Converting Term Life to Whole Life - Convertible term life insurance allows you to convert a temporary (term) policy into a permanent one.
People typically buy term life insurance because it's affordable, practical, and easy. You simply buy term life insurance for one low price for a specified length of time, also called a term. But what if your needs change, your term policy is set to expire, or you decide you want permanent insurance?
Fortunately, term life insurance provides for the best of all worlds. You can buy term life insurance now and then convert it to permanent insurance later.
Sometimes called going from "term to perm," converting your term life insurance to a type of permanent insurance is easy. It doesn't typically require a medical exam and term life insurance offers the conversion option, even if your health has declined.
Term life insurance policies provide coverage during the years you need it most, typically between 10 to 30 years.
Once you reach the end of your "term," your policy expires and you typically have three options: renew your policy, convert your term life insurance policy into a permanent policy, or discontinue coverage.
Here are Four Reasons to Convert Your Term Life Insurance Policy
1. You don't have to repeat a life insurance medical exam.
Life insurance medical exams are a prerequisite for many types of life insurance, including term life insurance and some whole life insurance. Convertible term life insurance allows you to transition from a term life policy to a permanent policy, without repeating a medical exam. That's ideal for those who may have experienced health changes or don't have the time to schedule an exam.
2. It's designed to meet your needs today — and tomorrow.
Maybe you've just had a baby or your family is still growing. You need a budget-friendly option for coverage — and term life insurance fits the bill. Once your children are financially independent or your paycheck increases over time, you may reevaluate your life insurance needs and discover that a whole life policy better suits you — and is now within reach.
3. You have the option to convert to lifelong coverage.
Term life policies have an expiration date. By converting your term life policy to a permanent (Whole Life or Universal Life) policy, you'd go from having coverage with an end date to having coverage for up to a lifetime. There are two things, however, to be mindful of when converting your term life policy to a permanent one. The premium increases and there's typically a window of time during which you can convert. Some convertible term life insurance policies may also have a maximum age limit for conversion. Make sure to read the fine print carefully and ask questions if you have them.
4. You have a financial nest egg for your family's future.
Unlike term life insurance, whole life insurance builds "cash value," which grows with each monthly payment. Left alone, that money can become like a nest egg for your family's future. It can be used toward anything you'd like, such as supporting a child or grandchild's future education or supplementing a retirement fund.
By converting your term life policy into a whole life policy, you'll have a lifetime of coverage that can help to financially protect your loved ones. And you'll also have the ability to watch your policy grow in cash value — making your family's financial future even brighter.