Conversion of Life Insurance

[bUU]

Mostly as an educational endeavor, I would love to read people's reactions to the attached offer my spouse received on leaving her previous job.

[pb4uski]

In my experience this is fairly common. the first question that you need to ask yourself is do you need your spouse to have life insurance coverage? If the answer to that question is yes, then the next step would be to compare this alternative with other alternatives (such as term life if your need for coverage is not a permanent need).

[Independent]

+1

Also: Your spouse's health could be a major issue. I'd expect that the pool of people who convert group life contains an unusually high fraction of unusually poor risks. For the insurer to make money, it needs to charge a rate that covers the entire pool, healthy and unhealthy.

If you need the insurance, and she's in unusually poor health, this may be a good deal. Check the rates on various alternatives.

If you need the insurance, but she's in normal good health, she can probably get a better deal elsewhere.

[2B]

Buying life insurance through an employer has always been a bad deal when I've looked at it. The rates are always higher than what I could get on the open market. It's obvious the only people that should buy it are people with health risks.

One other problem is that you typically lose the insurance if you leave your job. Even if your health is bad you need to "die in the saddle" to collect on the higher cost insurance. Your wife is getting an opportunity to convert but I am sure it is at an even higher cost.

[kcowan]

I was offered to continue my "key man" insurance when I retired. I had 60 days to decide. Guaranteed with no tests. I opted for a brand new policy because I had begun intensive exercise. The rate was much lower.

[bUU]

Thanks for the insights.