policy ownership. Underwriting will be required under these circumstances: When the requested increase in coverage exceeds the term coverage. Conversion of non-convertible rider. Benefits or riders are requested to be added to the permanent policy. 4 Request for a better underwriting class. Premiums The initial premium required is based on the amount that will keep the new permanent policy current and may be less than the full premium amount due to conversion credits. If the client would like to pay monthly, the entire first month s premium should be collected at the time of the application. For annual, semi-annual and quarterly modes, either the entire premium can be collected or the entire premium minus any available conversion credit amount. The permanent policy cannot be placed with the conversion credit only; out of pocket premium must be paid to place the permanent policy. To establish the permanent policy on a monthly draft, provide the Electronic Payment Agreement form DEBITAUTH-05 (11/14). The DEBITAUTH-05 (11/14) form needs to be completed even if previously completed when applying for the term policy. The check should be made payable to the issuing company of the permanent policy. 5 4 If converting to Whole Life with The Enricher rider, the underwriting amount of the Enricher is the net amount at risk, which is the difference between the Enricher coverage and the first-year Enricher premium payments.

7 Illustrations Replacements involving proposed permanent insurance always require an illustration or proposal. Verify Appointments and Licensing Producers must be properly appointed and registered with the permanent product issuing company. In some cases, the producer s life insurance license may be required in up to three states. 1. The state where the application is signed. 2. The state where the owner resides (if a trust is the owner, then the state where the trust is domiciled). 3. At the time the application is written, if the proposed insured resides in one of the states or U.S. territories shown below, the producer must also be licensed in that state: Alabama Idaho Michigan Puerto Rico Alaska Iowa Mississippi South Carolina Arizona Kansas New Hampshire South Dakota Colorado Louisiana New Mexico West Virginia Florida Maine North Carolina Georgia Maryland Oklahoma Software The illustration software currently has the ability to illustrate term conversions through the term conversion functionality or as new business if conversion credits no longer apply. Forms Refer to the term conversion checklist found on the producer website for a full list of forms needed. New Business For independant producers, once all of the forms are complete and the premium is collected, the case may be sent to New Business for processing. Submit original paperwork via fax and regular mail or overnight to: MetLife New Business Crane Nest Drive 5th Floor Tampa, FL For MetLife career agents, applications should be sent to your appropriate field office. 6

8 Any discussion of taxes is for general informational purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate. Prospectuses for Equity Advantage Variable Universal Life, and for the investment portfolios offered thereunder, are available from MetLife. The policy prospectus contains information about the policy s features, risks, charges and expenses. Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The investment objectives, risks and policies of the investment options, as well as other information about the investment options, are described in their respective prospectuses. Clients should read the prospectuses and consider this information carefully before investing. Product availability and features may vary by state. MetLife life insurance policies have limitations, exclusions, charges, termination provisions and terms for keeping them in force. There is no guarantee that any of the variable investment options in this product will meet its stated goals or objectives. The cash value is subject to market fluctuations so that, when withdrawn, it may be worth more or less than its original value. Current life insurance products are issued by MetLife Insurance Company USA, Charlotte, NC and Metropolitan Life Insurance Company, New York, NY All guarantees are subject to the claims-paying ability and financial strength of the issuing insurance company. Variable products are distributed by MetLife Investors Distribution Company. All are MetLife companies. Insurance Products: Not A Deposit Not Guaranteed By Any Bank Or Credit Union Not FDIC-Insured Not Insured By Any Federal Government Agency May Go Down In Value MetLife Insurance Company USA North Community House Road Charlotte, NC metlife.com Metropolitan Life Insurance Company 200 Park Avenue New York, NY BDTM24018 L [1115] 2014 METLIFE, INC. PEANUTS 2014 Peanuts Worldwide LLC