Stacked Term Riders offer a customizable way to cover clients into retirement and beyond
Consumers are looking for more affordable options for protecting their financial futures. Legal & General America (LGA) responded to that need by introducing up to 40 years of level term life insurance coverage with its new OPTerm 35 and 40 products.
New options for affordable, longer-duration coverage
“Forty-year term policies are appealing for many reasons. One large concern is that more people are refinancing mortgages.1 They may have started with a 30-year mortgage, but the refinance often pushes the debt into the traditional retirement years,” said Patrick Bowen, senior vice president, Distribution, at Legal & General America. “A study from American Financing showed 44% of people between 60 and 70 still have a mortgage in retirement. And 21% of homeowners over 75 still have some type of mortgage debt.2”
The survey by national mortgage banker American Financing also found that as many as 17% of those surveyed say they may never pay off their mortgage. Part of a policyholder’s legacy can be to ensure a surviving spouse has the option to do so.
“OPTerm 40 can offer peace of mind, knowing a loved one could afford to keep the family’s home, even if something were to happen to the policyholder,” said Bowen.
Because it may be two to three times more affordable than a Guaranteed Universal Life (GUL) that’s set up to provide the same 40 years of coverage, OPTerm 40 has been favorably received since its debut.3 Consumers may want term coverage not only for increasingly longer mortgages but also for other life events that can be of shorter duration.
Debt and obligations continue beyond age 65
Combined with OPTerm 40, LGA’s Term Riders offer customizable ways to get cost-conscious clients the right amount of coverage, for the right amount of time.
“A client may need 40 years of affordable coverage, but the protection need can shrink as certain financial milestones are reached,” said Bowen. “For instance, they may want coverage not only to ensure a mortgage is covered but also to have funds available to pay for college tuition or credit card debt. The key consideration is that some of these needs may disappear over time.”
Legal & General America’s term products along with Term Riders offer flexibility and can be customized to cover those milestones until they are reached. One to three Term Riders in durations of 10, 15 or 20 years may be stacked. Riders drop off and premiums are reduced as each rider’s coverage period expires.
“We love the OPTerm 35 and 40 products and have seen interest intensify for proposed insureds. When consumers understand they can buy long-term, low-cost, guaranteed premium/death-benefit coverage that can extend beyond the average American’s life expectancy — it’s an uncomplicated sale.” — Insurance Designers of Dallas
“For instance, a client may be worried about the future of a child faced with a six-figure college bill. Tuition and room and board costs are increasing faster than the rate of inflation,” said Bowen. “But once the child graduates and the tuition has been paid, the need for that portion of their life insurance is gone. Using a Term Rider to cover that limited event for a shorter duration provides a customized solution.”
The Term Riders stacked on the base policy also offers a solution that can be used to cover other education costs throughout a child’s life, including private primary and secondary school as well. “Ensuring enough coverage up through a college graduation for each child in a family is often a priority for policyholders,” said Bowen.
OPTerm 40 and Term Riders can offer multiple benefits for cost-conscious clients
Stacking Term Riders on a base policy offers other benefits over buying individual policies to achieve the same total of coverage.
“Term Riders can give your clients flexibility while saving them money by avoiding additional policy fees. Multiple individual policies and associated fees can really add up, making Term Riders a great option. And riders with the base policy means one easy payment with consolidated billing.”
“OPTerm 35 and 40 are being favorably received by our agents. Our marketers are quoting them increasingly, and we already have made numerous sales. We think the biggest advantage is that the client has many more years in which to convert as compared with the typical term. We are finding the underwriting is very consistent with all term periods, making it easier to explain offers to agents.” — Levinson & Associates, Inc.
Bowen also points out that for some clients, a blend of permanent and term insurance using the OPTerm 35 or 40 may be a good solution. “They may want a certain amount of lifetime coverage, but the premium for permanent insurance can cause sticker shock. Using the two together may be the right thing to do to meet their needs at a price they are more comfortable with.”
Legal & General America also sees the long-term appeal of its OPTerm products with millennials, who are often more budget conscious.
“We are committed to the term market, and we’ll continue to innovate to meet customer needs,” said Bowen.
“Legal & General America is a very solid company, with a long history of great service. We’re building on that foundation not only with these latest product offerings but also with plans to create a digital experience that appeals to all clients, including a younger demographic who want 24/7 convenience and online options.”
A life insurance solution: the Term Rider advantage
Stacking term coverage can help your clients purchase the right amount of protection for the right length of time and may be the most cost-effective way to buy life insurance.
Are you interested in helping your client customize their life insurance coverage to manage a lifetime of milestones? Find out whether a Term Rider solution may be the right strategy at www.FirstTo40.com.
1. Over 40% of all mortgage applications are refinancing an existing loan according to Mortgage Bankers Association, 2018.
2. Consumer Financial Protection Bureau Report 2017.
3. GUL illustrations run as of March 29, 2019. OPTerm 40 is a term product that provides level term coverage for the initial term period. Premiums increase annually thereafter to age 95, at which time coverage ceases. Unlike GUL, OPTerm does not provide permanent coverage, flexible premium or potential cash value.
Legal & General America life insurance products are underwritten and issued by Banner Life Insurance Company, Urbana, Maryland and William Penn Life Insurance Company of New York, Valley Stream, NY. Banner products are distributed in 49 states and in DC. William Penn products are available exclusively in New York; Banner does not solicit business there. The Legal & General America companies are part of the worldwide Legal & General Group. OPTerm policy form # ICC18-OPTC and state variations. In New York, OPTerm policy form # OPTN-NY. OPTerm premiums are guaranteed to stay level for the initial term period and increase annually thereafter. Premiums quoted include $60 annual policy fee. OPTerm does not provide permanent life insurance coverage. Premiums based on preferred plus non-tobacco and standard plus non-tobacco underwriting classes. OPTerm 40 rates are as of 05.13.19. OPTerm 35 and 40 are not available in New York. Term Riders issue ages vary from base plan and coverage ceases at the end of the term duration. Two-year contestability and suicide provisions apply. Policy descriptions provided here are not a statement of contract. Please refer to the policy forms for full disclosure of all benefits and limitations. 19-200