Today’s modern insurance policy is not just a piece of paper you sign and throw away. Modern policies are full of riders and amendments that give the user the power to change the original document as need arises. One such rider is an insurance policy conversion rider. It’s a specific amendment that aids in converting one type of insurance policy into another. For instance, if you have a car loan from a bank or an auto finance company, then you might need to convert your insurance policy from standard to lease, or vice versa. Or, let’s say you recently purchased a life insurance policy as part of your holistic retirement strategy constructed by experienced professionals. Since first purchasing the policy, your financial goals have changed, and your original policy no longer makes sense. In such situations, the conversion rider comes in handy. Here are some details about what conversion riders are and how you can get them when creating or amending an insurance policy.
What is an insurance policy conversion rider?
An insurance policy conversion rider is an amendment that allows you to convert your insurance policy from one type to another. For example, you might have a life insurance policy with a high-risk rider, which is rare. But, what if you want to convert it to a term life insurance policy with no rider or a low-risk rider? What if you bought a term policy and want to convert it to whole life? Or, what if you have a whole life insurance policy but want to convert it to a term policy? All these situations require you to have an insurance policy conversion rider. You can also use a conversion rider to switch from one insurance company to another. For example, you might have a term policy with company X and a whole life policy with company Y. You might want to switch the whole life policy to a term policy with company X. This way, you can reduce your insurance costs. You can also switch from one type of policy with company X to a different type of policy with company Y.
Why do you need a conversion rider?
Conversion riders in life insurance allow you to change your insurance policies without having to go through the hassle of taking out a new policy, filling out the details all over again, and getting new documents. If you have a term life insurance policy and want to convert it to a whole life policy, you’ll need to show the agent that you are financially sound and can afford to buy the whole life policy. The conversion process requires you to provide documentation and proof of your financial status. With conversion riders in life insurance, you can do all of this without having to apply for a new policy and without proving your financial status all over again. Perhaps even more importantly, if the conversion rider is structured properly you will not need to go through medical underwriting again. This could be a critical point in restructuring your insurance in your retirement plan. Lastly, you will not get caught with the insurance company offering a “better” product than what you have and not being able to get it. Now, with a conversion rider, you can simply switch to the “better” policy. Financial flexibility in the future is a key component of any retirement plan.
How to get a conversion rider?
As a firm, Secure Retirement Strategies prides itself on the experience and knowledge it has of the various types of companies that do and do not offer conversion riders in life insurance policies. We match that knowledge with our assessment of your current and desired financial circumstances. We want each of our clients to know the option they have with a conversion rider within policies offered by certain companies, and allow them to choose whether or not a conversion rider is right for them. In some cases, it’s even possible to obtain a conversion rider when amending an existing insurance policy. You might need to amend your policy if you have new dependents or want to change the amount of coverage you receive from your insurance company. You also need a conversion rider to amend your policy if you want to switch from one insurance company to another.
Final words: Are insurance policy conversion riders right for you?
Insurance policy conversion riders are a useful amendment that lets you change your policy from one type to another. You can use them to switch from a standard policy to an all-risk policy, or from a term policy to a whole life policy. You can also use them to switch from one insurance company to another, or to amend your existing policy. With a conversion rider, you can make all these changes smoothly and easily without having to go through the hassle of taking out a new policy. Making sure you understand the options between policies and how a rider might fit into your future is what Secure Retirement Strategies does better than any other financial advisory firm. We communicate these options to our clients in a manner that is understandable, forthright, and transparent.