Level term Assurance with Critical Illness Conversion option?

Ellemick

Hi all
In 1999 my husband & I took out Level term Assurance with Critical Illness ( 25 years) with Legal & General, (encouraged to do so by a mortgage shop when arranging our first mortgage). I was wondering what the conversion option actually means?
It states:
“You may convert this policy to a savings, endowment or whole life plan without further medical information at any time up to the age of sixty”.


Hate the idea of losing all we've paid in, so would converting be a good option? What should we convert it to?
Advice really appreciated

Nearlyold

The advantage of converting a policy is that there is no medical underwriting involved so you can take out a different plan whatever your current state of health, however you are only converting forwards, the premiums paid when it was a Level Term policy will still be "lost" as the premiums have been used to cover the risk of you claiming.
In addition the sum assured in relation to the premium will be lower for any of the plans you can convert to - assuming L&G still offer those saving/endowment policy types as savings plans linked to life cover and/or endowment policies are now out of date anyway and no longer offered by many mainstream insurance providers.

Chris_Pollard

Ellemick, I don't suppose you are alone in considering insurance premiums you have paid are "lost" as you haven't had to claim but this typically isn't salient in the mind when you think about house insurance, car insurance, perhaps it is because life and health cover is long term in nature. The premiums you have paid over the years will have helped many who have not retained their health whilst providing you and your husband peace of mind.

Any future spending on insurance should be based on your needs now, and in the future. This should drive your thinking. As the earlier poster has stated, if there has been a change in health for the worse, then the option you have could be great value for money - if you need life insurance.

If you no longer require life cover, then perhaps consider funnelling the money you could have spent into a separate "pot" and using it to celebrate the fact you and your husband have been fortunate enough not to have to claim by a few extra treats. I believe psychologists call what you are experiencing a "sunk cost fallacy", a bit like reading a book till the end, even though you get to half way through and are not enjoying or learning anything from it.

Ignore the money spent in the past, and focus on what you need and want for the future.