Why do the policy years start over for the converted policy if ROPC/E was on the original T10?
The 15 year return of premium option on T75 and T100 plans is priced for return of premium after 15 years in that plan. If we did not re-start the policy years, the ROPC/E benefit would be payable sooner and would require higher premiums. While some ROPC/E premiums were paid under the T10 policy, these were lower than the T75/T100 ROPC premium and therefore not enough to offset these additional costs. Conversion generally makes sense (e.g. saves premium) if the new policy remains in force for more than 10 years. Hence, in the majority of cases it is in the customers’ best interest not to charge for additional ROPC costs and start the policy years over again. Another option would have been to charge all T10 policies that include ROPC/E-15 years for the potential of early return of premium in the converted T75/T100 policies, which we don’t feel provides good value to most.
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