Ohio National Life Term: You Had No Idea a Mutual Could Write Term this Cheap…Did You?

Ohio National Life, the 100 some odd year old life insurance company from Cincinnati known for having a good…well…almost everything.

Most of the time, we can segment companies by being rockstars with certain products.  For example, we know Berkshire Life and the Standard for their industry leading and extremely benefit rich disability insurance contracts.

We regard Banner Life and Genworth for their fiercely cheap term insurance rates, we know of Jackson National Life for their amazing annuity products.  Ohio National tends to be a different story.

ohio national term life insuranceInstead of being known for it’s one great product, it’s honestly really good at just about everything it touches.  Solid whole life contracts, a current assumption universal life contract that many revere as the industries best, a highly respected variable annuity (for people who care about variable annuities…ew), and really great term rates.

Term rates that are very uncharacteristic for a mutual life insurer.  Idiosyncratic term rates aside, we wanted to know if their term product was a good choice as a top contender for your financial life.

Term Unlike Other Mutuals

Though the die hard Northwestern Mutuals, Guardians, etc. among us will scoff at the labeling of Ohio National Life as a “mutual” (due to the fact that they are in fact a mutual holding company, details on what that’s all about forthcoming, not today unfortunately) ONL (as it’s commonly referred to) is every bit as dedicated to the mutual cause as far as we can tell.

The only “un-mutual” like thing they do is write term life insurance business that will actually find its way near the top of a list of lowest cost premiums on a spreadsheet.

Typically, the mutuals write term insurance for one reason…to convert it to their whole life contracts.

And Ohio National is aware of this feature and very much happy to talk about it.  But unlike the other big name mutuals (if such a thing really exists) term insurance from Ohio National Life doesn’t come with the same annoyingly arrogant price that insureds need to pay for the privilege to convert to permanent life insurance at the big old mutuals.

Instead, ONL offers the privilege to convert to its permanent products at a price that gives the likes of Banner and Genworth a real run for their money (they also have a pretty slick permanent life underwriting policy for recently insured individuals that we’ll discuss in later weeks when we review their universal and whole life products).

This is a very noteworthy approach, and we applaud them for taking this stance.

Still Going Down

For some time, the trend on term life insurance was buy now, and buy again a few years from now.  This was working out pretty well as insurers were easing into the new CSO tables and rates for term insurance were decreasing pretty consistently year over year.

Unfortunately for agents and brokers, the feeding frenzy has ended and the slide in prices has pretty much come to a halt, if not backed up just a bit.

However, Ohio National just recently released its latest line up of term products and with it, came a repricing that brought on even lower prices than before.

There latest term round up–known as Flex Term Series 8–comes in level 10, 15, and 20 year periods (no 30, they’ve never really been a player on that market, plus they have the industries lowest priced universal life product that sometimes beats out 30 year term rates, impressive we know).

In addition to the Flex Term series, Ohio National Life also has an annually renewable term product (they never sell it and you’ll hear few people ever talk about it) and a nifty product known as Recap Term (more on that in a bit).

Three Products

Ohio National has 3 term products:

  1. A level term product in 10, 15, and 20 year level periods (no 30 year level term).  The level products come in two flavors: a basic and a “plus” version.  The difference is the conversion option.  The basic products are convertible to a basic (and rather old) current assumption universal life product.  The plus products are convertible to any permanent product in ONL’s arsenal at time of conversion.  However, conversion to blended products is not contractually allowed.  ONL does, though, currently allow conversions to blended policies if the blend is no more than 50/50 whole life to term.  This is not a contractual guarantee and can be revoked at any time.
  2. An annually renewable term product that also comes in a basic and plus version.  For this product, ONL channels it’s inner mutual, and ONL isn’t going to let its mutual brethren one up it in the “we only sell term for the conversion option” game on every product.  ONL only allows conversions for 3 years, and the product is only renewable for 10 (if you cocked your head and thought: those numbers don’t make any sense, don’t worry; you’re not alone).
  3. Lastly, Ohio National has what we’d consider the most unique term product in the industry.  They call it Recap Term, and it allows for a conversion credit (i.e. the ability to deduct premiums paid towards the new permanent premium upon conversion) for all of the premiums paid up to 5 years.  Most products that have conversion credits allow for one year’s premium to be deducted, but no more.  If the client misses the conversion by year five, he or she is back to one year’s premium as a conversion credit.  The product is a level premium product for 10 years.

Conversion period of the level products are available until the end of the level period or age 70 whichever comes (no extension for cases issued after age 70).

Available Riders

Riders available on Ohio National’s Term products are:

  • Waiver of premium using a 5 year own-occ definition of disability.  The waiver rider will cover up to $10,000 in monthly benefit for all life insurance in force.  Maximum face amount covered under this benefit at issue is $3 million.
  • Accelerated Death Benefit for terminal illness only and capped at $250,000 in total available benefit.
  • Accidental Death Benefit
  • Guaranteed Increase Option, with a tiny maximum exercise amount that barely makes it worth mentioning

Other Noteworthy Features

Ohio National Life has a few liberalized underwriting practices concerning private pilots and cigar smokers.  Private pilots with at least 100 hours under their belts who fly no more than 150 hours per year and are Instrument Panel Verified.

Cigar smokers are traditionally not given tobacco rates.

ONL also has a preferred smoker rate so cigarette users who are otherwise in good health can get slightly better rates.  Some people have criticized ONL for some time for stiff underwriting.

Don’t believe the hype.  This is more rumor mongering among those who don’t have ONL as an arrow in their quiver.

All in all a pretty well rounded line up of term products.  On top of that, ONL has superlative financials to boot.  So, for extremely competitive term rates from a mutual with amazing financials and size, Ohio National Life is a top choice provider.


6 Responses to “Ohio National Life Term: You Had No Idea a Mutual Could Write Term this Cheap…Did You?”

  1. Jim Tobin says:

    Brandon, I’m new to wl and curious if there are there any wl company’s that will allow you to convert term to wl at a more aggressive blend ratio than 50/50? Thanks for the blog. best, jim

    • Brandon Roberts says:

      Yes there are, but I wouldn’t major in the minors here. I can’t think of a situation where I’d choose someone over ONL just because they allowed a larger term blend upon conversion. There’s also certainly not anyone out there with a term product priced as competitively as ONL that will allow for more term on the blend upon conversion.

  2. Justin Bilyj says:

    Besides the myth of ONL’s tight underwriting, I have also heard they aren’t good with placing larger cases.

    Is there a particular amount band they are competitive with?
    Thanks!

    • Brandon Roberts says:

      This depends a bit on your working definition of large cases. I wouldn’t go to them with a $10 mill+ term case without a lot of discussion with underwriting first (but then again, no one really goes to any company with that size case without some discussion with the company up front). I’ve placed a bunch of several million dollar cases with them no problem.

  3. AMD says:

    Sorry, but I’m still mystified.

    “The plus products are convertible to any permanent product in ONL’s arsenal at time of conversion. However, conversion to blended products is not contractually allowed. ONL does, though, currently allow conversions to blended policies if the blend is no more than 50/50 whole life to term. This is not a contractual guarantee and can be revoked at any time.”

    This seems to contradict itself. Conversion to blended products isn’t allowed, except when it is?

    • Brandon Roberts says:

      Hello,

      It’s current company practice; not contractually guaranteed. This really isn’t unique to them (current company practice), nor is the 50/50 limit on conversions. It’s simply not an area where they are strong (conversion liberty).

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