What Is Term Conversion Credit?
Term conversion is a process where you convert your term life insurance policy into a permanent life insurance policy. This process is allowed by most term policies, and you can convert some or all of your coverage into a permanent policy within a specific time frame. Permanent life insurance policies are those policies that do not expire and last for the insured’s lifetime, as long as premiums are paid as per policy terms.
Advantages of Converting to Permanent Life Insurance Policy
Compared to term life insurance, permanent life insurance policies generally cost more in premiums but offer various advantages, such as:
| Advantages | Explanation |
|---|---|
| Savings | Permanent life insurance policies have the potential to build cash value, which grows tax-deferred and can be used for various reasons, such as building a nest egg for retirement, boosting the death benefit, or supplementing retirement income through a policy loan. |
| Easy Conversion | Converting your term policy to a permanent life insurance policy is often simpler than buying a new policy since most insurance companies allow conversion without requiring underwriting again. |
| Budget Flexibility | If your budget allows, you can upgrade your coverage at a higher premium through a permanent policy. |
| Final Expenses | Converting to a permanent policy ensures that you continue to have death benefit protection, which can help your family pay for your final expenses. |
Converting Your Term Policy to a Permanent Policy
Converting your term life policy to a permanent policy is a simple process that involves talking to your agent, reading your policy to confirm the conversion option, and determining the length of the conversion period. You should also consider various factors, such as the kinds of permanent policies available, the conversion charges, and whether you should convert the policy all at once or in installments.
Once you discuss the term conversion with your agent and are satisfied with the new policy, you can make the change. With term conversion credit, you can enjoy the benefits of permanent life insurance policies without starting the process from scratch.
