Should I Convert My Term Life Insurance to Permanent Coverage in Placentia?

What does converting term life insurance actually mean?

Many term policies include a conversion privilege. It lets you trade some or all of your term coverage for a permanent policy, such as whole life or universal life, from the same insurance company.

The big advantage is that most conversions do not require a new medical exam or health questions. The insurer generally uses the health rating you received when you first bought the term policy. Your new premium is based on your age at the time you convert, so it will be higher than your term premium, often by a wide margin.

Conversion rules are written into your policy contract, and they vary from one insurer to the next. Two policies that look alike on the first page can have very different conversion terms on page twelve.

When converting makes sense

The strongest case for converting is a change in your health. If you have been diagnosed with a condition since you bought your policy, a new policy could be expensive or out of reach. Conversion lets you keep coverage without being judged on your current health.

Other situations point the same way.

• You now want coverage that lasts your whole life, for example to cover final expenses or leave something to a beneficiary.
• You have a child or other dependent who will need financial support for life.
• Your term is ending soon and you still have people who rely on your income.
• You want a policy that builds cash value you can use later as part of your plan for retirement.

When keeping term, or letting it go, is the better choice

Term life is meant to cover a specific stretch of years, like while the kids are growing up or the mortgage is being paid down. If that need will be gone when the term ends, paying much higher premiums for permanent coverage may not be the best use of your money.

If you are still in good health, compare before you convert. A brand new term policy or a separately underwritten permanent policy may cost less than the conversion price, because you would be rated on your current, healthy profile instead of a class you were given years ago.

Budget matters too. A permanent policy only helps if you can keep paying for it. A policy that lapses after a few years because the premium was too much leaves you with nothing.

Deadlines and details to check in your policy

The most common mistake we see is waiting too long. Conversion privileges usually expire before the term itself does, and many end at a certain age. Once that window closes, it does not reopen.

Pull out your policy contract or call your insurer and look for these points.

• The last date or age at which you can convert.
• Which permanent products the insurer allows you to convert into.
• Whether you can convert only part of the coverage and keep the rest as term.
• Whether any riders, like a waiver of premium, carry over to the new policy.

How we help you decide

We start by reading your current policy with you, at our office or by phone and video. Then we get a conversion illustration from your insurer and, if your health allows, compare it with new coverage options side by side.

Because we are a small team, the same agent works with you from the first conversation through the final paperwork. You will not have to repeat your story to someone new, and you will get an honest answer, even when that answer is to keep the term policy you already have.