William Penn Life, 2008 (43. évfolyam, 1-12. szám)

2008-01-01 / 1. szám

Moneywi$e

with Mark Lantz

Converting juvenile term plans to permanent plans

THE QUESTION OF THE MONTH is: "Can I convert a Youth Special Juvenile Term Plan to a permanent life plan for my child? The answer is a resounding "YES!" And, not only can you make such a conversion, you will ALSO receive credits toward the premiums for the permanent plan when you do.

Let me try to explain credits and the conversion process to you.

Let's say you purchased a WPA special juvenile term plan for your 15-year-old child 10 years ago, and since then you have paid $25 per year towards that coverage. Now, 10 years later, your child is age 25 and you want to convert their coverage to a permanent adult life plan. To date, you have paid $250 in premiums ($25/per x 10 years). When you convert to a permanent plan, you will earn a credit ot $10 for each year you paid premiums, or a total of $100 ($10 credit/year x 10 years). This will allow you to reduce the annual premium on your child's new permanent plan by $100 for the first year under the permanent plan. Should you decide to pay the premiums semi-annually or quarterly, your conversion credit will reduce those payments during that first year as well.

Now, if instead of paying $25 per year for your child's old special juvenile plan you paid a single premium, then one-half of the single premium you paid will be used as a conversion credit toward the first year's premium on a new permanent plan.

Let's look at two examples that may help clarify things:

EXAMPLE #1: You want to convert your son's juvenile plan to an adult 20 Pay Life plan with a face amount of $20,000. You purchased the juvenile plan when your son was an infant and have been paying the $25 annual premium for the past 25 years. Thus, you have earned a conversion credit of $250 ($10 credit/year x 25 years).

The annual premium for your son's new 20 Pay Life plan will be $318.40. But, after applying your conversion credit, the first year's premium will be only $68.40.

EXAMPLE #2: You want to convert your daughter's juvenile plan to an adult 20 Pay Life plan with a face amount of $10,000. You purchased your daughter's juvenile plan when she was 15 and have been paying the $25 annual premium for the past 10 years. Thus, you have earned a conversion credit of $100 ($10 credit/ year x 10 years).

The annual premium for your daughter's new 20 Pay Life plan will be $146.60. But, after applying your conversion credit, the first year's premium will be only $46.60.

Yes, conversion credit math can be a bit confusing, but the end result is always the same—you save money on your child's new adult life plan.

As always, your local WPA representative will be more than happy to answer any questions you have about our special juvenile plans, adult life plans and conversion credits. The really important point in this process is that you continue your child's life insurance coverage as they progress into adulthood, [wpl]

The WPA offers many affordable life insurance plans for people ages 0 to 85. We enjoy serving our members and their family and friends.

AND DON’T FORGET...The WPA is currently paying 5.25% on our 9-Year Surrender Charge Annuities...a great way to cover your own future. Call for details.

Call your local WPA representative to learn more, or call Mark Lantz, Sales Director, at I -800-848-7366, Ext. 134.

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William Penn Life, January 2008