The letter Lafayette Life sends out each year regarding the term coverage is well intentioned but premature for the majority of Infinite Banking/Bank On Yourself policies. The reason being that the term rider was specifically placed in these policies so you, Mr. and Mrs. Policyowner, could overfund the Paid Up Additions Rider. If you were to prematurely convert the term rider before the end of year 7, your policy would become a Modified Endowment Contract (lose the tax benefits). We don’t want that to happen.
Lafayette will send that letter out to everyone with a term policy or term rider. It’s a good reminder once you begin year 8 and beyond but definitely premature notice until then. IF you have any questions about this matter, please do not hesitate to contact me: www.vcita.com/v/john.montoya.