Why Convert Term Life Insurance

Converting from term to permanent life insurance allows you to take advantage of the cash value that builds as savings and help with estate planning.


convert term life insurance

Convertible life insurance

convertible life insurancePeople looking for an affordable option for life insurance always opt for the term life insurance. It is not a bad choice, especially if it is the one you can afford for the moment. However, there are better choices for you within this category. Let us say getting a term life with an option of conversion clause. If you are looking at term life, then read one to find out how you can avoid costly mistakes.

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Pros and Cons of converting term life to whole life

pros and cons of converting term life to whole lifeIt is a type of insurance policy with a definite time coverage or temporary. Once it expires, you only have two options, renew it or end the coverage. It can end up to a sad or saddest ending.

For instance, if you are 45 years old and get a 20 years term life plan with death benefits. It can cost you around 30 dollars a month for the premium. In case you die before the 20-year term, then the insurer will pay for the death benefit. It is a sad ending for you bad better for your family. 

However, if you outlive the 20-year term because you are healthy and well, you can say goodbye to your premium. The insurance provider will keep all the premiums you paid for 20 years. It is also a sad story for you but a good thing you are in good health. 

The bad thing about term life is the fact that it is temporary. For many average income earners, it is the best choice for them because you can get more death benefit. Although your current financial situation calls for term life, it can change over time and for the better. Therefore, it is better to think of getting a term life that you can convert to whole life or universal life later on. 

The conversion feature is a good idea, especially if you are the type of person aiming for a better future. 

Cost to convert from term to permanent life insurance

cost to convert from term to permanent life insuranceThere is a special clause within a term life agreement that allows the policyholder to convert it into permanent. However, it is not always the case. It still depends on the insurer. So, it is better to ask your insurance provider upfront about it. Conversion is possible as long as it is done at the right time and age. Think of it as similar to leasing the insurance then buying it afterward. 

Also, having a conversion feature may add to the monthly premium, but it is all worth it. You can do it without the need to undergo another qualifying stage and medical examinations. According to statistics, there is only 2% of term life policyholders take advantage of the conversion period. It is true because most insureds lack information about it. Also, most insurance companies do not discuss this clause with their client. 

Here is another situation that can help you decide whether to opt for it or not. For instance, a 45 years old get a 20 years term life plan. Also, it includes ten years conversion clause. If in case you develop a chronic illness like diabetes or heart disease during the ninth year, you can convert it to permanent. You can do it without the need to go through a medical examination. It is possible as long as it happens within the ten years clause. One can get an affordable premium than having new life coverage.

For a written policy without the conversion feature, you need to face an expiring policy and costlier renewal because of your current health condition. Also, you need to again go through a medical exam that will expose your true health condition. 

Even if you cannot afford permanent insurance today, life changes can give you the reason for conversion in the future. Also, working policyholders can experience growth in career. Therefore you can afford permanent life insurance after several years. 

If you are healthy, you might think you do not need to convert. However, think about your age. Once a term life expires, you are already 20 years and older. So, it means that you will still look for insurance after that. You will face a more rigid process and expensive premium because of your age. If you can get the term life at the age of 20 to 30 and the 10-year clause, you have enough time to assess both your finances and health condition.

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Can I transfer my term life insurance policy to another company

can i transfer my term life insurance policy to another companyIf you want to get insurance coverage, it is better to think of long term goals and plans. You can give yourself a favor by acquiring a conversion clause. If you already have one, do not wait for it to expire. Convert it before it’s too late.

Ask an insurance provider about the years of conversion clause. Also, get information about their conversion guidelines like medical exams and additional requirements. There are insurers with very lenient guidelines when it comes to converting term life insurance.

It is important to ask for a professional opinion from one of our agents to guide you. They can give complete and useful information on the best insurance providers to offer this type of term life features. They can fully explain everything to avoid confusion, especially for first-time insurance buyers. Call 1-800-342-1537.

Is convertible term life insurance worth it

is convertible term life insurance worth itAs its name implies, it is coverage for life until the day of your passing. With the conversion, you can enjoy the same perks. It has a premium that does not change over time. Hence, it can offer security to you and your family. Also, you do not have to die before you can take advantage of your investment. It has a cash value that grows with the plan. You have the liberty to withdraw, or you may also borrow from it.

Policyholders will have more earning power as they get older. Also, mature people realize the need for more savings and investments. You can only get it from permanent coverage. One can use it after retirement or make a loan to buy something you need. You may also use it to finance hospitalization and medical expenses like medications.

Convertible term life insurance FAQs

Should i convert term life insurance to permanent?

However, as you age, you’ll likely make more money and improve your financial situation. That’s a good time to convert to a permanent life policy. Permanent life will cost you more than term life, but it will also provide you with savings for your survivors or to use as an emergency fund or retirement fund.

What is term life insurance conversion credit?

Conversion Credits: Sometimes insurance companies will offer conversion credits to offset the costs of increased premiums on a permanent life policy. The conversion credit may result in lowered premiums for the first year. If you’re looking into a term-to-perm conversion, be sure to inquire about a credit.

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About Coach B.

After starting his financial career with Phoenix Home Life Insurance Company back in 1992, Scott decided he wanted to provide people with an easier and more enjoyable way to buy life insurance. That was the start of Coach B. Life Insurance, whose mission is to be transparent, honest, and helpful to customers — without ever bugging or pushing them.

In the years since then, he has worked tirelessly to improve the process of shopping for insurance. His goal is to make sure that everyone who comes to Coach B. — whether they end up buying a policy or not — has the best possible experience.

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