Why Convert Term Life Insurance To Permanent?
Term life insurance policies offer coverage for a certain period. But what if you want coverage that lasts a lifetime? The good news is that most term life policies offer the option to convert them into permanent life insurance policies. But is it the right move for you? Here’s what you need to know about converting term life to permanent life insurance.
| Policyholder | Policy | Annual Premium |
|---|---|---|
| 30-year-old male, nonsmoker, excellent health | 30-year term, $500,000 death benefit | $368.20 (preferred plus rate) |
| Same male, now age 40 | Converted to a guaranteed universal life, $500,000 death benefit | $4,580 (preferred plus rate) |
Converting a term life policy to a permanent policy is easy. Check the language of your policy to see if conversion is an option. Next, check the term conversion period. Then, contact your insurance agent or company to ask to convert your policy. You won’t have to take a life insurance medical exam or go through the underwriting process. You’ll simply fill out a questionnaire, and your new permanent policy will be issued within a few days.
Although there are no fees to convert a term policy to a permanent policy, the rate you pay for coverage will increase. How much it increases depends on several factors, including your age when you convert, the amount you convert, and the type of permanent policy you choose.
Before you convert a term policy, there are several questions you should ask yourself and your life insurance agent or company:
- What’s your goal in converting?
- What can you afford?
- What permanent policies are available?
- Can you get a long-term care benefit?
- Can you get a rising death benefit?
By asking these questions, you might find that the permanent policies your insurer offers aren’t right for you. If you are in good health, shop around to see what else is out there. You might find that by getting rate quotes from other insurers for either term or permanent life policies that there are better deals available than what you’d get by converting.
