Prudential: June 2021 Term Conversion Updates
Prudential continues to seek opportunities to manage the volatility of its mortality experience during difficult economic circumstances. Currently Prudential has conversion options that are not eligible for reinsurance and can contribute disproportionally to how volatility impacts business.
In support of the commitment to customers and business Prudential will be making the following changes to their term conversion offerings which will take effect immediately.
1. Combine and Cancel Eliminated: Term policies cannot be combined when converting to permanent policies, each policy will need to be converted to their own permanent policy.
2. New Limits on Conversion to Survivorship: Term conversions to survivorship policies are allowed as an administrative practice. From this point forward the following guidelines apply when converting to a survivorship policy.
- Maximum New Survivorship Face Limit: $5,000,000
- Conversion Period: Conversions to Survivorship policies will be limited to the first 10 policy years.
Starting the Conversion to Survivorship Process
Conversion paperwork needs to be signed prior to the tenth anniversary of the term policy. Prior approval will still be necessary before submitting the conversion paperwork, contact your wholesaler to assist in gaining approval. The amount of remaining coverage that can be kept after the conversion will be determined during the pre-approval process based on other in force coverage that has been retained by Prudential.
- Who is affected? Term policy owners whose policies are beyond their tenth anniversary with a conversion privilege, and those who have larger than $5 million policies who wish to convert to a survivorship policy without medical underwriting.
- Who is not affected? Insured clients with policies under $5 million who are looking to convert to a survivorship policy. Those who wish to convert to an individual policy can convert to any individual permanent policy available at the time of conversion up to the convertible amount.
- What does this mean for clients with large term policies with a conversion option within the first 10 years? Clients who wish to convert the maximum $5 million to survivorship and keep the remaining term coverage will need to submit a request for approval. It may be necessary to reduce the $5 million survivorship amount or the amount of remaining term that will be allowed to continue to stay at Prudential’s $10 million retention limit.
- How do I find out what options are available for clients? Since prior approval is necessary, contact your wholesaler to assist in gaining approval before submitting the survivorship conversion paperwork. The amount of remaining coverage that can be kept after the conversion will be determined during the pre-approval process based on other in-force coverage that has been retained by Prudential. Conversion paperwork needs to be signed prior to the tenth anniversary of the term policy.
Please refer to the updated Term Conversion Highlighter below, and give us a call at 1-800-792-6795 with any questions.