Robert Bloink, JD, LLM and William H. Byrnes, JD, LLM

If your clients would benefit from a low-cost, term-like product with permanent features, take a look at Term Universal Life (Term UL). But do not make the mistake of assuming that Term UL is your father’s convertible term policy. Gone are the massive premium increases at conversion that cannot be predicted when the term policy is issued. Term UL gives your clients a clear view of future premiums, making the product suitable for long-term planning without the high premiums of other permanent products.

What Is Term UL?

Term UL is a relatively new product that starts as a term policy but automatically converts to a UL policy after the policy’s term phase—be it ten, fifteen, or twenty+ years. Although not every carrier offers Term UL, it is offered by a growing number of carriers, including Genworth Life and Annuity, West Coast Life, and Protective Life.

As the price of term products increases, Term UL is filling the gap by offering lower premiums and permanent features without the uncertainty of convertible term. Regardless of insurability at the time the product converts, the product will convert to a permanent product at a premium rate that the insured is aware of at the time they purchase the contract. Term UL may be a good product for young professionals and entrepreneurs who need term now but are likely to need a permanent life insurance solution down the road. A switch on the policy flips, converting it from an income replacement vehicle to an estate preservation vehicle.

For the complete discussion on Term UL see Advisor’s Journal.

For previous coverage of universal life in Advisor’s Journal, see Can Term Life Coupled with a Mutual Fund Investment Replace a Variable Universal Life Policy? (CC 10-77).

For in-depth analysis of universal life, see Advisor’s Main Library: A—Fundamentals Of Universal Life Insurance.

Your questions and comments are always welcome. Please contact the Panel of Experts.

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