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balance) are generally transferred to the C-group conversion UL
policy in accordance with a schedule under which (1) none of the
conversion credit balance is transferred to the C-group
conversion UL policy if conversion occurs in the C-group term
policy’s first year, (2) 47.5 percent of the conversion credit
balance is transferred to the C-group conversion UL policy if
conversion occurs in the C-group term policy’s second year, (3)
90.25 percent of the conversion credit balance is transferred to
the C-group conversion UL policy if conversion occurs in the C-
group term policy’s third year, and (4) 95 percent of the
conversion credit balance is transferred to the C-group
conversion UL policy if conversion occurs in the C-group term
policy’s fourth or later year.13 Policyholders never receive
more than 95 percent of their conversion credit balance because
the insurance salesperson, upon conversion, is paid a commission
equal to 5 percent of that balance. Conversion credits
transferred from the C-group term policy to the C-group
conversion UL policy are applied to the cash value in the C-group
conversion UL policy (i.e., they are earned by the policyholder
and made available to him or her) in 120 monthly installments,
13 For C-group term policies issued after Jan. 31, 1993, 0
percent of the conversion credit balance is transferred to the C-
group conversion UL policy if conversion occurs in the policy’s
first 4 years, and 95 percent of the conversion credit balance is
transferred to the conversion policy if conversion occurs at any
other time.
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