Extending convertible term assurance for a client with medical considerations

Client’s circumstances

A woman in her mid-40s with a known medical history. She had a 30-year convertible term assurance, which was due to expire when she reached 60 years old, and which she had taken out when she was in good health.

Issues addressed

When the client took out the original 30-year policy, the cost was cheaper than buying longer-term cover and was the most affordable option. She now had the income and/or liquidity to purchase longer-term cover, which would protect her estate from an Inheritance Tax bill.

Now experiencing medical difficulties, any new cover bought would be subject to an increase of 50% – 100% on the premiums payable.

Tailored solution provided by John Lamb Hill Oldridge

We recommended that instead of our client buying a very expensive new contract, she should activate the conversion option on their original policy. This would extend the contract for an additional 30 years until she reached aged 90.

This removed the need to go through the medical underwriting process or disclose the health issues that have arisen in the previous 15 years, both extremely valuable benefits for this particular client.

Overall, the convertible term saved the client money. It allowed them to purchase an affordable contract initially while their liquidity was low, and now convert it without being subject to medically loaded premiums.

This case illustrates how, by securing cover early, some clients can avoid the impact of increasing protection costs due to declining health later in life and how John Lamb Hill Oldridge advisers can improve clients’ financial positions.