How Sears Retirees can convert their group Life Insurance (Sears in the news)
SEARS has ended life insurance benefits for eligible retirees, one of the final links to the days when the company promised generous benefits to take care of its workers.
The life insurance benefits were canceled March 15, though some retirees didn’t receive letters notifying them of the change until after that date, said Ron Olbrysh, chairman of the National Association of Retired Sears Employees.
Retirees can convert all or part of their group life insurance policies to individual whole life policies and pay the premiums, according to the letter sent to retirees.
3 Essential Things Sears Retirees must know when converting Life Insurance (Sears in the news)
- Before you go too far in converting your group life insurance coverage, it is very important to ask yourself if you need life insurance in the first place. If the answer is ‘no’ then you probably don;t need to consider conversion of the group life insurance. Many people man not need life insurance because they have no dependents, no debt, significant savings or maybe more than enough existing life insurance coverage from other policies.
- When you convert group life insurance to a personal policy, one of the biggest benefits is the ability to do so within 31 days with no medical evidence of insurability. This is really great for people who need life insurance but cannot get it because of age, smoking or medical issues. Since there is no medical required for the conversion, the life insurance company protects themselves by charging a higher premium for converting group policies.
- If you are healthy, insurable and need life insurance, it may be in your best interest to shop around and buy a personal plan because it will be less expensive for those that are more insurable.
How to understand the Life Insurance Conversion
Conversion allows an employee to convert their policy into a whole life insurance policy, regardless of their state of health as long as they apply within the allotted time frame.
A whole life insurance policy provides lifelong coverage (until death or the maturity date); however, premium payments may be a lot higher than the group rates.
A whole life insurance policy (as opposed to a term life insurance policy) has a guaranteed cash value that builds over time.
What is a Term Life Insurance conversion?
Term insurance policies are only designed to last a certain length of time, called a term. Once that period ends, so does the coverage.
Policyholders can then choose to extend coverage after a term ends by either purchasing a new policy or converting a qualified term insurance policy to a permanent one.
Converting to a permanent, whole life policy is an ideal option if you decide you want financial protection for the rest of your life.
2 Best Options when you need to convert your life Insurance Policy
If you have a term insurance policy and your conversion expiration date is approaching and you want to be insured for a longer period of time, you have two options: convert to a permanent policy or buy a new policy.
If you are still as healthy as you were when you took out the policy (or maybe healthier now?), you may want to investigate the cost of a new policy versus converting into a permanent one.
With a new term policy, you won’t have access to accumulating cash values like permanent policies offer, but you can be insured for another term at a significantly lower cost compared to permanent insurance.
However, if your health has deteriorated even in the slightest, you are an ideal candidate for converting.
If you need help understanding the merits of converting a group life insurance policy, look for a financial advisor or life insurance agent that understands insurance conversions.
It’s also important to look for a life insurance broker instead of a captive life insurance agent. Insurance brokers will shop the market for the best products and the best price. Brokers are more likely to act in your best interest that an agent that just sells one companies products.
Mintco Financial helps SEARS retirees to convert their Life Insurance Policies
There are many things to take into account when purchasing life insurance, and changes in your life situation can reflect changes in your insurance requirements.
That’s why it’s important to carefully consider the different policy options and ensure that you have the right solution to meet your long-term life insurance needs.
An insurance specialist with Mintco Financial will review your current life insurance situation and help you design a policy to plan for the future.
At the end of the day, one of the biggest investments you can make is an investment in yourself.
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