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If you’re considering life insurance and you want to keep your options open, a convertible term policy might be the right choice for you.

You can convert it to permanent life insurance without having to go through an insurance company’s underwriting process.

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Learn more about convertible term life insurance and whether it’s right for you. In this article, we’ll check out the most popular frequently asked questions about convertible term life insurance to help you determine if it’s best for you.

How does a convertable term policy work?

One of the most common types of term life insurance you’ll see is called “level term life insurance.” This type of plan keeps the premium and death benefit fixed during the length of the term, which can be anywhere from 5 to 40 years.

A convertible level term policy works the same way as a traditional term life insurance policy but has an option or “rider” that allows you to convert to a permanent life insurance policy later on. Not exercising this option will allow you to keep the insurance until the end of the term. A lot of people who have these conversion clauses in their policies don’t even know it.

What is the main benefit of a convertible term insurance policy?

Most people purchase term insurance to cover the financial needs that their family will face without the income of the insured. Generally, these policies contain a substantial death benefit but come with a very affordable premium.

The term conversion provision will allow the insured to convert the temporary term policy to a permanent insurance policy like whole life or universal life before the term insurance coverage expires. The primary benefit is that the conversion takes place without medical underwriting.

For example, if you are nearing the end of a 20-year term insurance policy and rather than renew it, you decide to convert it to permanent life insurance, you will not have to deal with medical underwriting, which can be extremely beneficial if your health has declined since taking out the policy.

Do I have to stay with the same Life Insurance Company?

Yes, if you elect to convert your term life insurance policy, you will have to select a permanent life insurance product from the same company you purchased your term insurance from.

Knowing this, it’s important to verify that the company you purchase your term coverage from will be offering the type of policy you’ll need when you convert. Typically, your choice will be between a whole life insurance product or a universal life insurance product, depending on the company’s conversion terms.

Most companies that offer term conversions will have designated policies on hand specifically for the conversion process. And  these companies will  offer permanent insurance without medical underwriting, which means the coversion will be processed quickly allowing the new policy to be issued considerably faster than if you were applying for a brand new policy.

Does the conversion have to take place at a specific time?

Depending on the insurance company you are using for your term insurance policy, the conversion privilege in the policy must be triggered by a certain time which is generally the expiration date of the policy. For most insurance companies, the term conversion period begins five years after the issue date and lasts until the expiration date or at a particular age like 65.

Two things that you should confirm when purchasing a term life insurance policy are whether the company has a term conversion option as a core benefit or as a rider, and secondly, what policies they offer when you’re ready to convert

Do I have to convert all of my term insurance?

Most life insurance companies will let you determine how much of the coverage you want to covert and if not the entire coverage amount, whether you want to keep any coverage that was not converted or whether you want to cancel it.

For example, John has a $1 million term policy that is convertible. He realizes near the end of his policy period that he will need less life insurance in the future so he converts only $100,000 of the term policy, but keeps the remaining term coverage active until the expiration date.


How much does it cost to convert my Term Insurance?

Typically, life insurance companies do not charge for converting your policy because they are happy to keep you as a customer forever rather than only for the life of the term policy and underwriting costs are considerably less than the costs of onboarding a new applicant.

How does convertible term life insurance differ from renewable term life insurance?

Since most term policies are renewable, the only difference between renewable term insurance and convertible term would be the conversion option. If you purchase a convertible term policy, you’ll have three options when your term insurance is about to expire:

  1. Let the policy cancel and purchase a new policy if needed. (Not recommended)
  2. Convert some or all of your term policy to whole life or universal life and be prepared for a higher premium. (Recommended)
  3. Renew your term policy based on your new age with annual renewable term insurance and roll the dice on how much your premium will increase year after year. (Not recommended)

Do all insurance companies have convertible term insurance?

Most, but not all insurance companies offer convertible term life insurance. The ones that don’t are generally the companies that only offer term insurance and no permanent life insurance.

Can I convert my group term life insurance?

Some employers will allow employees who are leaving the company to convert their term life insurance to a permanent life insurance policy. However, once you leave your company’s employ, you will be responsible for 100% of the policy premium.

Can I convert my term policy even if have a serious illness or disease?

Yes, in fact, this is the primary reason that you should confirm your term insurance is convertible before you buy it.

Suppose you have a convertible term insurance policy that is about to expire and you’ve been recently diagnosed with cancer. You can still convert some or all of your term insurance to permanent life insurance without having to prove you are healthy.

In Conclusion

Both renewable and convertible term life insurance policies can be useful, depending on your needs. A traditional term policy is only good for a certain amount of time and then expires, while the conversion rider provides a choice of what happens after.

If you are currently looking for life insurance, take your time and don’t rush into any decisions. Find the right policy by contacting the right agent!

Term Life Insurance Quotes

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Richard Reich
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