Lincoln National Discontinues Conversion Commissions

[tlmarketing]

I'm just reading through this announcement by Lincoln, passed along by them as if no big deal. Not too long ago, they increased the timeframe for chargebacks, and now they are discontinuing conversion commissions on policies....keep this in mind when considering your next term case!


Dear Valued Partner:

We are writing to inform you of changes to our Term Conversion Guidelines.

Term conversion options on new term policies with policy effective dates on or after September 12, 2016, will continue to have access to the full suite of competitive permanent products through policy year seven. After year seven, policies that are eligible may convert to one of the available product(s) designated for conversion by Lincoln. A separate Term product will be available for those clients who would like the ability to convert to the full product portfolio for the entire conversion period.

These Term Conversion changes support our ability to continue offering a comprehensive, competitive, and relevant portfolio of term products for your clients. Our Term conversion guideline practices are still among the most competitive in the industry, providing you and your clients the flexibility needed to customize their long-term plans.

Guidelines for commissions paid on permanent policies are being adjusted based upon the policy year at the time of conversion. Please note, no first year commissions will be paid for conversions after policy year seven on inforce policies with policy effective dates prior to September 12, 2016, if the term conversion application is received on or after January 1, 2017. Please see the attached Term Conversion Changes Summary Grid for details.

Our solutions enable advisors to serve a wide range of clients depending on specific needs, regardless of age or face amount. Our term products continue to resonate in the market and grow in sales, and we remain committed to this space as evident with the recent launch of Lincoln TermAccel®.

Enclosed find detailed information about these changes, and options for you and your clients to consider. Additionally, the updated Term Conversion Guidelines will be available on July 18, 2016. As you will see, several steps have been taken to minimize the impact to inforce policyowners along with business currently in the sales process.

We thank you for your partnership, and encourage you to contact your Lincoln representative with any questions, or for assistance in evaluating your options.


Cordially,

Mike Burns
Senior Vice President, Insurance Solutions
Lincoln Financial Group

Andy Bucklee
Head of Insurance Solutions Distribution
Lincoln Financial Distributors

 

[Mattschmidt]

Unreal. They'll issue a policy but not pay the agent on it. SMH

 

[AboutThatLife]

What's the industry standard?

 

[tlmarketing]

If you convert a policy in its first year, most companies will reduce comp by the amount that was paid out when the term policy was sold....some won't allow conversion during the first year of the policy.

The real sleazy parts by Lincoln are that they are reducing the conversion comp during the first 4 years, and completely eliminating compensation to an agent if converted after the 7th year.

Lincoln National is anti-agent.

 

[scagnt83]

The real sleazy parts by Lincoln are that they are reducing the conversion comp during the first 4 years, and completely eliminating compensation to an agent if converted after the 7th year.

That is not entirely accurate.

They are eliminating conversion comp after year 7 for existing Term Products.

Any of their new line of Term Products sold (available 9/12/16) will pay full comp on Conversions starting year 4 and extending to the end of the Conversion Period.

But, after year 7 of the new Term Product, the conversion options become limited.


I agree that it is anti-agent. It is anti-consumer as well with the conversion limitations on the new product coming out.


You will see more stuff like this in the industry. Low interest rates are killing the carriers. I would rather them do this than have their ratings go lower.

 

[tlmarketing]

Good point on the new vs old products.

Obviously they want to kill those blocks of business with as quickly as possible and eliminate conversions of both old and new products.

 

[MichaelBurton]

Good point on the new vs old products.

Obviously they want to kill those blocks of business with as quickly as possible and eliminate conversions of both old and new products.

Are you being serious? I'm not challenging you at all - just thought it was a pretty intriguing "take" on the agenda behind the actions. Normally I don't think of carriers as wanting to discourage conversions.

Please elaborate if you don't mind! Thanks!

 

[paytoplay]

Are you being serious? I'm not challenging you at all - just thought it was a pretty intriguing "take" on the agenda behind the actions. Normally I don't think of carriers as wanting to discourage conversions.

Please elaborate if you don't mind! Thanks!

Early conversions are generally good from the insurance company's standpoint. Its the late duration conversions -- when the insured has had a change of health -- that is the major problem.

If the insured has had a major change of health, and the level term period is coming up, the commission is really just a gift from the insurance company. They don't need anyone to sell the conversion -- it sells itself.

 

[WinoBlues]

Early conversions are generally good from the insurance company's standpoint. Its the late duration conversions -- when the insured has had a change of health -- that is the major problem.

If the insured has had a major change of health, and the level term period is coming up, the commission is really just a gift from the insurance company. They don't need anyone to sell the conversion -- it sells itself.

That. Many of my conversions of older term policies are on older sicker clients. The restrictions on the plans available for conversion are helping the adverse selection. If a person is standard or better they may qualify for a stronger plan at a better net cost.